Dropshipping in the USA is well-known for being highly lucrative for many online retailers. However, it’s also extremely competitive, and advertising costs are steep. In contrast, dropshipping in Canada is less saturated and can be a profitable venture when done correctly.
In this article, I’ll cover the profitability of the dropshipping industry in Canada, including how to dropship legally, manage shipping and customs, a list of Canadian dropshipping suppliers, compare it to shipping in the USA, and discuss factors that will increase your chances of success.
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Is Dropshipping Profitable in Canada?
With a population of 39 million and consistent and healthy growth in eCommerce make Canada a profitable country to start a dropshipping business. Using suppliers in Canada is a viable option as importing from suppliers outside of Canada may incur an import tax and will cut into your profits.
The Canadian e-commerce market is projected to reach $89 billion USD in 2024, accounting for 13.4% of the country’s total retail sales according to Made in CA. This growth is driven by increased user penetration, mobile commerce, and overall increase in online shopping.
Currently, 73.4% of Canadians shop online, translating to approximately 28.2 million people. This number is expected to reach 79.3% by 2027 (ESW).
The most popular categories are Electronics & Media, generating $9.8 billion, and Fashion, generating $9.4 billion (ESW). By 2025, Fashion is projected to become the most profitable category, reaching an estimated value of $12 billion USD.
International online sales play a significant role, with 67% of Canadians buying from international retailers, primarily from the United States and China (Mordor Intelli). Electronics, fashion, and beauty products are among the most commonly purchased items which is vital information for potential dropshippers.
In terms of payment preferences, credit cards dominate, accounting for 54% of all transactions, followed by digital wallets at 27% (ESW). Marketplaces like Amazon Canada, which accounts for a 45% market share, and Walmart Canada, with 13%, are the most popular platforms for Canadians (Mordor Intelli).
The good news from a dropshipping perspective is whilst the e-commerce industry is growing within Canada, the demand has plateaued. This shows there are opportunities to break into the market with the right strategies.
Dropshipping to Canada from AliExpress
Shipping to Canada from AliExpress can be very expensive and complicated, depending where you’re shipping to, and the products you’re shipping. The main reasons for the high shipping costs include Canada’s size in relation to its population and the high fuel costs.
I always recommend offering free shipping to your customers because this is what your competitors do. If you don’t offer it, customers will simply go elsewhere. If you decide to offer free shipping across the country, make sure your shipping page clearly indicates which areas are excluded from free shipping. Without this clarity, offering free shipping nationwide could result in occasional losses.
Avoiding products that are too heavy or bulky from China will save you a lot of money. If you offer a wide range of products of different shapes, sizes, and weights, shipping will inevitably become more complicated.
Prices vary between different shipping companies and Chinese suppliers depending on the product size, and to get the best rates, you may need to use multiple suppliers, which can be complex.
Whilst it’s unlikely, be aware that your customer may incur import taxes when the item arrives to your customer from any product crossing the Canadian border. Currently, anything under $20 is exempt from additional fees, and items shipped from the US to Canada under $150 are also fee-free.
Most products shipped from China to Canada will not incur a tax import fee, however, this will depend on exactly where the product is being shipped from, the type of product being shipped and the size and weight of the product. These regulations change frequently, so it’s essential to research before diving in.
I suggest you read this article from AliExpress on paying for customs and import taxes.
These factors can determine whether a product is suitable for dropshipping. Don’t expect many repeat customers if they face unexpected import taxes without any warning from you.
For more info, check out the Canadian Government’s duty and taxes.
