How To Start Dropshipping In Canada In 2023

How to Start Dropshipping in Canada in 2023

Looking for how to start dropshipping in Canada but don’t have the storage space, and you want to save money and time? If the answer is yes, dropshipping is an ideal business for you.

When you use the dropshipping method you solve all the problems that are mentioned before, which enables you to conserve your time and money and eliminate the need for storage space.

Living in a country like Canada enables you to easily start up your dropshipping business, and quickly record profit due to its numerous geographical, judicial, and economic benefits.

So let’s start by explaining what exactly dropshipping business is.

How does dropshipping work?

To make it simple, in dropshipping business you act as a mediator between the customer and the supplier, where you advertise and sell the product of the supplier, and make the sale to the customer.

By acting as the mediator, or the retailer, you are setting up the dropshipping business website on your own, or you advertise your products on larger websites such as Amazon, Shopify, or Alibaba, then when the order is placed, you contact the supplier, and place the order, while the customer pays for the transport cost and your commission.

While you engage in the process, it is important to notice that you don’t have any inventory on your own, and your supplier keeps it in storage and delivers it for you. Customer access your website which lists all the products that you provide, their prices, specifications, and availability. Then he/she chooses the product, places the order, and you transfer this order, along with the delivery information to the supplier, and that is it!

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What are the pros and cons of dropshipping?

It is important to notice that the pros of the dropshipping business largely outweigh the cons, and risks are usually low, which makes it a perfect startup business for beginners.

Pros of dropshipping

  • Low cost of setup and maintenance, meaning that is fairly easy to set up your online dropshipping business, and keeping it operational usually doesn’t cost a lot.
  • No storage, which further reduces the cost of running your business, and eliminates the risks of overstocking or understocking, by eliminating the need for maintaining your physical warehouse, and paying for its upkeep.
  • No delivery, delivery logistics, and the whole process of delivery are run by your supplier which delivers the product to the customer.
  • New and developing, this business area of dropshipping is still developing, and the market is always expanding which makes for a lucrative and prospering area to invest in, whether you are new to retail business, or a veteran.

Cons of dropshipping

  • The abundance of competition, with the market which is rapidly expanding, and a growing number of customers, comes competition, which requires you to be innovative, persuasive, and persistent.
  • Cost of service, to differentiate from the competition you have to enter the dropshipping business with aim of making a small margin of profit in the beginning.
  • Providing customer service, when you act as a mediator between the customer and the supplier in the purchase process, you also have to accept the obligation to resolve the problem if it arises, problems vary from broken products to late deliveries, and so on.

A step-by-step guide to set up your dropshipping business in Canada

While it is important thing to be motivated, and have the right mindset, equally important is to be well-informed, and aware of the challenges that lie ahead. This is also true for the dropshipping business which constantly grows and evolves, making it even more important to stay updated, and knowledgeable about the whole process of setting it up in Canada.

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Finding a product or service which is in demand in Canada

This is the most important part of the process, and it can define how much success and profit will you have in the future, so it is important to dedicate enough time to research. This research consists of exploring the products and services which are in demand and popular, with extensive market research. Useful tools such as Google Trends, and websites like Amazon and Etsy offer useful insights into the popularity and trending demand of products that are being sold and purchased online.

A useful way to conduct your dropshipping business is to express and profound interest and love for the things you advertise and provide, which will ensure that you have a deeper knowledge of the industry, supply and demand, and all the trends that follow the process of retail.

To keep yourself profitable, it is important to calculate all the costs and profits, and decide if it is a good choice to sell the product that you were planning on selling. A rule of thumb in the industry is the 40% which ensures that you maintain a healthy income, and stores funds for the resolving of issues such as refunds, repairs, and the cost of keeping your website operational.

Also keep in mind the type of product that you sell, as more expensive products may enable you to reduce your profit margin, and less expensive ones require you to sell more of the product to keep the margin at 40%.

Choosing your supplier in Canada

Another key part of the dropshipping business is choosing your supplier, and it is really important to do your homework well when it comes to choosing one. You have two options, you can choose an international supplier or a domestic, Canadian one. Both of these options bear specific advantages and disadvantages.

With an international supplier, your choices are numerous, and often manufacturing cost is lower, which makes the product cheaper, in the end, sites such as Aliexpress or Alibaba are great places to start with, but keep in mind that you will have to deal with prolonged supply times, and customs if you choose this option.

On the other hand, a Canadian supplier means that the product is usually delivered in a shorter amount of time, and there is no need to worry about customs, but the choices may be fewer, and more expensive.

To summarize, you are entering a trade-off, lower cost, but longer delivery time and customs, or higher cost, but faster delivery time. Ultimately when you choose the supplier, you should check the merchandise, and make sure that the product is up to your standards, and standards that will make your customers come back to you for future purchases.

