Evidence of meeting #83 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was e-commerce.
A video is available from Parliament.
Liberal
Sukh Dhaliwal Liberal Surrey—Newton, BC
What steps are you taking to make them familiar with the types of platforms that are available? Are you telling them government should be...?
Managing Director, eBay Canada Limited
We spend a lot on marketing. Yes, we're trying to tell the story. We had an event here last week, in Ottawa. Members of the committee were there, participating, which was lovely to see. We in fact honoured small and medium businesses that had done really well on the platform. We use events like those, marketing and whatever, to tell the story.
It's something we need to do more of in Canada, creating a narrative of small business success and what that looks like, so that people like me can do it, as opposed to, you know, the Shopifys of the world. It is an awesome example and a great success story, but there are a lot of micro-businesses that are doing tremendously well. eBay definitely spends a lot of resources to try to bring those to the surface and publicize them.
Liberal
The Chair Liberal Mark Eyking
That ends our first round. We're going to go into a second round, starting off with the Liberals. They have five minutes.
Mr. Fonseca, you have the floor.
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
Thank you, Mr. Chair. Thank you to our presenters.
Mr. Simons, congratulations on the success you have had over many decades—centuries actually. We look at Eaton's, Simpsons, and Sears, and the demise of those companies. I would like to ask how you've reinvented yourself.
Thank you very much for opening your first store, your flagship, in Mississauga, Ontario, which is my riding. That's great, given all those jobs you've brought and the investments you've made.
I want to know about what has kept you so successful. How do you work with those small businesses that supply to you? Do you help bring them along as part of your supply chain? Do you provide the resources and the expertise to be able to get them into your supply chain, keep them in your supply chain, and keep them growing?
Chief Executive Officer, La Maison Simons Inc.
I'll address that in two parts.
How have we stayed successful? It's been very demanding for a private company over the last 10 years. We've invested massively in our e-commerce operations. We still feel there's a new equilibrium business model being formed between stores and e-commerce.
Today we run a world-class tier one platform. We're using facial image recognition technology from Spain. We've really tried to stay on the forefront of technology, but it's been very demanding from an investment point of view. It's also been essential, because e-commerce is no longer just a separate business. We sell in the U.S., so we are international. It's really become the backbone of all our IT infrastructure, and it will continue to be that way.
In that regard, that's what I think. Your second question, then, was what?
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
It was just about your supply chain. Do you bring in product from SMEs, and some of the smaller manufacturers?
Chief Executive Officer, La Maison Simons Inc.
Yes. It's amazing how much creativity there is in Canada at that micro-level. There's Philippe Dubuc, who's a designer in Montreal, who runs one shop. We've been supporting him, and we're working with new start-ups from coast to coast today.
It's not only product start-ups we're bringing in. We're finding young, creative artists who really have no interest in commercializing their art. Perhaps we have new ways to help them commercialize their skill sets. A'Shop and En Masse, for example, are artistic, artisanal workshops that are going well.
I'm really proud about what we're doing in Canada to pair up with these creative resources, and our customers are reacting very positively to it too. We definitely bring them in and try to nurture them along. It's a win-win.
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
It seems like you've always been ahead of the game. We often talk about governments sometimes not keeping pace in terms of the services we provide through CanExport or our trade commissions.
Are those helping you?
Chief Executive Officer, La Maison Simons Inc.
As of today I've never accepted a dollar of—I have, I'm sorry. There is a scientific tax credit for innovation in the supply chain that we've accessed, but it's a non-factor for us. We've put together a vision of what we want to build and we've struggled to build it on our own, and I'm prepared to continue doing that. Again, as I said, we're on the verge of trying to break ground on what will be a $100-million robotic purchase—a total project of $150 million—to render our distribution world class.
