E172: Selling in Amazon Canada with Dave Bryant
Hi, it’s Dave here. Mike is taking some much-needed time off at the moment so I’m taking the reins. Coincidentally, today’s podcast topic is something that I’m in the best position to talk about – selling on Amazon Canada. If the accent isn’t a giveaway already, I am Canadian myself and currently running my business out of Vancouver.
So, let’s start off with a question. Should you be selling in Canada? The answer to this is of course relative. But, if you are living in the United States, then Canada would technically be the “lowest hanging fruit” when it comes to expanding your business.
I’ve added some more advantages below.
- The American market is increasingly becoming more saturated.
- Advertising rates are significantly higher in the United States. They’re literally 2-3 times what they cost in Canada and almost all other marketplaces.
- The cost of sale is also higher in America. In Canada, the average is around 3% while it’s typically above 10% south of the border.
- You are a lot more likely to get higher profit margins in Canada because there’s less competition within the same niche.
Depending on your circumstances, these disadvantages may be relevant.
- Canada has significantly fewer people living there than in the US. It has about a tenth of the American population.
- It takes a lot of work to sell in Canada because it has its own tax and business registration regiment. If you’re new to selling online, it will be much easier to do so on Amazon.com.
- Canada has a different currency, which can have specific ramifications for your business.
The Taxation Thing
In America, there is no federal tax. In Canada, you have to pay the equivalent of a federal tax called the GST/HST. This is typically 5%. While you can get this amount back at the end of the year, that’s an upfront cost you have to deal with right out of the gate. And this can be tricky since we mostly run cash flow dependent businesses.
You should also register for GST/HST in order to send your goods to Canada. There’s no getting around that. The good thing is it’s quite easy to do this. If you use a larger customs broker that handles shipments going into Canada, they can register the number for you. Most of them will do it for free or charge a small fee to get this done. Mike and I both use Pacific Customs Brokers, Ltd.
Here are my tips for starting to sell in Amazon.ca.
- Start small and just enough to get your feet wet. Send a small shipment to Canada and work it up gradually to pallets.
- List your products on Amazon.ca. Consider the language in the geographic area you’re targeting when coming up with your keywords.
- Make sure to turn on Sponsored Ads for Canada.
- Monitor the exchange rate every month.
- When your sales start to get substantial, register for GST/HST. Canada has a record of everything you’re bringing into the country and assume you will eventually get a telephone call from CRA if you don’t.
The last thing I’ll leave you with is this: have a plan to sell internationally in order to sustain growth and profitability for your business. Some of the insights above can also be applied in another marketplace so you already have a point of reference.
Other Useful Resources:
Thanks for listening to this episode! If you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes.
If you have any questions or comments, feel free to leave them below. Happy selling!
Full Audio Transcript
Dave: This is Dave and welcome to this week's episode of the EcomCrew Podcast. So this week, I'm flying solo. Mike is off on the east coast of America somewhere trying to cross off three more states on his half visited list. So he's vacationing with his wife, I think in Vermont, Connecticut, and Main if my geography serves me correctly. But in this episode, I'm going to discuss how you can start selling in Canada. And between me and Mike, I am the most qualified person to talk about this because as you may have told, from my slight, hopefully very slight Canadian accent, I am actually Canadian myself. So I am a true genuine Canadian.
And all that aside, though, my passport aside, I have made Canada a strong focus of my new business ever since it basically started. And the reason is that international marketplaces, Canada included but also including other marketplaces, including Europe and Japan, and other places as well is kind of the future of e-commerce. America is becoming an increasingly saturated marketplace, very competitive, as most of us know.
So, although e-commerce is continuing to grow in America at about 16 to 17% a year, in my experience, and kind of anecdotally, it seems competition is growing at an even faster pace and as most of us have probably witnessed by being inundated with different ads for different Amazon courses, and software and tools all the time on YouTube and Facebook and other social networks. So, if you can look past America, though, there is a lot of opportunity and a lot of fairly low hanging fruit. And if you are selling in America right now, Amazon Canada is probably the lowest hanging of those fruit.
