Scaling an E-Commerce Business in Canada
- For Canadian startups to grow more rapidly, the government needs to improve its procurement processes to acquire solutions from local companies.
- There is a massive opportunity for e-commerce businesses in Canada to grow as more businesses seek to take crucial operations online.
- Entrepreneurs should start early to give themselves and their business time to grow.
The Canadian government needs to better its procurement processes to quickly adopt the technological innovations developed by Canadian startups. This helps Canadian companies grow much faster and prevents other competitors from absorbing Canadian talent and intellectual property.
What does Amilia do and how did you start the company?
I used to be a venture capitalist (VC). My background is in finance and I have looked at many, many deals. At one point, I came across the activities sector, mainly because I have kids. I quickly realized there was a huge opportunity to build something à la Amazon. At that time in 2009, I was buying stuff on Amazon and having it delivered to my door, but I could not find a swimming class for my kids. Even more than that, I could not perform a transaction to secure those classes. So, I started to build the first-ever e-commerce platform for community organizations selling activity memberships, collecting donations, renting tennis courts and more. That is how we started. Now that we have built the platform, everything is working well. We are essentially looking to solve a problem that seems to exist everywhere around the world.
What motivated you to pursue a career in entrepreneurship? What are the key elements of the entrepreneur’s DNA?
I never thought of myself as an entrepreneur as I never came from a world of entrepreneurship. I love being a VC. At one point, I lost my job. I decided that I was smart enough to build a company and I already had that vision for an e-commerce business. I realized that the worst thing that could happen to me would be that the business will fail and I will just find another job after that. So, I never thought I had it in me. Everybody has it in themselves to become an entrepreneur if they have the guts to throw themselves into things and let it become a lifestyle, in the sense that it is not just a job but something you love. Entrepreneurship is about building and not about getting rich very rapidly.
From the beginning, you need to decide what kind of organization you want to build. I decided that I was going to be a typical VC and swing for the fences. I chose to build a broad product and attack the market in a crazy way to capture all the customers in a given community while creating a marketplace that had the capability to host a lot of transactions. That was a big challenge. It would have taken time to build. If you decide to go vertical and become more of a lifestyle company or something else, there will other aspects to consider as well. You need to pick a spot and play that game.
What are the strengths and weaknesses of Canada’s SME ecosystem?
Canada’s ecosystem has improved a lot. When I was a VC at the beginning of 2000, there was a lot less capital and people had fewer resources when starting a company. Because of that, we now have people who have gone through that whole cycle, which makes a big difference. If you have ever tried to start a company at 25 years old, you say that at 32, the next one will be much better. So, Canada now has many entrepreneurs who are seasoned and that has made a big difference.
“Canadians need to buy more from other Canadians, especially for government-related services.”
I am pretty confident about the future of SMEs in Canada. The biggest challenge is the fact that we always start from a small market point of view. But the truth is that you cannot make it big by only selling in Quebec. You need to go out there rapidly. Generally, finding a product-market fit and early adopters in the US should be much more difficult than finding them close to home. But actually, we sell much easier in the US than in Canada and Quebec. That makes no sense. Canadians need to buy more from other Canadians, especially for government-related services.
We are very conservative in Canada and do not tend to be early adopters of technology. The procurement processes are so bad in Canada that many businesses are almost stuck. Even if someone wanted to buy new software, the processes they have to go through are so crazy and so things do not change very rapidly. It has been a real challenge to get government-backed organizations to adopt innovation. If I could have closed Montreal before going to the US, it would have accelerated everything. But the truth is, I would probably end up closing Chicago before Montreal, which in my mind is nonsense.
What would you like to see in terms of support for entrepreneurs and innovators in e-commerce businesses? Who should be providing that support?
Canada is doing pretty well in terms of having support available. The Scientific Research and Experimental Development (SR&ED) tax credits helped us a lot when we were building the platform. That said, getting initial traction is difficult. Obviously, selling online, when your competitor is Amazon, is very difficult. In our case, we did not have to compete with Amazon – Amazon sells everything, but they do not sell activities.
“If the government can drive the costs of online transactions down, that would be much better for Canadian e-commerce companies.”
With that said, we do not have as much of a choice in payment processors in Canada. Furthermore, the costs of credit cards in Canada are much higher than elsewhere, especially in Europe. If the government can drive the costs of online transactions down, that would be much better for Canadian e-commerce businesses. This is a cost that is not good for the merchants or the consumers. They pretend that it should be more expensive to transact online due to risks. That is bullshit. It is no longer that risky. I do not see why it would cost more money to buy something online with a credit card than if I were to buy the same thing at a convenience store.
What are the opportunities in the wider Canadian e-commerce business space?
The market opportunity for this kind of e-commerce business is crazy big. In the US alone, people are spending around $300 billion to $400 billion on activities and memberships per year. We estimate that the market is probably worth $60 billion and we are looking to capture a pretty good size of that. There are 30,000 Parks and Recreation venues in the US alone, plus 40,000 museums, 10,000 YMCA locations and 65,000 dance studios.
If you are a merchant right now or any type of organization in this space, you need to get online and change your business model. Yes, it will be scary, because nobody really wants to change that much.
“We need to continue to move to the digital world and if you are not digital within your first year, you are dead in the long run.”
I remember how, some time ago, I could not buy anything online in Canada. Now, I can. But the problem is that we are also fighting with the big guy in the US, though I see no reason why we cannot do much better. We need to continue to move to the digital world and if you are not digital within your first year, you are dead in the long run.
Why did you opt to take investment from CBGF? What will that enable Amilia to do?
We spent the first 13 years of our e-commerce business just building the platform. We were not yet in the go-to-market phase. But, there comes a point where if you want to grow a tech business, you will need capital. I could have decided to take the next 15 years to go along with the way things were and with the team I had, but the opportunity was too big. I decided to go and swing for the fences. I put the plane in the air and decided that it is not time to cut fuel but the refuel and accelerate everything.
I built the company with workers who were in their 30s. They are great and highly motivated, but they have no experience. With this extra capital, I could bring in people in their 40s – people with more experience. Someone might be very good at 30, but they have not yet seen a lot. In the month that we got the capital, we were able to bring in a couple of Vice Presidents at the senior level who were able to change everything. My 30-something people were also happy because they were able to learn so much.
I have the intention to become the next Shopify from Montreal. Without money, this will never happen. The reality is that it costs money to build a business.
What advice do you have for young Canadian entrepreneurs looking to launch and scale their companies?
Do not wait for your 40s to start a business. You should jump into a startup much earlier. The best time is when you do not have kids yet and when you do not owe any money to anybody. Try something, fail, find a job, start again and so on. Take your time. We hear a lot about other companies and let the pressure get to us. Do not just look at the kind of money other companies raise, look also at how many others have failed. Just pick a spot, decide what you want to do and take your time.
“We always feel like we have to go fast, but a solid business will take 15 to 20 years to build.”
We always feel like we have to go fast, but a solid business will take 15 to 20 years to build. In the beginning, keep it small and focus on the product. At the end of the day, you need a product to win early adopters before you can move to sales and marketing. If you have a product that is very ordinary, you will not be able to convince anybody to buy from you. You have to be different and think outside of the box. You need something that is going to bring change. I am talking from the point of view of building a technology-based company – maybe things are different if you are in the service industry. Either way, take your time because it is a long game. If you survive the first few years, you will be able to make something good.