Industry Committee on May 30th, 2013

[Gary Collins]

They're not my fans, I might say. They're more the product's fans.

We've actually found social media to be a growing opportunity for us to market. As a channel, you're able, in a very precise way, to focus offers to people, particularly through Facebook. People choose to put an awful lot of information on Facebook about themselves, and as part of the marketing process you're able to target special offers to people who are looking for that kind of a product. We found that to be a very successful marketing channel as well. A little bit more than 90% of our marketing spend is online.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

It sounds like you have very dedicated social media marketing strategies, not just Internet, but social media.

[Gary Collins]

Absolutely. What we're finding more and more is that Internet use is shifting to mobile, on phones, iPads, iPhones, and BlackBerry, for example. More and more customers are searching on those, using these devices to go online, particularly in the U.S. market, where penetration of mobile is much higher even than in Canada in terms of people searching, as well as in some other places in the world. In some of the developing markets, mobile is virtually all there is. It is a different platform, as opposed to the laptop or your main computer on your desk. That presents a whole array of different challenges on how to market to people. It's a small screen. It's different. That marketing process is evolving.

We've also been very successful as a Canadian company in attracting world-class talent. We've recruited a number of senior employees from large U.S. Internet e-commerce businesses, such as Zappos. The gentleman who runs our IT has been at Oracle and Netflix. He ran their IT.

We have not found it easy, but we've been able to attract global talent to our business. We think we have a world-class marketing team based in Vancouver for our operation.

[The Chair, Conservative, David Sweet]

About 10 more seconds.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Do you have a corporate philanthropic program for people in the developing world?

[Gary Collins]

Yes, we do, and I talked a little bit in my presentation about one of the projects we did in Kenya recently with the Me to We organization and the Save the Children foundation. We expect this will expand significantly in the coming years, as well as in other places across the world, including North America.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Braid and Mr. Collins.

I feel almost a little guilty that I may have stolen Mr. Harris's thunder. Before we start the clock, we're going to allow Mr. Harris to make the comment that he needs to make and go ahead with his question.

[Dan Harris, NDP, Scarborough Southwest, ON]

I did not at all feel like you were stealing my thunder. I felt like I had finally gotten through what should be a part of every single meeting.

As was mentioned before, if there's anything that you weren't able to share with the committee that you feel would be useful for the study, please send it to the clerk in both official languages, if that's possible. We'll certainly take that into consideration.

Thank you very much, Mr. Chair. We can start my time now.

Mr. Preston, I actually want to follow up on the questions that Ms. Gallant was raising earlier about cloud computing and the lack of cloud computing in Canada. As you mentioned, in certain key areas where national security might be a consideration, do you think that in establishing a set of guidelines and in terms of building cloud computing in Canada it should be one of the central components of a digital economy strategy?

[Paul Preston]

I actually do, yes. I think it's important for the providers of cloud infrastructures to understand what's expected—that we take protection of information and of privacy very seriously in Canada. I think that should indeed be a part of the strategy, yes.

[Dan Harris, NDP, Scarborough Southwest, ON]

Excellent.

In terms of the availability of cloud computing and businesses adopting more ICT and getting online, do you believe that the limitations in bandwidth that both consumers and businesses have is a barrier to that?

[Paul Preston]

I think it will become increasingly a barrier if we don't find innovative ways to provide more bandwidth. You can look at some trending, say, 50 years from now, or even five years from now, and see that we're not going to be able to afford the bandwidth we need. But we've been very good at innovating within the telco space. We need to come up with innovative solutions.

It could become a major barrier for us, but I do have confidence that we will be able to address that challenge.

[Dan Harris, NDP, Scarborough Southwest, ON]

We certainly have an opportunity now to deal with that before it actually does become a barrier—to actually be proactive rather than have to react after it's become a problem.

Thank you very much for your answers.

Mr. Collins, you were speaking earlier about modernization regulations. When considering a digital economy strategy, modernizing the regulations should certainly be a component of that. You mentioned that for you, as a business, the shipping costs aren't really a big barrier. When the CFIB came here, they said that shipping costs are a great barrier for small and medium enterprises in particular because they don't have the kind of volume you have. Have you experienced that in dealing with any of your suppliers, perhaps?

[Gary Collins]

I could ask my suppliers and get back to you. I don't know to what extent it's a barrier to them. I know for us, as I said, we ship very high volumes in very light packages. I believe we do get very good rates. I think others in the manufacturing sector, where they're shipping heavy items or single units, where they're not able to get the scale, would certainly find it more onerous for them. But I can't really speak for them.

[Dan Harris, NDP, Scarborough Southwest, ON]

You mentioned that the logistics software being used is proprietary. If you don't mind my asking, and you can provide just a rough estimate, roughly how much had to be invested to actually create the logistics system that, it would seem, serves your needs very well?

[Gary Collins]

It does serve our needs very well. We have—I'm trying to think of the numbers right now in our IT department—certainly north of 25 people who work full-time on not just our logistics but our supply chain, our business information systems, so that the managers can get information back in real time. Being online, it's critical that we get a feedback loop that's virtually instantaneous from our customers. We spend a great deal of time on that.

So the capital expense wouldn't have been significant. It's business information, and the laboratory logistics are a Microsoft technologies platform. The capital costs wouldn't have been as high as the ongoing developmental costs.

I couldn't give you an estimate, but I can try to get that back to you, if you like.

[Dan Harris, NDP, Scarborough Southwest, ON]

That would be great, just to give us context. But certainly keeping 25 people employed shows there is a great cost involved that of course small businesses would have trouble leveraging.

Were you able to make use of government programs to help offset some of those high costs?

[Gary Collins]

We have a very sophisticated finance department as well, and a CFO, who is not here with me. I'm sure that through the various benefits that are out there, we have accessed over the years as many of them as possible. I think most businesses try to. Whether there were tax credits or investments, etc., I'm sure we've accessed all of those. I couldn't speak for any specific ones, though.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Collins, Mr. Harris, and Mr. Preston.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I have a quick point of order.

It's more a point of clarification. We were wondering at this end of the table if, when Mr. Warawa gets his glasses from the obstetrician, it includes delivery.

[Voices]

Oh, oh!

[The Chair, Conservative, David Sweet]

At this point I'm going to say thank you very much for your testimony. We appreciate it greatly.

The meeting is adjourned.