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Setting up your website

It is highly important that your website is presentable, and looks appealing to the customer, while at the same time providing precise information about the product that you are advertising. Make sure that your products have high-quality pictures, and detailed specifications

So take time to capture photos of the product in high resolution, as it might prove the difference between you and the other supplier, which uses outdated or stock images of the product.

Another aspect is the detailed specifications of the products, which include size, weight, color, and other important characteristics, along with user guides, reviews, and experiences. Including all of these might prove to be a demanding task, but it is the one that will make you stand out among the other sellers that sell the same product.

If you are looking for an easy way to set up your online shop, then websites like Shopify dropshipping and BigCommerce dropshipping are the right choice, as they are offering already preset templates for online shops, and make the process much easier. Etsy and Amazon are other viable options that offer higher marketability but at a higher price.

Buying insurance

Wherever there is money involved, or dealing with people, there is risk present. Some customers may be unsatisfied with the service and product you provide, and may choose to sue you. Some competitors may deem your advertising and selling practices unfair, and opt to do the same.

It is important that in these situations you have an appropriate type of insurance. In the beginning, it is often enough to purchase general liability insurance which includes most of the risks that a startup dropshipping business may encounter.

As your business expands, it might be wise to include other types of insurance, which specialize in various types of risks, such as loss of property, lawsuits, cyberattacks, and reimbursement of legal fees.

When your business grows and evolves, the type of risks will become more clear to you, and you will be able to choose the correct insurance to address these issues. But, if any doubts remain, you can always consult legal experts who will assess your situation and propose the best insurance package for you.

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Advertising your product

You won’t be able to sell your product if you don’t offer it to the right people. Advertising is one of the most important parts of the dropshipping business as it attracts customers, offers them products, and increases revenue.

Nowadays, social media outlets such as Instagram, Facebook, and TikTok have become great places to advertise your products, through funny and captivating means, such as shorts, reels, and posts. These inform the customer about your product while avoiding the boring approach of advertisements, and are a great way to increase revenue, and your website visits.

Using Google and Facebook ads means that you are using the old-fashioned, tested approach which is guaranteed to work and present your product to the customers, as they use the data and statistics collected by the website visits, and make sure to present the right product, to the right customers. This method makes sure that you maximize the economic notion of supply and demand.

Another method that is being employed, and has proved to have great success, is to advertise your product through SEO (Search Engine Optimization). By using this method your product description, blog reviews, and web pages use keywords that ensure that your product ranks higher than it usually would in Google searches. Thus increasing your website visits, and product sales.

Setting up for the future

After a specific amount of time running your business, it is recommended to turn to analytics, which will provide you with deep and meaningful insights. These insights enable you to learn how customers interact with your products, and through which social platforms they find out about your product.

These analytics provide you with a pathway and plan for the future. Which course to undertake, where to invest more, and where to reduce your funding. Keep a close eye on these, as they make the difference between prosperous, and stagnating businesses.

Another thing to address is the financial and legal aspects of the dropshipping business. This is where accountants and lawyers become your best friends, as they keep your business profitable, and within legal boundaries.

Accountants will do the hard work for you when it comes to financing, as they keep track of your expenses and profits. They calculate the amount that needs to be used for tax payments, and how to keep these tax expenses minimal.

Lawyers are tasked with dealing with the legal obligations that you face when running a business. While at the same time, they make sure that your agreements, contracts, and other legal documents are in perfect order, and within the legal boundaries of the Canadian judicial system.

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What is the difference between eCommerce and dropshipping?

Though they may seem similar at first, there are several differences between ecommerce and dropshipping. The differences that are most notable between ecommerce and dropshipping are regarding the storage and delivery of the product sold by the retailer.

The most notable differences are:

  • In dropshipping, the owner of the business doesn’t own the inventory that is advertised on his/her website, with all the merchandise being supplied by the producer.
  • In ecommerce, the owner of the retail website or store, also has the inventory, with the accompanying storage space.
  • The owner of the dropshipping business doesn’t need to own either the packaging or storage facility.
  • The owner of an ecommerce business has to have both packaging and storage space to run his business.
  • In the process of ordering a product in dropshipping owner only handles the receiving part, and transfers the order to the producer, which handles the rest.
  • In ecommerce, this process is completely handled by the owner, from ordering to delivery.
  • Ecommerce business owner can control the quality of the product that is sold.
  • Dropshipping business owner has to rely on the producer to maintain, control, and ensure the quality of the product being provided.
  • Storage, starting capital, and delivery service are a must when starting an ecommerce business.
  • Dropshipping requires no storage and delivery service, and only a low amount of capital to commence.

In summary, dropshipping is the best option for beginners who have low starting capital, and don’t wish to bother themselves with storage and delivery. Another advantage is that owners don’t have to bother themselves with the supplying process, and can focus their efforts on advertising, brand upgrading, and customer outreach.

What is the best dropshipping platform in Canada?

