Vancouver e-commerce company Elastic Path Software Inc. is the Shopify of big brands, catering to companies with revenues in the tens of millions of dollars. Customers did $6.5 billion in sales last year through Elastic Path’s platform last year, and today the firm announced it has raised $5.35 million in equity investments led by the BDC Venture Capital IT Fund.
Despite standouts like ClearlyContacts.ca, Canada trails our southern neighbours on the retail side of the e-commerce landscape, with less than 50% of businesses having something as basic as a website. But the amazing success of Shopify highlights the major role that Canadian companies have played behind the scenes of digital shopping, with a huge chunk of sales running on Canadian-built platforms.
“I like to think of e-commerce as an iceberg—there’s a part that you see as a consumer, and underneath that is all the tools to manage it, which involves some very complex processes,” explains Elastic Path CEO Harry Chemko. “Think about a large retailer that might have five million items in their catalogue—that’s pretty tough to manage with a spreadsheet. You need to have the right systems to manage that.”
Chemko discussed the company’s plans for its fresh injection of funds and the future of e-commerce.
Canadian Business: How did this investment round come about?
Harry Chemko: Elastic Path was started in 2000, right out of university, and we were a bootstrap company until last summer when we started raising capital. We’ve really started to grow as a company and started to move to a subscription-revenue model which is something that required more funding as we expand not only in North America but Europe as well.
There’s growth in the partnerships we want to roll out, and that’s a big reason for the funding. We [also want to] expand more geographically, to get better reach into areas like Western Europe where you need to have a really localized presence and a couple of partners in each region to be able to do a good job of covering your customer base there. Those things start to add up.
Between you and Shopify, Canadian e-commerce platforms underpin a large share of online transactions. Is there something about Canada that makes these kind of e-commerce businesses successful?
Part of me thinks that its because Canadian entrepreneurs get frustrated because our e-commerce experiences aren’t as good as they are south of the border! [E-commerce] is a hard problem to solve—it changes based on consumer technology, which is different from most business software, which changes based on business need. I think that Canada has a lot of very smart entrepreneurs, and I think Canada is very focused on e-commerce because of frustration that we haven’t had access to the same level of goods and services in the U.S. Something like two-thirds of Canadian consumers who shop online are shopping from U.S. websites.
What does the future of e-commerce look like?
As consumer technology changes you have to really think about what you provide as an e-commerce platform. It seems to work in five-year cycles to me. In 2000–2005 it was just about getting a site online. Then 2005–2010 was really about multi-channel—how you can have your online channel through your website work alongside what people are doing when they come to your store. The next five years really to me is about driving amazing customer experiences, taking advantage of all the great technology that’s available on the consumer landscape.
There a definite change in how companies are thinking about the future of e-commerce. It’s really been catalogue-based ecommerce websites and maybe a mobile site over the last several years. We really think that the future means that if you’re a large retailer you’re probably going to have dozens if not hundreds of touchpoints. You see what Apple’s announcing today with some sort of NFC payment system with a watch—all of a sudden you start thinking about conducting e-commerce through a wearable.