Evidence of meeting #73 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was technology.
A recording is available from Parliament.
5:10 p.m.
Conservative
5:10 p.m.
Liberal
Geoff Regan Liberal Halifax West, NS
Thank you, Mr. Chair.
I must say, I'm having difficulty letting go of the image of my friend Mr. Warawa visiting an obstetrician.
5:10 p.m.
Voices
Oh, oh!
5:10 p.m.
Liberal
Geoff Regan Liberal Halifax West, NS
Especially to get glasses, but that's okay. Just a little fun. He was taking a shot at me earlier, so it's only fair.
Mr. Collins, we've heard that shipping costs can be a barrier in e-commerce. Can you tell us what you've seen in that regard? What are the differences you've seen operating here in Canada versus operating in places like the U.S. and in Sweden in terms of shipping costs?
5:10 p.m.
President, Coastal.com
We don't see a dramatic difference. Shipping costs, as a cost of goods for us, are not significant. They're not huge. Certainly they're part of the revenue. We see a very competitive marketplace for that. We receive bids from all the major couriers—I mentioned Canada Post, Purolator, FedEx, and the U.S. Postal Service. And in Europe, they're not dissimilar. In our experience, we find that to be a fairly competitive marketplace. We would obviously like it to be lower, but it's a crucial part of what we do.
We have a 365-day return policy, so if Mr. Warawa didn't like his glasses or, heaven forbid, his wife got tired of them after 11 months and wanted to ship the glasses back—not him....
5:10 p.m.
Voices
Oh, oh!
5:10 p.m.
President, Coastal.com
She could call us and we would send her a shipping label through the Internet, through e-mail, and she could print that and send them right back to us.
So shipping is important to us. We ship over 10,000 packages globally a day. And we're also pretty attractive to the courier businesses because we ship a relatively bulky package that's extremely light. From my background in the aviation business, we love that, having a bulked up product that's very light, because the fuel burn is very low. I think companies that ship larger, heavier product might find shipping costs to be more of an issue for them.
5:10 p.m.
Liberal
Geoff Regan Liberal Halifax West, NS
Would you like to talk for a moment about the dangers of counterfeit eye products, in terms of both the role of e-commerce and the spread of them, so to speak, or the distribution of them? And where do most of them originate?
5:10 p.m.
President, Coastal.com
It's hard to tell where most of the counterfeits might originate. We go to great lengths to have direct relationships with the manufacturers wherever possible and purchase products directly. We do also purchase products from their distributors. But one always has to be mindful of that risk, that somebody is slipping something into the supply chain. We have undertakings by our suppliers, indemnities that they sign. We try to put a lot of onus on them to be accountable for what they produce and what they ship. We also go through an inspection process ourselves, when we first receive goods, to verify, because we just don't trust necessarily that all supply chains globally are a hundred percent risk free.
Where they come from—I think, generally, people believe they come from Asia, particularly China. I think that's probably valid, although I don't have direct evidence of that. But they certainly are out there.
You have to go to great lengths to make sure those products don't make it into the supply chain, and certainly your supply chain. It's a huge risk to our company's reputation if we were ever to supply a product that was not genuine, particularly with regard to contact lenses. It's unlikely that damage is going to be done to somebody as a result of eyeglasses, but certainly with contact lenses—where you actually put those into your eye—one must be very careful of that. We go through inspections with the FDA and Health Canada, etc., to make sure that our facilities are compliant as well.
5:10 p.m.
Liberal
Geoff Regan Liberal Halifax West, NS
Thank you.
Mr. Preston, the Conference Board publishes annually How Canada Performs: A Report Card on Canada. In the most recent report, this year, Canada received a D on the innovation report card. ICT investment also merited a D grade, and Canada ranked eighth out of 15 peer countries, including countries like the U.S., Sweden, Denmark. Your study also found that Canada has not increased ICT investment over time.
What do these findings actually mean in the context of improving Canada's productivity and growth? Clearly, D grades certainly sound pretty bad on paper, but how do they actually reflect on SMEs throughout the nation? And what role can the government play in improving this grade?
5:15 p.m.