If you are considering the best overall dropshipping platform in Canada then you have two options Shopify, or BigCommerce. Where both of these are great for beginners in the dropshipping business, as they have options for designing your store, building it, and managing it.

Using the Shopify dropshipping platform

One of the most popular platforms in Canada is certainly Shopify. It claims high popularity due to its easy accessibility, user-friendly interface, and affordable pricing. Aloof these features make it the best platform for beginners.

Shopify offers a high variety of preset themes that may suit your business. Various themes address the popular choices for business, with an interface that goes along with them. It is a perfect option for those who want to get started quickly.

Another great feature is the variety of payment options, which vary from credit cards to cryptocurrencies. This allows the customer and sellers to choose the payment option that suits them the most. And by using Shopify’s payment method you can avoid paying additional transaction fees.

Shopify provides you with a direct connection to your supplier and insight into suppliers’ inventory, allowing you to customize the number of sales of a specific product. This is a great way to make sure that you don’t run out of stock.

In the end, Shopify boasts great customer support. You can contact them using email, website chat, phone, or their forum. By using these Shopify makes sure that its users are always connected, and able to resolve their issues.

Using the BigCommerce dropshipping platform

Another platform that is great for beginners, and those who are more experienced with sales and software development is BigCommerce. This platform enables its users to customize their store experience by using HTML code to make the required changes.

The main difference from Shopify is that BigCommerce enables its users to adjust every little detail in their online store. This produces highly unique stores which are different in their way from each other.

As with Shopify BigCommerce allows transactions by hundreds of transaction providers, and currencies. This is supplemented by highly efficient translation service, which makes your store multilingual, which in return broadens your customer base.

Both of these platforms are available for a small amount of money which includes the majority of services that they offer. This means that you enjoy the most of content and service by using the standard package.

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Choosing a domestic or international dropshipping supplier

A choice between a domestic or international supplier is one to be taken seriously. Both of these options offer certain advantages and suffer from disadvantages. So, choosing one that suits your specific needs is crucial.

Domestic, Canadian suppliers

When you choose a supplier that comes from your country you enable yourself to frequently visit his location. By doing this, you enable yourself to conduct necessary controls that ensure the highest level of quality and service.

One of these is product quality control, where you can visit the production and storage facility yourself. This enables you to make sure that the product is up to the standards that you require.

Another great feature is the lack of taxes and customs. Both of these ensure that your delivery times are kept to a minimum, and at the same time, they reduce the cost of the product and increase profits.

You also have to consider the costs of production, especially in developed countries such as Canada, which adhere to higher standards. This increases the price of the product and decreases the profit you make.

Another drawback that you may experience is the decreased diversity of products and low level of stock availability. This is an occurrence that may happen when a domestic supplier is supplying products to both local and international customers.

International suppliers

International supplier offers you a wide array of product, which enables you to choose the one that you think will sell the best. Another advantage is that mass production also offers products that you can label with your brand. This may lead to future expansion of your brand and higher income.

With international suppliers, your choices are endless. This means that if one of these runs out of product, you can easily replace him with the other that has the product in storage.

As for the drawbacks of international suppliers, the most important is the long delivery times accompanied by the presence of customs and tax. Both of these may increase the price of your product, and decrease customer satisfaction.

How to start dropshipping in Canada conclusion

Dropshipping business is a great startup idea for beginners, as it offers a wide choice of opportunities and products, with low risk involved. This makes it a perfect choice to explore and develop, with high returns if successful.

As with every other business, marketability, quality control, and customer satisfaction are a must. You are responsible for all these, and extensive research will increase your chances of success and profit.

Choosing the right dropshipping platform and supplier are two keys to success. If you make the right choices, in combination with being persistent and knowledgeable, your chances of success and increase your income! Thanks for checking out how to start dropshipping in Canada.

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FAQs about how to start dropshipping in Canada

How do I register my dropshipping business in Canada?

The easiest way to make your dropshipping business legal is by registering your dropshipping business as Sole Proprietorship, which means that you don’t need to obtain a business license. And you conduct your business under your name, making the process of start-up much easier.

How much do I pay in taxes for dropshipping business in Canada?

Canada employs a progressive tax system, which means that your tax increases with the amount of revenue. In 2022, the parameters for taxation were like this. Tax Rate                            Tax Brackets                      Taxable Income 15%                                   on the first $50,197            $50,197 20,5%                                on the next $50,195           $50,197 up to $100,392 26%                                   on the next $55,233           $100,392 up to $155,625 29%                                   on the next $66,083           $155,625 up to $221,708

Is it profitable to start a dropshipping business in Canada?

Dropshipping business in Canada is steadily growing and increasing its yearly revenue constantly. It is predicted that in 2023 this revenue will amount to $55 billion. So the answer is yes, dropshipping is certainly profitable in Canada, and it will continue to be even more profitable in the coming years.

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January 19, 2023
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