So, in this week's episode, I want to discuss why you should sell an Amazon Canada, maybe why you shouldn't sell on Amazon Canada, and also how you can go about selling on Amazon.ca. So, there's one thing that I should kind of get out of the way from the very beginning, a misnomer about Canada, and that is that Canada is America's largest national park. Well, believe it or not Americans, Canada is not a national park of America. It's actually its very own country. We were formed in July 1, 1867, and we are still part of the British monarch. So, Donald Trump is not our president. In fact, even Justin Trudeau is not our head of state. In fact, that is the Queen of England.
So yes, I'm saying this obviously, with a very large tongue in cheek. But the truth of it is, is that Canada is its own country. Yes, you probably know that. But as its own country, a lot of people overlook, potentially how many complications there may be selling in Canada. So, I'm going to address those here a little bit further down on this podcast, because like I mentioned, you probably know that Canada is not its own is not a 51st state of America. But there are a few complications that you do want to be aware of, especially relating to sales tax and business registration.
But before we get to that though, I want to discuss why you should and potentially shouldn't sell on Amazon.ca. And actually, I should include in this previous sentence, why you should sell or not sell internationally, because while I'm focusing on Amazon Canada in this episode, I think, really, this episode is about selling internationally in general, because if you're in the UK, or in Europe, potentially, Canada is not your lowest hanging fruit, it might be another European marketplace. However, if you're in America, or even if you're an Australian, but your main market is America, then Canada is probably the lowest hanging fruit, just because of the geographic closeness to America.
So, why should you sell internationally? Well, like I mentioned before, the American marketplace is just becoming more saturated and more competitive. And what that means more than anything is not necessarily that your top line revenue is seeing a hit, because again, e-commerce is growing pretty rapidly. And yes, there's a lot more competition. But the competition maybe is not all that advanced. So, even though your top line revenue might not be taking a huge hit, where it is taking a hit is your bottom line. So, one thing I've noticed with America is that the profit margins are increasingly lower there.
So, imagine that you have this giant marketplace that is Amazon.com, or pretty much anywhere in e-commerce in general. And all of a sudden, now you have a lot of less advanced people selling in Amazon.com, or on their own website. Well, you may have a wide variety of people here, including a lot of people who are just doing this as a really small time side hustle. So, I think back to me, when I first started my e-commerce company, back when I was in university, and I was happy to make a few hundred bucks a month. If I made 500 bucks a month, I was over the moon.
And nowadays, there are even more people like me back in university, who are just happy to make a few hundred bucks doing a side hustle. And what that means is that they're happy to take a smaller price point for their products, they are happy to sell them at a much lower price. And what that does is it decreases the overall pricing on the market for whatever product you're selling, it lowers prices, and in turn, lowers your profit margins. The other thing that's happening, and this is one that I can actually see very directly is that the cost of advertising in America is literally two to three times, that's two to 300% higher than in America than it is in Canada and almost all other marketplaces. America is the most expensive marketplace to advertise on by far.
Now, I haven't sold in all marketplaces of course. I can't really speak to China or Southeast Asia, or some of these other more distant countries, and how their advertising rates compare in those countries, but I can speak definitely firsthand when it comes to Canada, compared to America, advertising rates are significantly more south of the border. So, just as I pull up my Amazon dashboard here, my average cost of sale in Canada for the last 90 days is around 3%. And in the US, it's just above 10%.
Now, obviously, I probably am in a niche where the cost of advertising is quite a bit lower. So these numbers are relative. But either way, no matter what industry you're in, you're probably going to see that if you're selling on Canada, your advertising rates are going to be about a third of what they are in America. So, if you sell in Canada, you're going to get a higher profit margin. The negative is that number one and this is the obvious one is that Canada is about a 10th of the population of America. We have about 35 million people; America has just over 300 people, 300 million people. So it's about a 10th of the size of America.