Associate Director, Innovation Policy, Conference Board of Canada
The report card does reflect a comparison with our peer OECD countries. While we are improving in some measures, other countries are improving quicker than we are, so our relative grade has stayed as a D rating overall.
There is some real issue there with the ability of our SMEs to adopt ICT and what impact that has on our country. We know that 98% of our businesses are of SME size, so it has a major impact if they're not able to adopt ICT effectively.
I think the government has an important role to play in a couple of ways—creating that ground floor, that ecosystem that encourages ICT adoption, whether through directed programs, such as the couple that I've mentioned, or through also providing a communication and coordination vehicle so that firms know what programs and assistance are available for them to adopt ICT technology.
So I believe improved communication and improved coordination would go a long way.
5:15 p.m.
Liberal
Geoff Regan Liberal Halifax West, NS
I'll ask you this, Mr. Preston, and maybe Mr. Collins would like to answer it also. Canadians, of course, are often considered to be risk-averse. This risk aversion is said to have a notable impact on productivity and growth. Do you think this risk aversion can be overcome, and will that be through policies, practices, or other means?
5:15 p.m.
Associate Director, Innovation Policy, Conference Board of Canada
It's interesting, because risk aversion—we talk about a culture of risk aversion—is one of the things we plan to spend more time looking at. It does have a real impact. Our estimate is that we make $7,000 less per Canadian as compared with our U.S. counterparts because of our productivity measures. There's a real challenge there on the productivity side.
5:15 p.m.
President, Coastal.com
I would only add some of the things that could be done. I talked a little bit about interprovincial trade barriers, etc.
As well, Canada's capital markets are not as developed as they are in perhaps other places, I think particularly the U.S. I don't know if we're ever going to match that. Having a more fully developed capital market, having regulations that are up to date with the evolution of technology, I think would be extremely helpful.
People take risks when they see an advantage, when they see an opportunity. I think making it easier to have the benefit arrive—as opposed to having government be part of the risk that the business has to evaluate, or government regulations legislation—would be helpful.
5:15 p.m.
Conservative
The Chair Conservative David Sweet
Thank you very much, Mr. Collins and Mr. Regan.
I'll just remind members that I'm working off the clock that's on our BlackBerry. It's actually two minutes faster than the clock that's on the wall here—and course it's different from that clock too.
Mr. Braid, for five minutes.
5:15 p.m.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Thank you, Mr. Chair.
Mr. Collins, with respect to your customers and your sales, I'm just curious to know what percentage of your sales are in Canada and what percentage are exports.
5:15 p.m.
President, Coastal.com
Currently, probably a third of our sales are in Canada. It's certainly our largest market. The company started in Vancouver, so it has greater market penetration there.
The rest of the sales would be export sales. The largest markets are in Europe, particularly northern Europe, Scandinavia. The United States is growing extremely quickly. Australia and New Zealand are also big and very fast-growing markets for us. We are also in Japan. I think we're the number two provider of contact lenses in Japan. We've just started marketing very lightly into Brazil.
It might be interesting for the committee to know that when we do research on our customers, the largest market penetration per capita is actually in rural and remote parts of the country. We don't receive a huge number of customers from there, but as a percentage of the population, it's by far the highest in the north or in rural areas, where access to cost-effective eye care is very expensive, or not in existence in some communities.
They all get deliveries from Canada Post, but it may be very difficult to go down and get a great product at a great price.
5:20 p.m.
Conservative
5:20 p.m.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
How do you drive customers to your website? How do they become aware that the company and the website exist?
5:20 p.m.
President, Coastal.com
We do have five bricks-and-mortar stores in Sweden. We've just recently opened our very first store in Canada, an actual footprint store on Robson street in Vancouver. We'll probably do a little bit of that across the country and in various markets, but it will be a small portion of what we do.
More than 90% of all our marketing and sales spend is online. We do that through search engine optimization, word search, display adds, and retargeting affiliates. We do a lot of e-mail. We have a customer base of about 4.4 million. We also have 2 million Facebook fans, which is a very large number. A million of those are in the U.S.
5:20 p.m.
Conservative