We're ready to compete. It should be a level playing field and I think we have to come to see what is ultimately going to be unavoidable. We have the technology today to simply.... I think the idea of little orders “can't collect taxes” is disingenuous, honestly. We have the technology today to easily collect these taxes. Yes, I think the U.S. de minimis should be at zero too or there are going to be problems. I'm not arguing for an uneven playing field. I'm arguing for common sense. I'm arguing for the fact that our societies are aging. There are values in things we want to do in Canada and we're going to have to finance them.
I believe change is going to be very focused on the cities, especially on the energy grid and sustainability. I think as you see dematerialization happen in your city, such as Mississauga, you will start to find a reduction in your real estate rolls and you'll find an erosion of your city tax base. I think it's going to be very detrimental to our ability to modernize our cities in Canada. I really come back to that level playing field.
Liberal
The Chair Liberal Mark Eyking
I know you're on a roll, but your time is up.
It's all going well this afternoon. We have to move over to the Conservatives for five minutes with Mr. Dreeshen.
You have the floor, sir.
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
Thank you very much, Mr. Chair.
It certainly is great to be able to speak to you. Again, one key thing that was brought up earlier was the Internet, and of course, how we're able to manage that. I was on industry, science, and technology, and we were about to study Internet capabilities in rural and remote Canada. Hopefully that's going to be continued and looked at. That's really one of the major criticisms and concerns that we have right now. It seems as though the costs associated with it and the coverage that is there is obviously where the major population is. That's something that has to be addressed. Again, I think the businesses are the ones that can help push governments to make sure that they're focused in the right direction.
The other thing to recognize is that what's taking place is the disruptive technologies that are out there. I do think back to Sears. To me, when I was a kid it was all the catalogue. I didn't know that they had buildings. If we're looking at what is happening now, they got lost on that. Of course, with so many businesses, we have these stranded assets that are there as they've put millions and millions of dollars into these things, but that isn't what is going to be needed in the future.
I think that's really one key thing that I'd like us to be able to focus on. From the panellists, are there ways that we can ensure that the requirements needed for our Internet services are up to par for all of Canada and not simply the corridors of population?
Mr. Geist.
Canada Research Chair in Internet and E-commerce Law, Faculty of Law, University of Ottawa, As an Individual
There's a reason that I started the five recommendations with access, because I really do think it is the foundational issue that you have to address. You are right to note that there is not a quality of access today, and access even where it is available in many places remains expensive, which creates, in a sense, two sets of digital divides in Canada.
We have a digital divide sometimes between urban and rural with communities that don't have any access at all, but even within urban communities where Internet is available, it may be unaffordable. That's why there is an emphasis, I think, both on affordability and on access.
We've seen various programs and successive governments from both sides endeavour to establish programs and prioritize the issue and we haven't made the kind of progress that I think we would have otherwise hoped for, given that there are still too many Canadians who don't have that kind of access. That can't help but create a real laggard when it comes to e-commerce adoption, whether as consumers or as businesses seeking to adopt.
I think that means, at times, investment where the market won't otherwise invest. I think it means finding ways to inject new competition, particularly in the wireless sector. It's things like NVNOs, which are seen as virtual companies riding on the network but offering up the prospect of greater levels of competition—we see these kinds of things in some other jurisdictions—and then continuing with spectrum policy that seeks to inject some of those new competitors into the marketplace as well.
It's not going to happen overnight, but unless it is a top priority with clear targets and objectives—and the CRTC tried to do that—I fear we're going to be here five years from now still talking about the number of Canadians who can't afford it or don't have access.
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
Ms. Stairs, when you're looking at e-commerce, and so on, your organizations would be the ones most affected by this or the restrictions that exist there. Are there any discussions within your organizations about how that can be improved, at least on the e-commerce side of things?
Managing Director, eBay Canada Limited
We are very much advocates for investing in access, because we see the potential and we certainly see that platforms such as eBay, but any number of platforms, allow people to make money, support a family, hire people in their local community, and stay in their local community, which is something that we see over and over again. As to how we bridge that gap, certainly we have participated in some of the consultations with ISED and are very supportive of that, but what we bring to the table is the platform.
