Drop Shipping in Canada: Getting Started, The Top Drop Ship Companies to Work With and the Answer to the Burning Question - It's Still Profitable?
Are you looking to drop ship in Canada? Do you want to know the best drop shipping companies and how to get started with drop shipping within Canada?
If so, then this post is for you! In this article we'll answer all of your questions about dropshipping in Canada.
From what it is, to whether or not it's still profitable. We'll also talk about the pros and cons of drop shipping as well as some tips on how to start your own drop ship business.
Without further ado, let's dive into our discussion!
Drop shipping is the process of fulfilling orders by purchasing items from a wholesaler and then selling it directly to the customer.
There are different types of drop shipping models such as:
- print on demand
- marketplace ecommerce website (an extension of a business that doesn't sell online)
- buying products in bulk and reselling them (product reselling, possible white label)
- product creation or 'DIY kits'.
For more details about the different types of dropshipping available check out Shopify's guide to dropshipping here.
Dropshipping is a very popular e commerce business model because it eliminates the need to keep products in stock.
This allows retailers to focus on their strengths, such as marketing and customer service resources while still profiting off of the product sales.
When you drop ship, your store is like a digital storefront that sells products to customers. You don't have any inventory on-hand because all the product orders are sent directly from another company and delivered straight to the customer's door!
When you set up your drop shipping store, you will link it with the wholesale company that offers drop shipped items and create what's called an "e commerce storefront".
As soon as someone places an order through your website, they are transferred over to the wholesaler who fulfils and ships out their purchase.
The drop shipping model has been around since the 1990s and it's gained in popularity in recent years because of its low upfront cost.
It's not uncommon for a drop shipper to turn a profit in their first year while spending a few thousand on creating an ecommerce website.
However, drop shipping isn't as profitable as it used to be due to increased competition in the marketplace and websites such as Amazon that offer drop shipped items at lower prices than you can find elsewhere.
How does 18.33% up to 50% more profit sounds?
Nailing down an average on how much drop shippers can make is a challenge. But some successful dropshipping businesses are earning up to $100,000 per year.
- In 2017, 23% of all online sales—equal to approximately $85 billion per year—were fulfilled through the dropshipping model.
- 27% of Online Retailers Are Adopting Drop Shipping
- One third of Amazon’s fulfillment sales are by drop shippers who are selling their product there.
For a more in-depth look at drop shipping stats visit this post here.
- Easy to start. Other than paying for and creating an ecommerce website and establishing social media accounts for your online store - there is very little else required in order to get started with a drop shipping business.
- No upfront costs. No need to pre purchase stock or worry about storage, with a dropshipping business model your supplier or suppliers handle those costs.
- Lower overhead and less capital required. Without the added expenses of inventory, storage and staff - you're free to invest your profits into advertising, customer acquisition, and custom design for your online store.
- Easy to scale. With a drop shipping business you can take advantage of e commerce trends and capitalize on them quickly by being fast to market.
- Easy to test. With drop shipping you're not risking your own money on production, so if a product doesn't sell - it's easy to let it fade away and drop it!
- Easy to handle returns. With drop shipping, returns are handled by the supplier - not you.
- Wide selection of products to sell. With a drop shipping business, you can offer a wide variety of products from multiple suppliers all under one roof.
- Frequent changes in product availability at wholesale suppliers. This can cause major setbacks for drop shippers who are heavily dependent on a certain item or supplier.
- Low margins. With drop shipping, you're never getting the wholesale price on any product. The profit margins can be as low as a few cents per sale or up to low double digits. It's a volume game.
- No control over product quality. Dropshipping suppliers are responsible for quality control, inventory and shipping - not drop shippers. If a product delivered is damaged, you may not find out until it's too late which could hurt your online reputation.
- Limited customization and branding. With drop shipping, your online store will always be someone else's brand. And you'll have limited options for customizing the customer sales journey, packaging, look or feel of the product - plus shipping times and shipping costs.
- No in-person customer service available. One of drop shipping's biggest advantages is also one of its largest disadvantages. With drop shippers handling customer service and order fulfillment, you have limited opportunities to connect with your customers and market other products to them.
Canadian drop shipping is still a profitable online business but it has changed over the years due to the changing Canadian market.
It's not as straightforward as what it used to be before, which means drop shippers need to do a bit more homework when getting started.
The pros and cons of starting a dropshiping business in Canada are the same as in any country, except with the added stress of GST, HST and other import taxes and duties.
Drop shippers in Canada are required to pay GST or HST on drop shipped goods.
A 5% GST tax applies to most goods, except for prescription drugs, basic groceries, agriculture and fishing goods.
Dropshipping businesses in Canada are also required to account for their revenue by keeping track of the total amount they sell on a monthly basis.
Taxes calculated at the point of sale are determined by the company's address, as well as the customer address.
To start dropshipping goods from China or anywhere else outside of Canada, there are some other factors to consider as well. International taxes on imported items; custom duties for specific countries such as the USA; just to name a couple.
Before you start selling products and dropshipping in Canada, consult an accountant and your local tax authority.
More information on tax obligations associated with dropshipping is available at the Canada Revenue Agency's website.
Yes, dropshipping is legal in Canada; however, you can only offer products which are legally saleable. Carefully research and adhere to any import or other restrictions that exist with regards to your product.
Visit the Canada Border Services Agency website for more information.
Yes, drop shippers in Canada are required to have a business licence. However, the type and requirements vary by province or territory.
Be sure to research your local government licensing requirements before you get started.
No, drop shipping businesses can operate with just an e commerce platform like Shopify and not necessarily a custom online store.
It's important to build your drop shipping business on a platform that integrates with the most number of delivery services.
This will allow you to lower costs and offer more options when it comes to postage rates as well as handling returns from dissatisfied customers.
A great example is Shopify which allows drop shippers in Canada to sign up without any credit card or payment information required, whereas other platforms might ask for an upfront fee.
With the CourierGateway verified Shopify app you can also integrate multiple courier carriers such as Purolator, CanPar, Fedex and many others all within one account allowing for greater flexibility.
This is an excellent feature for Canadian online sellers who are looking to start their own dropshipping business.
84% of eCommerce Retailers state that finding a dependable, reliable and consistent manufacturer and supplier to work with is their number one struggle.
Many dropshipping businesses choose to work with Chinese manufacturers because they offer the lowest production cost.
However, there can be drawbacks such as language barrier which may lead to miscommunication and important issues which may lead to poor quality or late deliveries.
Canadians are a multicultural society so finding suppliers in Canada is not an issue; however you will have to
- Gelato (Print on demand)
- G Furn
- Printful (Print on demand)
Disclaimer: CourierGateway does not endorse or receive any affiliate commissions for the suggestions above. The list above was created by industry research on the best dropshipping suppliers and customer reviews' on the top Canadian drop shippers.
Start with a niche. Choose your market niche and identify what type of products you want to sell and what kind of store you would like to set up. Golf, home decor, gardening, clothing and fashion are all popular categories to choose from.
Beyond the Rack - Canadian dropshipping supplier with men's and women's fashion, beauty and self care products plus a handful of other general store categories available.
Slaite POD - A print on demand supplier dropshipping products like T-shirts, sweatshirts & hoodies, jackets that integrates with Shopify.
Natures Essential Garden - This website is a one-stop shop for aromatherapy products and other natural and organic items.
Golf Stuff - The name says it all. As a Canadian supplier specializing in golf-related products, you can trust them to supply and deliver. Whether you're looking for apparel or accessories, they've got everything you need related to golfing.
Dreamhug - This supp