Dropshipping from AliExpress to Canada Average Shipping Times
| Chinese Shipping Company | Estimated Average Shipping Times to Canada | Tracking Availability |
|---|---|---|
| AliExpress Standard Shipping | 24 days | ✔ |
| AliExpress Selection Standard | 21 days | ✔ |
| AliExpress Saver Shipping | 29 days | ✔ |
| AliExpress Premium Shipping | 21 days | ✔ |
| UPS Express Saver | 11 days | ✔ |
| UPS Expedited | 11 days | ✔ |
| Cainiao Super Economy Global | 60 days | Unavailable |
| Cainiao Super Economy | 64 days | Unavailable |
| Cainiao Super Economy for Special Goods | 58 days | Unavailable |
| Cainiao Standard for Special Goods | 22 days | ✔ |
| FedEx IP | 11 days | ✔ |
| FedEx IE | 8 days | ✔ |
| EMS | 20 days | ✔ |
| e-EMS | 31 days | ✔ |
| DHL | 11 days | ✔ |
| USPS | 12 days | ✔ |
| From US Warehouse | Varies 9 – 28 days | ✔ |
Legal Requirements for Dropshipping in Canada
Yes, dropshipping is legal in Canada. However, to operate a dropshipping business successfully and comply with Canadian laws, you should be aware of the following key considerations:
Business Registration
- Register your business with the appropriate provincial or federal authorities.
- Consider obtaining a Business Number (BN) from the Canada Revenue Agency (CRA) for tax purposes.
Taxes
- Determine which taxes (GST/HST/PST) apply to your sales, depending on the provinces/territories you sell to, and collect and remit taxes as required.
- Report your business income and expenses on your personal or corporate tax return.
Consumer Protection Laws
- Comply with Canadian consumer protection laws, including those related to returns, refunds, and warranties.
- Ensure clear communication about shipping times, costs, and return policies.
Import Regulations
- Understand import duties and customs regulations if you are importing goods from suppliers outside Canada.
- Ensure clear communication about shipping times, costs, and return policies.
Advertising Laws
- Follow the rules set by the Competition Bureau for accurate advertising.
- Avoid misleading or deceptive marketing practices.
Dropshipping in Canada as an International Student
As an international student in Canada, you can run a dropshipping business, provided it doesn’t conflict with your study permit conditions. Although a study permit allows off-campus work up to 20 hours per week during academic sessions, running a dropshipping business isn’t considered traditional employment.
Make sure to register your business at the federal or provincial level and obtain a Business Number (BN) from the Canada Revenue Agency (CRA) for tax purposes. Be aware of income tax obligations and the need to collect and remit sales taxes (GST/HST/PST) if your revenue exceeds CAD 30,000 in four consecutive quarters.
In addition, comply with Canadian consumer protection and privacy laws, ensure truthful advertising, and follow import regulations if sourcing products from outside Canada.
Before starting, consult your university’s international student office to understand any impact on your student status. For business structure, you can choose between a sole proprietorship or incorporation, depending on your preferences for liability.
For more information, I suggest you read the Government of Canada’s regulations on Working off campus as an International student.
Dropshipping in Canada vs USA – Which is Better?
If you’re based in Canada and considering a dropshipping business, the obvious choice is whether to stick to selling to your Canadian market or opt for the much larger US market. I’ll cover each of the main factors to help you make an easier decision.
Market Size
USA
With a population of over 350 million, the U.S. is one of the largest consumer markets globally. Americans also have a high disposable income, leading to strong purchasing power. E-commerce sales in the U.S. exceeded $1 trillion in 2022, making it a lucrative market for dropshipping.
Canada
Canada has a smaller population of about 38 million, but it still has a significant e-commerce market. Canadians are tech-savvy, with high internet penetration rates and increasing online shopping habits. The Canadian e-commerce market was valued at over $89 billion in 2022.
Shipping and Logistics
USA
- Domestic shipping is efficient due to the comprehensive network of carriers like USPS, FedEx, and UPS.
- Delivery times range from 2-7 days depending on the service.
- A wider range of fulfillment centers offers faster delivery.
- Lower shipping costs due to competition and shorter delivery routes.
Canada
- Shipping is relatively expensive due to the country’s vast size and lower population density.
- Delivery times can range from 3-10 days, depending on the location.
- Import duties and taxes can increase the total cost.
- Limited fulfillment centers, leading to slower shipping times.
Taxation and Legal Issues
USA
- Sales tax is state-based, and regulations vary by state.
- Nexus rules make it necessary to collect sales tax in states where you have a significant business presence.
- Generally favorable business regulations and tax rates.
Canada
- Goods and Services Tax (GST) and Harmonized Sales Tax (HST) need to be collected based on provincial rates.
- Canadian Consumer Protection laws regulate clear advertising and return policies.
- Additional customs duties may apply to products imported from outside North America.