To Mr. Geist's point, people need to be able to access the platform. Once you can access the platform at a decent speed and at a decent cost, it is amazing that the world is now suddenly your oyster and you can stay wherever you happen to be in the country.
We did a heat map that looked at commercial activity by population. We saw hot spots in southern Ontario, but also that northern B.C. and the southern part of the Northwest Territories were hotbeds of e-commerce activity. That's precisely because people are able to access. They can stay in their small communities and have meaningful commercial activity as a result of the access.
Liberal
The Chair Liberal Mark Eyking
Thank you.
We're going to move over to the Liberals. Madam Ludwig, you have the floor.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
That's fascinating testimony. Thank you very much.
My first question is around the business community itself. There are many who have said that the business community is turning flat as we get more involved with e-commerce. Mathew Wilson was here earlier this week from the Canadian Manufacturers and Exporters and he talked about the importance of “brand Canada”.
In the e-commerce environment, is that an important aspect to trade, that people know they're buying a Canadian-made suit, or a Canadian-made item or service?
Managing Director, eBay Canada Limited
Absolutely, yes. To Michael's point, Canada is seen as having good protections and a good infrastructure, and trading with a Canadian company feels more secure than trading with companies from other jurisdictions. There is a massive benefit to “brand Canada”.
Is it all that it could be? Perhaps not, but absolutely there's a benefit.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
For my next question, I'm going to start with Dr. Geist and move along.
I know in previous testimony you've talked about cybersecurity. I'll give a local example. There's a small inn in my community, and someone had basically fraudulently copied the website. People were paying, thinking that they were staying at this inn. Not only did they lose the revenue for it, but they lost the bookings, because they were double-booked when the person finally arrived, and certainly the individual lost their personal experience and some of their personal information.
For all of you on the committee, how do we protect and enhance the protection of consumers and businesses against this in terms of cybersecurity?
Canada Research Chair in Internet and E-commerce Law, Faculty of Law, University of Ottawa, As an Individual
I'll start by noting that there's no single solution, and you're right to highlight it as an issue. I mentioned in my opening remarks the importance of trust, and I highlighted that in the context of the anti-spam legislation.
It is worth emphasizing that the anti-spam legislation isn't just about dealing with fraudulent spam. It deals with malware. It deals with phishing attempts, which can be used in some of those instances. We do have some of those rules in place, and it is important to recognize that there is, in my view, a concerted effort to water down that legislation. I appeared before the industry committee here a week or so ago and have seen some of that testimony.
If you take a look at the data, we established a world-class law. In fact, the data suggests that even on the email e-commerce side, Canada has higher deliverability rates and higher click-through rates than we see in other places. In other words, people are more trusting of email e-commerce in Canada than they are in the United States, as more of them are likely to click through. Part of that might well be because we've seen an increase as a result of tough anti-spam laws that had the effect of cleaning up many of the lists and made that aspect of e-commerce more effective.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
Thank you.
Mr. Simons, your company must focus quite significantly on cybersecurity.
Chief Executive Officer, La Maison Simons Inc.
It's an important area. The only comment I would make, without perhaps as much reflection on the issue, from a personal point of view, is that there has to be good co-operation regarding the payment providers.
I've had a number of experiences where we have a piece of AI that identifies potentially fraudulent transactions, which we block and then we automatically review. When I review them, I know they're fraudulent. I call the banks and say it's fraudulent, and no one wants to talk to me. They tell me to ship it anyway, because it's just part of their loss that they're going to pass on to their consumers.
In any part of security, it really is a team effort, and I think there would be something to do to really underline the fact that not only the Internet sites, but the payment providers really have to be sensitized to it and not just blow it off as a cost of business.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
Are the payment providers also collecting taxes that will go back into the local communities?
October 25th, 2017 / 4:25 p.m.
Chief Executive Officer, La Maison Simons Inc.
Do you mean on the fraudulent payments?