Dropshipping in Canada – Everything You Need to Know

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Are you considering dropshipping in Canada as a new business venture? I’ll give you an overview of how to go about it, the steps required and whether it’s a viable business model in Canada.

Online shopping bags with Canadian flag

What is Dropshipping?

Dropshipping is an order fulfilment business model that requires the retailer to market products on an online platform. When a customer purchases one of the retailer’s products, the retailer purchases the products from their supplier and their supplier ships the product directly to the customer. This enables the retailer to market and sells a product that they have never physically come into contact with.

Is Dropshipping Profitable in Canada?

With a population of 37 million and a consistent and healthy growth in eCommerce make Canada a profitable country to start a dropshipping business. Using suppliers in Canada is a great option as importing from suppliers outside of Canada may incur an import tax and will cut into your profits.

Canadians spend over 30 billion annually on eCommerce and are 7th on the list for online spending per capita with an average of $1746 spent online.

Canadians spend over 30 billion annually on eCommerce and this is expected to reach 36 billion annually by 2024.

Per capita, Canada is 7th on the list with an average of $1,746 spent online. Over 28 million Canadians made a purchase online in 2019. Dropshipping isn’t as prominent in Canada as it is in the US. This makes Canada a great place to start a dropshipping business.

The top 3 eCommerce platforms for Canada will come as no surprise; Amazon, Walmart and Costco. Combined, these 3 companies attributed for 30% of all online revenue in Canada.

The big advantage of dropshipping from suppliers in Canada is they already know what quality standard is expected and which products are legal in the Canadian market. The other main one is shipping times will be considerably quicker.

The disadvantages are fewer potential suppliers which means fewer products for you to source for your store. The other is pricing could be higher. For a full breakdown on dropshipping to other countries, I suggest you read this article.

Shipping in Canada

Shipping in Canada can be very expensive and can become complicated depending on where you’re shipping from, where you’re shipping to and what products you’re shipping. The main reasons why shipping is so expensive is due to Canada’s size in relation to its population and high fuel costs. 

I always recommend offering free to your customers as this is what your competitors do and if you don’t offer it too, they’ll just go to your competitors. If you do offer free shipping and plan to ship to the whole country, you need to make it clear on your shipping page which areas are not free to ship to. If you offer free shipping to the whole country you will run at a loss some of the time.

Trying to avoid selling products that are too heavy or large will save you a lot of money. If you have a large variety of different products that are of different shapes, sizes and weights, shipping will be complicated. Different shipping company’s prices vary depending on the varied product sizes and if you want the best possible prices you will need to use multiple shipping companies which can complicate things.

If you plan on finding suppliers from across the Canadian border, be aware that your customer may be up for an import tax upon the item reaching their doorstep. At the time of writing this, anything under $20 has no additional fees and anything from the US to Canada under $150 has no additional fees. These sorts of rules and regulations change regularly, so please research this before jumping in.

This can dictate whether a product is or isn’t feasible for dropshipping. Don’t expect many repeat customers if they’re hit with an import tax without any pre-warning from you.

Is Dropshipping Legal in Canada?

Yes, dropshipping in Canada is legal. You will, however, have to make sure anything you sell can be legally sold in Canada. This includes products that may not meet Canada’s mandatory quality standards. If importing products, ensure you are following Canadian importing restrictions.

To search the Canadian Trademark database, click here

To search for Canadian prohibited and restricted items to import, click here

eBay Dropshipping in Canada

eBay allows dropshipping on their platform, however, they do have policies you’ll need to abide by. Their policy states that if you list an item on eBay and then you purchase the item from another online retailer or marketplace, then they send it directly to your customer is not permitted. This means, you can’t dropship from sites like AliExpress or your account could be flagged or suspended.

Another thing to remember is, you are responsible for making sure your product reaches your customer in the timeframe stated on your listing. This can be difficult when you are completely out of control of the shipping side of things.

For more information, click here for eBay’s dropshipping policy

Amazon Dropshipping in Canada

Amazon in Canada also has policies regarding Dropshipping. They state that Dropshippers are not permitted to purchase products from another online retailer and have that retailer ship directly to customers. You must dropship direct from suppliers or manufacturers.

Which Niche Should you Choose?

Choosing your niche will be the biggest factor in determining the success of your dropshipping store. Hearing this will you make you feel as though you can’t get this step wrong or your whole business is doomed. This isn’t really true.

The beauty of dropshipping is its low barrier of entry if you get this wrong, who cares, try again with a different niche. However, you really have to make sure you master the other steps in order to know if your business isn’t succeeding due to your niche or because of a separate aspect of your business.

As contradictory as this sounds, I wouldn’t spend too much time deciding on a niche to focus on. Many people take too much time and can become very indecisive when it comes to finding a profitable niche and never actually end up pulling the trigger and making a decision. At the same time, rushing in and picking the first niche you believe will make you a fortune can be a problem.