Competition and Market Saturation
USA
- Highly competitive market with a large number of dropshipping businesses.
- Product niches can become saturated quickly, necessitating strong differentiation strategies.
Canada
- Less competition compared to the U.S., providing opportunities for new entrants.
- Some niche markets remain untapped.
Consumer Preferences
USA
- Consumers expect fast shipping, free returns, and competitive pricing.
- More inclined to buy trending products and impulse purchases.
Canada
- Quality and reliability are more critical due to higher shipping costs and potential import duties.
- Prefer local suppliers to minimize delays and additional costs.
Advertising and Marketing
USA
- Higher advertising costs due to market competition.
- Diverse consumer preferences require targeted marketing strategies.
Canada
- Advertising costs are lower compared to the U.S.
- Easier to identify specific market segments due to population size.
Advantages and Disadvantages
USA
Best suited for dropshipping businesses looking to scale quickly due to market size, purchasing power, and efficient logistics. However, competition is fierce, requiring innovative marketing and niche selection.
Canada
Offers a less competitive environment with high internet penetration and growing e-commerce trends. Shipping costs and import regulations are challenges, but there’s significant potential if businesses understand consumer preferences.
Dropshipping Suppliers in Canada
Although many dropshippers choose AliExpress for their sourcing needs, using domestic suppliers within Canada can be a highly beneficial alternative.
By partnering with Canadian suppliers, you gain access to faster shipping times, avoid customs or cross-border complications, and benefit from higher-quality goods. Additionally, working with local suppliers can facilitate building stronger, more reliable business relationships.
Below is a list of Canadian suppliers who offer domestic dropshipping services. If you are looking for a more comprehensive list of USA and Canadian dropship suppliers, you are welcome to check out my Dropship Essentials pack for 1,200+ suppliers and much more.
| Canadian Dropship Suppliers | Products |
|---|---|
| HyperSKU | General |
| RV Dealers Canada | RV/Caravans |
| Aosom Canada | General |
| Worldwide Brands Canada | General |
| Payless Medical | Medical/Health |
| Zendrop | General |
| Ashley HomeStore Canada | Furniture/Home Decor |
| Syncee | General |
| TopDawg | General |
| Doba | General |
| Dream Designs | Furniture/Home Decor |
| CanvasCamp | Canvas Tents |
| Drone Shop Canada | Drones |
| Gelato Canada | Print-on-demand Clothing |
| Canadian Custom Apparel | Print-on-demand Clothing |
| Gift Baskets Canada Dropshipping | Gift Baskets |
| Buy Coffee Canada | Coffee |
| Contrado Canada | Print-on-demand |
Is Dropshipping Worth it in Canada?
When you consider that Canada has a large population, and a healthy GDP, they love shipping online and ad prices are often lower than you’ll find in the USA, it’s clear dropshipping in Canada can be a viable and profitable business to start.
However, the big considerations that can impact a dropshipping business in a negative way are:
- Shipping times from China
- Customs and import taxes for specific items
- Expensive areas within Canada to ship to
- Minimal suppliers within Canada that offer dropshipping services
- All legal obligations are abided by
The other consideration is which products are best for dropshipping within Canada. The same products that are popular within the USA may not attract the same demand in Canada.
Some popular niches and products to dropship with Canada are:
- Fashion/Clothing
- CBD
- Jewelry
- Coffee
- Home Decor
- Eco-Friendly Products
- Furniture
- Pet Supplies
- Print-on-demand
- Tea
What to Consider Before Dropshipping in Canada
| Factors to Consider | Results |
|---|---|
| Population | 39 Million |
| GDP Per Capita | $53,547 |
| English Proficiency | Very High |
| Facebook Ad Cost (CPC) | $0.73 |
| Facebook Ad Cost (CPM) | $0.16 |
| Payment Provides in Canada | Payment Providers in Canada |
| AliExpress Shipping Options to Canada | Most shipping options including AliExpress Standard Shipping |
Another option if you want to avoid the long shipping times from China is to buy at wholesale rates from Alibaba, private label your products and have a bulk order shipped to Canada. There are fulfillment centers (3PLs) such as ShipBob and Shipwire that can ship your products individually to your customers for fast and efficient shipping. I have much more information on this on my website.
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