Now, does that mean that your sales in Canada are roughly going to be 10% of what they are in America? No, I would actually argue that they're probably going to be significantly higher, because of the significantly less population. So when you sell in Canada, if you imagine that you're selling your typical garlic press, you might have 1,000 competitors on Amazon.com. In Canada, you may only have 100 competitors, maybe even less. And what that means is that you have a much higher likelihood of getting on that first page of Amazon's search results. And of course, getting on that first page is critical.
Now, a couple other negatives are it takes a lot of work to sell on Amazon Canada. It's like I mentioned, it's its own country, it has its own tax regimen. It has its own business regimen, business registration regimen. So it takes a lot of work to actually get products up there. And that work is basically a onetime cost, whether you look at it financially or just in terms of your time cost. So it's one time setup and pretty much after that it's more or less self running. But that does take time right from the get go.
And if you’re first expanding your business and first starting your business, Amazon.com is definitely the easiest marketplace to get into basically, for the fact that America more or less does not require a lot of business registration to sell in America, and it has that great $800 [inaudible 00:10:44] value. So you can ship anything $800 or less into America, you don't get charged any duties or taxes. In Canada, that same $800 is actually only $20. So unless your goods that you're shipping into Canada are $20 or less well, you're going to have to pay duties and GST/ HST, which is basically Canada's federal tax.
So, if you're first getting started, Amazon.com is definitely where you should focus your attention. Don't even worry about other marketplaces. Even then, if your sales have somewhat plateaued on Amazon, let's pretend they're growing at 15% a year and that is in e-commerce words, basically plateauing because e-commerce as an industry is growing at about 15% a year, there's still a lot lower hanging fruit for you to pick in America. My first expansion strategy would be if I was first starting off would be to obviously have your own website. And then once you have your own website up and going, then focus on getting traffic to that website through paid advertising specifically, Google ads, Google Shopping and Facebook.
And after that, once you have traffic to your website, then you can start growing your email list. And email marketing is still a lot easier than selling on Amazon Canada, or any international marketplace for that matter. But once you've kind of exhausted all those channels and avenues for growth, and let's pretend again, that they've kind of plateaued 15% or so, then you should definitely start looking at international marketplaces, whether it's Amazon Canada, or the UK or wherever it is that you're looking to expand and that's convenient for you, depending on where you are in the world.
So once you've made the decision, though, that you're going to start selling an Amazon Canada, now this is where kind of the gotchas come into effect. There is two or three that you really need to be aware of. So in America, there is no federal tax. And this makes life a lot easier because when you're importing goods into America, you are not having to pay a tax bill to get those into the country. Now in Canada, when you ship your goods up into Canada, and let's pretend you're shipping $1,000 pallet of goods into Canada, you are going to pay what they call GST, or depending on what province it is potentially HST.
But whatever the verbiage they use, that is basically a federal tax. So you pay this 5% GST as soon as it enters America — or not America as soon as it enters Canada. So on that thousand dollar shipment, you are all of a sudden cutting a check to the government for $50, 5% of that $1,000. Now you do get that money back at the end of the year, but that's an upfront cost you have to pay right out of the gate. And this is actually a significant problem because in e-commerce, we are such a cash flow dependent type of business where if all of a sudden you have to spend 5% of all your cost of goods, basically paying into bond into Canada, or whatever country it is that you're sending goods, because this is the same for Europe as well, this is going to take a significant portion of your tax or of your cash flow.
It's one of these things that we take for granted in Canada or in America that we don't have to do this, we don't have to pay any federal tax up front. So it really helps your cash flow. And conversely, in Canada and Europe, or wherever it is, it takes a negative hit on your cash flow. So that's the first kind of gotcha. The second gotcha also again relates to that federal tax is that you have to register for it. There is no way practically speaking to send your goods into Canada without first registering for GST. Again, in America, this is not an issue, there is no federal tax. The only thing that's in place is state tax in America. And as we all know, with state tax, 99.9% of Amazon sellers are not paying it and remitting it because it's a voluntary thing.
