Canadian shoppers have been comparatively slow to jump onboard the e-commerce trend, stymied largely by the sheer size of our nation and the associated challenges of delivering consumer goods in a timely and cost-efficient manner.
But news of the sale of Vancouver-based Coastal Contacts Inc., the parent of clearlycontacts.ca, offers strong evidence that our purchasing patterns are shifting dramatically.
The deal, announced late Wednesday, with French lens-manufacturing giant Essilor is worth an estimated C$430 million $445 million. It represents the largest investment in a Canadian e-commerce company to date, and the largest ever in a Canadian optical company.
The deal cheered investors, sending the stock soaring more than 20 per cent to $12.50 in mid-morning trade on the TSX.
Hubert Sagnières, Essilor’s chairman and chief executive officer, left little doubt of his belief in the strength of the Internet to reach consumers, noting, in a media release, its powerful impact on the vision-care industry in recent years.
The “purchasing process is becoming more diversified,” said Sagnières. “The Internet, if used properly, can help to drive market growth by educating consumers and making it more convenient for them to enjoy good visual health.”
Founded by Roger Hardy in 2000, Coastal Contacts has been an e-commerce pioneer in North America. Hardy used his background in transportation to drive the success of the business from its start in North America to an international market that includes Europe, Australia, New Zealand and Japan.
E-commerce makes up between 90 to 95 per cent of the business, with shoppers able to 'try on' glasses online by uploading images of their faces. Physical locations exist as an option for customers who unable or uncomfortable doing their ordering through the online store.
Similar to Amazon, the undisputed e-commerce leader, Coastal operates on an aggressive overnight service model that promises customers 24-hour delivery of prescription glasses or lenses.
Hardy, who will remain as Coastal.com’s CEO at least until the acquisition is completed, said the deal with Essilor increases the company’s ability to reach a broader market as e-commerce continues to accelerate globally.
“It’s a good starting point for Essilor to take this platform, expand it and run with it,” he told Yahoo Canada Finance.
E-commerce is approaching 10 per cent of overall retail sales in the U.S., while in Canada, that figure is closer to five per cent. Experts, however, predict the gap between the two countries will narrow over the next two to three years as retailers make it ever easier -- through price-matching guarantees and complementary shipping -- for Canadian shoppers to buy online.
Certainly we appear more than willing to catch up to our American neighbours. Online retail sales at Wal-mart were strong during last year’s Black Friday and Cyber Monday events, with nearly one of out every two Canadians choosing to do their purchasing online rather than head to a store.
That’s a dramatic change over the previous year where the retailer’s online shoppers in Canada numbered only one in every 10.
Canada Post has also reported a significant increase in its usual parcel volume, led largely by the rise of e-commerce. The postal service announced in December it will be putting a stronger focus on parcel delivery while phasing out door-to-door letter service.
Hardy said the company will continue to be headquartered in Vancouver, where about 400 people are employed. Another 350 employees for Coastal.com work in the U.S. and Europe.
The board of directors of Coastal.com unanimously approved the acquisition, which remains subject to customary closing conditions, including the approval of Coastal.com’s shareholders and regulatory approvals. The transaction is expected to close within the next 90 days.
**Editor's Note: Strikeout reflects to show price adjusted from $445 million to C$430 million.