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:
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