In Canada though, this GST/ HST is not voluntary at least when it comes to entering your goods into America or into Canada. You cannot get away from it, you're going to have to pay it, you have to register for it right out of the gate. So, that's going to be kind of your two, one, and two complexities selling in Canada. Now the good thing is that registering for these numbers is very simple. If you use a larger customs broker that handle shipments going into Canada, they can actually register for this number for you. Most of them will do it for free or just charge you a very small amount.
The customs broker that myself and Mike both use for entering shipments into Canada is PCB.ca, that's Pacificcustomsbrokers.ca. Unfortunately, we do not get any affiliate income from them. It'd be great if they would because we mention them all the time. But that's completely unbiased suggestion and recommendation from Mike and myself. So, if you talk to them, they'll be able to register you for your — what they call a GST/ HST/ business number. This is kind of an all in one number that you use to remit your sales tax and that you use also as a business registration number.
So at this point, as I talk about GST and federal sales tax, you're probably thinking, oh God, not another sales tax form I have to worry about. Well, the good news is that in Canada, filing and remitting GST is very easy, especially compared to the absolute Gong Show, that is American taxation. The GST remittance form is about five lines. You can literally do this in minutes, maybe an hour. And especially if Amazon.ca is your only sales channel, really all it consists of is downloading your report of your transactions for the last year and figuring out how much money you collected from customers, and subtracting all that amount of GST that you paid when you initially got your goods into Canada. It's very simple.
If you go to EcomCrew.com/AmazonCanada, we have reference for a good Canadian accountant who can help you with your Amazon taxes. Again, you don't need to use an accountant though. This is literally probably the simplest tax form I have ever seen. So, don't worry about it all that much. The other thing that you want to be aware of is that in Canada, we have a separate currency. Again, you probably knew that, but think about what that means in terms of ramifications. If you're comfortable dealing with international currencies, and you've dealt with them in the past, you know that there's a few hiccups to dealing with them.
And the biggest problem with international currency, well, there's actually two of them. The first one is actually getting Canadian dollars into your US bank account. And Amazon makes that fairly easy; they'll simply just exchange it at a terrible rate and deposit it into your US account. There's also transfer services, TransferWise is one that I love. They'll exchange money at a very competitive rate for you, and they'll get it into your US account. So, it's really not that complicated to get any foreign currency into your account but the bigger hiccup comes to do with the exchange rate.
So, if you go to a website like XE.com, you'll see the posted what they call the spot exchange rate. Now that rate looks really nice. And the terrible thing is, though, that you will never get anything close to it. If you're a large volume trader, you may get what they call the spot rate minus half a penny, or which today's exchange rate which is fairly close to par, basically, it's half a percent discount, or as a broker calls it basically their commission. So, the broker takes a half percent commission. It doesn't matter if that broker is Amazon or TransferWise, or whoever; somebody is taking a commission on it.
Now, the truth of it is, though, that you're never going to get half a percent commission, it's going to be more like three to 4% of a commission. So, that's a lot of money. Again, imagine you're getting now; you did $1,000 in sales on Amazon.ca, now you're transferring that money back to America. Well, as soon as it's exchanged into US dollars, you're going to lose three to 4%. And again, that's probably on a good day. I've seen it get much higher to five to 6%. So you're losing, again, just a little bit of money off the top line. It's almost like a credit card processing fee.
And you never notice them on individual transactions, okay, it's 3%, who cares, two or three bucks on $100 order, you don't really notice it. But at the end of the year, when you start to look at your P&L, you notice holy crap that was a huge expense throughout the year. And the same thing you're going to experience with Canada, again, any international marketplace, you're going to lose on that exchange rate. The other thing is that exchange rates are volatile, they move up and they moved down. And what that means is that your pricing needs to also be kind of fluid and elastic in Canada.