Always do your research before jumping in and assuming you know the winning product without doing your due diligence.

When deciding on a niche to dropship in Canada, there are many factors to consider to give you the best chance of finding a winning product.

Trending

Using a site like Google Trends will allow you to see how a product or niche is currently trending and if there is demand for your product.

Evergreen

As well as current demand, you want to make sure your product will be profitable for years to come. Evergreen products are products that people will purchase for years to come and are not just short trending.

Passion/Problem Solver

I generally recommend that you try to find a product that either people are passionate about or that solves a problem. Either of these products is generally more profitable and easier sells.

Price Point

Do you want to sell high ticket items or lower priced products? Do you want to sell products from AliExpress or would you rather find domestic suppliers with higher quality products?

Shipping

Shipping can be really expensive in Canada. This can dictate whether or not you want to choose to dropship larger or heavier products.

Accessibility

Try to find products that you can’t find at your local shopping centre. You can’t compete with your traditional retail stores that purchase in bulk at low prices. If your product is found at your local shopping centre, make sure you have a much larger selection with all possible variants and you become an authority within the niche.

Niching right down on a category will give you your best chance of success. For example, focusing your dropshipping business on home and garden is far too broad. There are literally hundreds of niches in this category. For example, you may want to niche down to vertical garden beds.

In a country of 37 million people like Canada, you won’t need to niche right down as much as a country like the US. When you’re in the US with 350 million people and much more competition, niching right down may be your best chance of success. In Canada, you can afford to be a little broader with your niche selection.

 Market Research for Canada Dropshipping

This step ties into choosing your niche. Doing your market research should be something you do when picking a niche. Many people find a product, build their store, then try to find people who want to buy their product. Making sure you have a large enough market before building your store is essential.

Market research involves finding out how much demand there is for your niche, spying on your competitors and having a target audience in mind for your product.

You’ll need to use a keyword tool when figuring out the demand for your product. The Google keyword tool is free to use, however, you will have to sign up to access it. Ubersuggest and Keywords Everywhere, which is a Chrome extension, are also very good free keyword tools.

Checking the monthly search results for your specific keyword in your niche will give you a good idea of demand. Remember to filter your search results for Canada only if you’re only planning to dropship in Canada to get an accurate result.

It can be tough to give you exact numbers on the monthly searches you should be looking for. This will vary depending on the price of the product you plan to dropship. If you plan on dropshipping $20 items you may need 20,000 monthly searches, if you’re selling $1,000 items you may only need 500 searches a month to be profitable.

Spying on your competition will give you a good idea of what you’re up against and how you can set yourself apart. Google your niche and check out all the Canadian online stores on the front page. Make sure you only check out the online-only stores as these will be your main competition. Have a look at their products, how their website is structured, their social media accounts and how they are doing the bulk of their advertising.

Knowing who your target audience is will make advertising much easier. By using Facebook audience insights, you can get a good idea of how big an audience is for the product you’re wanting to sell. You’re able to filter the exact category, location and audience age to give you fairly accurate results to the demand of your product and who to target for advertising.

Canadian Dropship Suppliers

Dropshipping is not as prominent in Canada as it is in the US. This makes it more difficult to find suppliers who dropship but on the upside, can provide opportunity. If you contact a supplier who doesn’t normally dropship, persuading them to do so may give you access to products that not many other Canadians are currently selling online. This provides far less competition in regards to pricing and exclusivity of specific items.

If you plan on using Aliexpress to dropship products from China to Canada, you’ll want to make sure that the products are at a low enough price that you won’t be charged an import tax. You are still able to dropship products under $150 without an import tax as long as it’s being shipped from US warehouses.

Salehoo

Has over 2.5 million products to choose from and tools to help find all the suppliers in Canada. All of Salehoo’s suppliers have gone through a screening process to help ensure they’re legit. Their Salehoo directory is $67 a year or $127 for lifetime access which is better value. They also have a dropship plan which is $27 a month.

Spocket

Used by over 30,000 dropshippers. Many of their suppliers are not in China so you can find many local suppliers. Integrates with all the major platforms including; Shopify, Wix, WooCommerce and BigCommerce. Plans vary from free, all the way up to $99 a month depending on your business needs.

Wholesale2b

One of the largest dropship directories in the world. They have access to over 1 million products to dropship. They sync to Amazon, eBay, Shopify, BigCommerce, WooCommerce and more. They have various plans depending on which plan you’ll require ranging from free up to $49.99 a month.

WorldWide Brands

Massive selection of products with over 16 million certified products to choose from. All suppliers are reviewed before being accepted to reduce the risk coming across shady suppliers. You’re able to filter the search results to find local Canadian suppliers. The price is $299 for lifetime access.

AliExpress

AliExpress is essentially a huge collection of suppliers mostly based in China. They all list their products in a similar way to how eBay works but without the auctions. Generally, the products are of the lower price which is why it’s the number one place for dropshippers. However, AliExpress does have a reputation of producing lower quality products.

