Coastal Contacts founder Roger Hardy is re-entering the e-commerce business by buying two online shoe-sellers.
Hardy’s Hardy Capital Corp., along with a small group of unnamed Canadian investors, were slated to announce on July 15 that they are spending an undisclosed amount to buy Seattle’s OnlineShoes.com and Vancouver’s ShoeMe.ca.
Hardy intends to consolidate the two companies and be the CEO and chairman of Canada’s largest online footwear operation, headquartered in Vancouver.
About 50 of the combined entity’s 250 employees are in Vancouver. Hardy told Business in Vancouver that he expects to hire an additional 50 employees in Vancouver within the next 12 months.
The combined company is generating about $175 million in annual revenue, and Hardy aims to increase that to more than $200 million next year.
“The footwear category in North America is estimated at more than $50 billion, and there are large segments of the population being grossly underserved,” Hardy said.
“What attracts our attention is when we see a market that is underserved. We serve it. That’s been our experience – finding great products for consumers that they’re going to love.”
The transactions come less than three months after French eyewear giant Essilor closed its deal to buy Vancouver’s Coastal Contacts for $430 million and replaced Hardy as CEO.
Hardy and his family members, who owned about 20% of the company, netted about $86 million from the sale of that business, which operates in Canada as Clearly Contacts and in Europe as Lensway.
Statistics Canada revealed July 8 that e-commerce sales growth far outstrips that of Canadian bricks-and-mortar stores but that Canadians far prefer in-store shopping. In 2012 Canadians purchased $7.7 billion online, up 16.3% from $6.6 billion in 2011. Total retail sales in Canada, at $502.6 billion, rose 2.9% during the same time frame.
That means that despite fast e-commerce growth, those sales still only represent 1.5% of total retail spending. In the U.S., e-commerce sales account for 5.2% of total retail sales in 2012, Statistics Canada noted.
Hardy attributed Canadians’ slowness to embrace e-commerce in part to shipping costs.
“Generally shipping rates are higher in Canada, but you’ve got to think about shipping as a percentage of the cost of the product,” he said. “We’ve always felt that higher-value goods are the right things to buy online. We’re not moving fridges or couches. We’re moving a product where the cost of shipping as a percentage of the cost of the good is pretty minimal.”
ShoeMe.ca, which launched sales in mid-2012, has had a triple-digit-percentage growth rate, its founder, Sean Clark, told BIV in April.
Clark will be president of Canadian operations while a 100-day consolidation plan is rolled out.