So, if the currency, imagine all of a sudden, the Canadian dollar for one American dollar, you basically get $1 and 30 cents of a Canadian dollar. Now imagine that all of a sudden, one American dollar gets you five Canadian dollars, well, all of a sudden, you can slash your prices in Canada relative. All right, I should say you would actually have to increase your prices, almost 500%. Now, of course, the exchange rate is not going to ever devalue or appreciate that much. But 10 to 20% swings throughout a year are quite normal.
And you need to adjust your prices, depending on whether that's a favorable exchange swing or a negative exchange swing. You need to be monitoring it at least on a monthly basis, if not a weekly basis, and adjust your prices appropriately. Otherwise, you can find out that you're selling your products at a loss if that exchange rate gets away from you. And the last kind of thing that you need to be aware of when you're selling into Canada is freight costs. So, when you're shipping, let's pretend that you shipping from let's say, Los Angeles into Canada, that is a significant distance to cover. It's about 1,000 to 1,500 kilometers. Again, I'll put this into Imperial for you Americans. That would be about 800 or 900 miles. So it's a significant distance.
And what that means is that you're going to have a significant freight cost. And it's roughly the same per mile as it is going within America as it is going to Canada. But you can imagine 1,000 miles, that adds up for I have a couple pallets right now being shipped from Seattle over to Toronto. Toronto is on the east coast of Canada, Seattle is on the west coast of America, it's a significant distance. And I'm paying close to $1,000 to have those two pallets shipped. And that doesn't include customs brokerage, and all the other miscellaneous fees that go away with it. So it's significant.
The other thing is that international with Amazon, you do not get partner carriers. It would be fantastic if you do because Amazon gets great rates with their partner carriers, but you do not have any partner carriers when you ship up to Canada from America. You have to figure that out on your own. So your freight costs are going to be significantly higher.
Okay, so now you're aware of all these things that you need to watch out for, the steps that you need to take just to kind of put them in chronological order if you're now have a big desire to sell on Canada. First thing you should do is open an Amazon.ca account or enable it within your Seller Central account. I can't remember, I believe actually that all you need to do is there is a drop down menu within that top menu bar in Seller Central. Scroll down to Amazon.ca, and I think you're pretty much auto registered for it when you have a unified North America Seller Central account. So there's not a lot to do open that account. But just make sure it is there and that it's fully functional. That should be your first step.
Second step is that you have to list your products on the Amazon.ca marketplace. They will not get listed by default. So you basically have to create brand new listings on Amazon.ca. So, this brings up an interesting point actually about listing products in Amazon.ca. And again, this goes for any of the Amazon marketplaces, when you sell on Amazon.ca, that's a completely different listing. That means that it's going to have separate reviews, it's going to have separate sales history, it's going to have separate BSRs. It's going to be for all intents and purposes, a separate listing. So that means that when you start in Canada, you are for all intents and purposes, you're starting from scratch with that listing.
Now Amazon is kind of toying with this, they're allowing some of the reviews to carry over from Amazon.com. But as far as I can tell at least from my expense that any type of rankings don't really carry through. Now the good thing is that if you have a product that that's doing fantastic on Amazon.com, it's probably going to replicate that success on Amazon.ca pretty quickly. Now if you did some black hat strategies, and you got some phony reviews, and this and that, again, they're going to show on Amazon.ca. It's kind of you have to take a look at an Amazon listing and see what I mean.
The dot com reviews are kind of hidden, but they're there. So you get some, I guess, social proof from having those reviews. It's not as significant though, as if you actually get a real live Canadian review on your Canadian listing. So yeah, your sales on Amazon are going to start from scratch. You're going to get a little bit of a boost just through predictability because you products sell well on another marketplace. They're probably a good product overall and potentially from some of the flow through of dot com reviews. But like I said, just be prepared for a little bit of a slow period in the very beginning.
So, once you have your Amazon.ca account, the next thing now that you have everything up and going, you know that okay, I can actually sell now in Canada is to send your first shipment to Canada. So, if you're sending a really small amount of product, let's pretend that you have $100 worth of products to send into Canada. I know there are people who basically under declare items. They should invite UPS or FedEx into Canada and they list them without actually getting GST registered. Again, GST is that federal sales tax, and it's also your business number. I know people do that. I know there's people that sell thousands and thousands of dollars a year and a month doing it that way, and never actually remitting any GST.