CJ Dropshipping

Very similar to Aliexpress in how it functions and how it looks. CJ Dropshipping is based purely on dropshipping. Once you sign up, you can simply add whichever products to your store in a very automated process. Pricing is very competitive and is worth checking out if you have considered AliExpress dropshipping as many of the prices are lower with CJ Dropshipping. They also have a huge selection of products.

Building your Dropshipping Store

Many beginners fear this step the most but in reality, it’s a relatively easy process. You don’t need any tech experience to build your own store these days. Each platform has many tutorials and guides to help if you do get stuck. Below are some of the most popular and easy to use platforms for building your dropshipping store.

Shopify

My choice for the best dropshipping platform is definitely Shopify. It’s specifically designed for eCommerce. Some platforms were designed for other purposes in mind and eCommerce is more of an add on. However, it will set you back $29 a month which is still good value but for some, it might be a little too pricey.

SquareSpace

Beautiful looking websites. Would suit people who are trying to have a classy looking website and only plan on selling a small number of products. Not as easy to use as some other website building platforms. Prices range from $16 a month to $52 a month.

Wix

One of the easiest platforms to use for beginners with its drag and drop interface. 100’s of different templates to choose from. However, once your website is live, you won’t be able to change templates. Depending on your business needs, prices vary from $18 a month up to $38 a month.

WooCommerce

If money is a big factor in your decision, then WooCommerce might be your choice. Its kinda free, but you will have to pay for your domain and hosting. It requires a little more of a learning curve than other platforms but it’s still not overly complicated.

BigCommerce

A slightly bigger learning curve compared to other platforms. One big advantage BigCommerce has is it’s packed full of sales features to help with conversions that you have to pay for with some of the other platforms. They offer a 15-day free trial and the standard plan is $29.95 a month.

As a person who has used all these platforms, I’d definitely recommend Shopify as my first choice. As long as you can afford the $29 a month. It’s packed full of features, its themes are beautiful, it’s easy to use and it has hundreds of apps to use.

If money is an issue, then Wix is $18 a month and WooCommerce is free but you will have to pay for hosting. These are also great options.

Drive Traffic to your Dropshipping store

There’s a real feeling of accomplishment once you have your very own dropshipping store built, full of products and live for the world to see. There’s one big problem, nobody is going to see it initially. When you consider there are 1.7 billion other websites you can’t expect Google to prioritize your website and drive traffic to your website as soon as it’s live.

There are various ways to drive traffic to your website. Paid advertising will be your best bet when starting out.

Facebook Ads

If you’re dropshipping lower-priced products, Facebook advertising is the way to go. You’re able to advertise your product to the exact audience who is interested in that niche. This makes for much higher sales conversions. Although Facebook advertising costs are getting higher, they’re still the number 1 advertising platform for dropshippers.

Google Ads

This is a better option if you are dropshipping high ticket products. The ads can cost more depending on the product you are selling but are high converting. You can either advertise on Google Ads which are the text ads at the top of Google or advertise on Google Product Listing Ads which are the images of products you see when you Google specific products.

Influencer Marketing

This can be an affordable option for beginners. Using influencers can be a great way to attract targeted traffic to your store. The reason for this is people trust influencers more than they trust general ads. tribegroup.co is a great website that helps connect influencers to online retailers.

SEO

Free traffic will always be the best traffic. SEO (search engine optimization) is organic traffic that will help you land on the front page of Google. Ranking in Google can take a lot of work and a lot of time but can be extremely profitable. Having a dropshipping store that sells exclusively to Canada will make ranking in Google easier than if you are trying to rank in the US. The obvious downside to this is, you’ll have fewer potential customers.

Optimizing and Scaling

Once your website has been up and running for some time, you’ll need to take a good look at the analytics to see how you can optimize your site for maximum profit.

Shopify Analytics

This data will give you information like what your best selling products are, which products give you the best profit margins, conversion rates for desktop compared to mobile devices and monthly profit margins. This information will help you decide where more of your advertising dollars should be spent and where less should be spent.

Advertising

Facebook Pixel will enable you to track your customer’s path which led to the sale so you can optimize your store and your advertising for maximum conversions. Google Analytics is another way to view how your customers are interacting on your website and tracks the traffic.

Summary – Is Dropshipping in Canada worth it?

Since the Pandemic, Canada has seen an incredible boom in eCommerce. Retail sales have more than doubled since the same time of the previous year. This has the potential to completely change how the retail industry will evolve in the future.

The exponential growth in Canada’s eCommerce industry means that sellers haven’t caught up to the growth in the market which creates gaps in the market for you to exploit. If you would rather dropship into the US whilst living outside the US I suggest you read this first.

The answer is yes, now is the perfect time to start a business Dropshipping in Canada.

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