Now in America where you can kind of argue that sales tax is up for debate whether people have Nexus or not through Amazon FBA, in Canada, it is plain as day. You absolutely have to remit and pay that GST, and they will find you, Canada will find you. Yeah, are they going to come after your assets in America, a few of them a couple grand in taxes, maybe not. But it's going to make your life hell going forward in Canada. So again, I'm not going to suggest that you shouldn't ever dodge GST and sales tax if you're wanting to ship a couple of products up there just to make sure that they arrive in okay condition and they're actually listed for sale and you don't want to register for GST to list those couple of items. Sure.
I mean, it was probably not a bad strategy to make sure your kinks worked out before you go through the work of registering for GST. But it's not a long term sustainable strategy. You should definitely register for GST as soon as you get kind of your kinks worked out. And again, to get registered for GST, if you go to EcomCrew.com/AmazonCanada, there's some links there for how you can self register. But the easiest way is to use a customs broker like PCB.ca, and they'll register for you.
Okay, now the next thing is that you want to monitor that exchange rate every month, just to make sure that your prices are accurate relative to the exchange rate. If that exchange rate has a huge fluctuation one month, you want to adjust your prices for that. Now that kind of covers all the nitty-gritty of actually getting your products into Canada. Now let's talk about some of the marketing stuff. And this is the more fun and sexy stuff. Unfortunately, you can't get to this part without going through all that businessy stuff prior to it. So, selling in Canada, Amazon Canada, how are you going to be successful?
So, the first thing that you should do, when you send your items and now they're for sale on Amazon Canada, well, turn on sponsored ads. That kind of is the same strategy in America, turn on sponsored ads from the get go. You're going to be absolutely floored how cheap advertising in Canada is. It is dirt cheap. This is like 2013 on Amazon.com. This is great because Amazon in Canada, it's pretty prolific. It's not quite firmly ingrained in our culture as it is in American culture. Not every home has Amazon Prime here in Canada. It's significant and it's definitely more than European households for sure. It's probably the number two in the world for sure, in terms of Amazon's penetration, but it's not quite as deep as America.
But when it does become that deep and it's definitely going to happen in the next couple of years, this is when you can really take advantage of being in Amazon early. Taking advantage of this low advertising rates, getting some initial traction, getting some initial reviews for literally probably well under 10% ACOS, probably closer to three to 5% ACOS. Get your sales early, get them cheap, and take advantage of these really cheap advertising rates and get those reviews for your product and get that initial traction really pennies on the dollar. These rates are going to go up probably in the next year or two here, you're going to turn on your Amazon or go to your Amazon.ca sponsored ad dashboard and find out that you're paying the same as in America. But right now that's not the case.
The other thing, when you're selling on Amazon Canada, Canada technically has two languages. I have a good friend David Coyard [ph] who's actually French Canadian. He's going to hate me for saying technically with quotation marks we have to official languages. The great thing is for us English speaking Canadians is that most French Canadians also speak English, it doesn't work the other way around. But French is the language for a big portion of Canadians. So, that means that somebody in Amazon.ca from Quebec is not searching for garlic press. They're searching for — I have no idea how you say garlic press in French, let's say garlic press. So they're searching for garlic press in Amazon.ca, and that is going to impact the SEO for Canadian listings.
So, you're probably not going to have your listings translated into French. I'm not even sure how you'd actually go about that. But there's a quick little hack that you can do to kind of take advantage of those French searches is that you can take the main keywords for your product and put them — translate them into French and put them — either some bury them in the bullet points, or bury them in the description. And you're going to immediately get some search traction from those French searches.
And in fact this is a hack that kind of works in America and other marketplaces too. So, a lot of people on Amazon.com translate their main keywords into Spanish. Again, that's not a dominant but it's a significant search language on Amazon.com. They translate it in Spanish and then they get some cheap easy traffic and SEO juice from simply translating a few main words into another language. So on Amazon.ca, you can definitely do that, just translate your main keywords, put them in your description and hopefully you get a little bit of search traffic for that.
I do believe Amazon.ca their A9 search algorithm I think somehow it is taking Canadian — or not Canadian, English listings on and translating them on the back end into French for SEO purposes. But translating those main keywords, putting them in at the bottom of your description or somewhere in your bullet points, that's a good cheap hack to get some good SEO for the French speaking portion of Canada.
And finally the last thing that you really want to keep an eye on when you're selling on Amazon.ca is your FBA costs. Now referral fees are pretty much identical in Canada and America, but the FBA shipping costs do vary. And in Canada, this is a really tough one because on some items it's less money and on some items it's more money. Again, relatively speaking and normalizing them into US dollars. It seems for us, our oversize items are cheaper to ship in Canada especially our really large items are cheaper to ship in Canada, where in America it seems that smaller items are cheaper to ship than Canada. So, keep an eye on that, don't assume that your FBA fees are going to be the same relatively speaking in Canada as they are in America, just keep an eye on that.
It doesn't vary all that much. It seems that there's about a 25% variance, but I have noticed for oversize items, we have one extremely large item, it's about 80 inches wide, and it does not exceed basically Amazon special handling dimension requirements in Canada. In the US it does, and what that means, it adds about $75 onto the cost in America but not in Canada. So, keep an eye on those FBA fees. Use Amazon's FBA fee calculator or just go through some of your transactions.
The other thing and I kind of realized that I forgot to mention this earlier on the podcast is that you want to be aware of duty rates going into Canada. And I'm going to spend a minute on this just because it's an important discussion. So, how most people are going to ship into Canada is that you're going to have your products in America, and you're going to basically ship them from America up into Canada. So, there's one negative to doing it that way. And the negative is that you're going to be paying basically double duties. So, you're going to pay duties going into America, let's pretend that you have some garlic presses $1,000 worth, and you pay 10% duties going into America, ship it at 100 bucks.
Now you ship those same garlic presses from America back into Canada. Let's pretend it's $1,000 worth, for some reason you're sending that shipment in its entirety back into Canada. Now Canada charges a 20% duty. So now you've paid $200 in duties. Well, you are not getting that hundred dollars back from America for those duties. Now, you can technically get it back, I'll get into this in a second here. But realistically, you're not getting it back.
And when it comes to duties and this is a great little importing tip for you all, importing duty goes based on the country of origin. So yes, those garlic presses are coming from America. That does not change the fact that they were made in China, in Guangzhou, China. They are still according to every country in the world, those are still Chinese garlic presses, even though they're coming from China or not from China, they're coming from America being shipped from there. They're still considered Chinese goods, and they're going to get dutied at the Chinese tariff. So that really sucks. You're getting double dutied.
Now, obviously, the way around that is to ship directly from China into Canada. The problem is that when you're first starting off, you probably don't have the volume to warrant that. You don't want to send a container of goods from China into Canada. Not until at least you've proven it. So on the beginning; you're probably just going to split your shipments from America into Canada. Now in terms of getting that duty back, yes, you can technically get it back. I can hear people in the audience right now saying aha, but you can get it back.
Yes, you can actually file some request with American customs to get that duty back. In my previous company, we probably paid double duties close to five to $6,000 in excess duties just from routing things through America into Canada. After talking to customs brokers, it was nearly a wash to get that money back in terms of what it would cost us to file the paperwork and more importantly it would take a long time to get that money back. So, it was nothing that we ever pursued. Now, if you're doing tens of thousands of dollars in double duty as I call it, sure yeah, it probably makes sense to file for that duties back. If you're doing a grand or two, it's almost certainly not going to make sense to try and file to get that money back.
There may be a service that pops up somewhere, a duty drawback program to get that duty back in an easier way. Right now though, that does not exist from what I know. If anyone out there in EcomCrew land knows of a service, go to EcomCrew.com and comment in the comments section, and let us know about that service. But for the most part, you're not getting that duty back. The other thing to be aware of is that duties in Canada are a lot more expensive. I find that there are about two to three times more in Canada than they are in America.
And the truth of it is that in America duties are actually just extremely cheap and Canada is more kind of consistent with the rest of the world. But expect to spend two to three times more in duties. So all that Trump stuff about saying that America is getting robbed, it's actually kind of true. America does not charge enough in duties for other countries especially China. So anyway, kind of on that tangent, I think that basically wraps up how and why you should sell on Amazon Canada. Again, I think selling internationally is the future of e-commerce. If you're not doing it now you definitely should look into it.
Again, Canada does not have to be the first market that you expand into, but either Canada or Europe or Australia or Japan, those are kind of the easy pickings. One of those should be your expansion area. You should set that as a goal pretty quickly into your company because although yes Amazon.com, it's really easy to sell into and you store a lot of meat on the bones and Google ads and Google Shopping, international is kind of the future of e-commerce at least in my opinion. So, if you guys have any questions about selling on Amazon Canada or you want to share your experiences selling on any international marketplace, head on over to EcomCrew.com/AmazonCanada and share your thoughts there. Thanks guys, and happy selling.
Interesting episode about Canada but…
after looking at viral launch and jungle scout sales estimator, WHY would I sell their ???
Example USA vitamin c serum avg monthly sales for top 10 listing 79,090$
Example CA vitamin c serum avg monthly sales for top 10 listing 4,265$
Because your chances of actually ranking on .ca are A LOT better than .com. It’s better to have 20% of $4,265 than 0% of $79,090. Also, if you are ranking on .com eventually you saturate those sales and need to expand to the next lowest hanging fruit.
Another great episode! I have been listening to your podcast for a while now and I can’t even explain how much I have learned from both yourself and Mike, so thank you guys for everything you do, definitely appreciate it.
I am just getting ready to release my first product on amazon.com and at the same time I am doing everything you talked about that we should do before we consider launching on amazon.ca, such as building an email list, having my own website/store etc. However, since I am also from Canada and have already registered a corporation here, would it make sense to launch on amazon.ca right away instead of waiting to get all these other things done? Would it take kess time and be easier than for other non-canadian sellers ?
Before listening to this episode I thought my next logical step would be to release the products I am already selling in the US in Canada as well, but after this episode I started thinking to just focus on the US and spend time on finding new products, marketig etc.
Please let me know what you think, I would really like to hear your opinion since you are a Canadian as well! :)
You will definitely get a lot quicker wins on Amazon.ca, although not as big. I wouldn’t choose one over the other but do both simultaneously. The extra effort to start selling in Canada as a Canadian company will be quite negligible. If you were not Canadian, it would be be a different story but there’s no reason to delay selling in Canada as a Canadian company.
Canada has been on my to-do list for a little while. I appreciate this podcast and the helpful tips!
Question: I see many of my products being sold on Amazon.ca already, though I have never shipped inventory there. Will I have trouble establishing my brand in Canada because of these existing listings? My brand is trademarked in the USA but not in Canada (yet).
Hi Michael – it will be a lot easier establishing your brand in Canada then in the U.S., but yes, there is more and more competition in Canada. Still relatively easy though :)
A while back, I think you guys recommended a firm to help us get established in Canada. Would you mind sharing that again? Might have been GST related or perhaps broader?
This is awesome! Do you still recommend Canada? I did it for one brand and it wasn’t as good as I hoped but now going to do it for my son’s card game and this is such great info!
What do you consider “substantial” in terms of registering for GST. $5K, 10k, $25K, $50k?
Who do you use for shipping to Canada? Is it Pacific Customs Broker or do they just do the customs part.
Thanks so much!
Hi Leslie – Yes totally recommend selling into Canada. The ‘official’ threshold is around $35k for being required to register. We mostly use Pacific Customs Broker.