Who wouldn’t be interested in possibly adding an extra 10% to their revenues? The answer is most likely no one. And where else to start than Canada. Our northern neighbor has one of the most stable and advanced economies in the world. And although the United States is the second largest regional market for online , China being the largest, Canada is slowly but surely catching up. Retail eCommerce sales are expected to reach almost 29 billion Canadian dollars by 2021, up from 18.3 billion in 2016.
Already in 2017 online sales in Canada are up more than 40%. So while the population may only be estimated at 11% of the US, they’re shopping online more than ever. The unique nature of the market means it can make for a profitable supplement to your existing base of US customers. So how do you get started?
If you’re already selling on Amazon.com, there’s little stopping you from expanding to the north. Your North American Unified Account (NAUA) means you can create and manage your product offerings and listings, and manage your pricing and inventory across both the US and Canada from one interface. And even better, your monthly Amazon subscription fee already covers you for selling into Canada, so there’s no additional cost.
So if this opportunity has got you thinking, here’s a few steps to help you on your journey.
1. Decide which marketplace to sell on and which of your products to sell
First of all figure out which marketplace you want to start selling on. Outside of Amazon.ca there’s also ebay.ca, etsy.ca, bestbuy.ca and newegg.ca and many more to choose from. Each marketplace has its own customer base, its own set of rules and policies, commission fees and customer expectations. So pick wisely.
Then take a moment to research whether your products are eligible to sell in Canada. There are import restrictions to Canada, bi-lingual packaging requirements (in French and English) and other regulations for cross-border trade to be aware of. Be sure to do your research. And check out your competition. If you’re planning on selling on Amazon.ca, you can do a like for like comparison with products with the same SKUs – this can give you an idea on how much you can charge for your own products and help you calculate your crucial return on investment (ROI). Remember that Canadian dollars aren’t worth the same as US dollars! When you’re setting your pricing strategy pay attention to the exchange rate – it could be wise to keep an eye on exchange rates monthly or quarterly, depending on what works for your business – and adjust your prices to reflect the exchange rate differences. Tools like forward contracts could help you set your budget by allowing you to protect the exchange rate on a given day for a fixed period of time, from two weeks to one year. It’s important to note that if the exchange rate changes in your favor that you can’t change the contract. Alternatively, WorldFirst also has daily and weekly market updates that could help you keep an eye on the currency markets.
One other thing to be aware of when it comes to your product listings in Canada – unfortunately your NAUA doesn’t automatically copy your US listings to your CA site. You have to create a new listing in the new marketplace. But on the upside, you can tailor your offering to each market.
2. Get your papers in order to start importing to Canada.
There are a number of taxes and requirements to be aware of before starting to sell in Canada. Firstly, anyone not living in Canada who wishes to import into Canada, is required to become a Non-Resident Importer (NRI). An NRI is any company that does not have a permanent presence in Canada and imports goods into Canada under their own name and business number. You’re required to get a business number (BN) prior to the first time you import. You can register for one here.
Once you’ve got your business number, you’re required to send it to the nearest tax office in order to receive an import-export account – these are free – and must be included on all your customs documents.
When it comes to taxes, most imported goods attract a tax rate of 5%. Duty may also be applicable, and it’s important to note that duty is added to the value of the goods and that is the amount the tax is then charged on. It is ultimately your responsibility to comply with all Canada Customs laws and regulations.
Sales on Amazon.ca may also be subject to Goods and Services Tax (GST) or Harmonized Sales Tax (HST), more on that here, depending on the province of supply. If you collect tax on your product sales on Amazon.ca, you must register for GST/HST in Canada and then remit the amount that is over and above what you originally paid out. The GST/HST number is much like the US EIN number. You acquire this number by registering with the Canada Revenue Agency – it’s also free. Most Amazon.ca sellers report and pay the tax on imports annually. Heads up, Canadian customs register everything that comes over their border so you won’t get away with dodging the GST/HST requirement for long.
3. Set your shipping strategy
As ever the two options available to you are Fulfillment by Amazon (FBA) or self-fulfillment.
If you’re using FBA be aware that you’re unable to use your current US FBA center to sell across both Amazon.com and Amazon.ca. Instead, you have to house inventory in fulfillment centers in each marketplace. This means you’ll need to import inventory to Canada. When you use FBA you need to ensure to send your shipment delivered duties paid (DPP) or Amazon will reject your shipment. The fees associated with FBA for Canada and the US may also differ.
If you choose to self-fulfil you could manage your inventory for both marketplaces either by running one set of SKUs for both regions, or separating them by region to manage independently.
4. Get started
Once you’ve decided to take the plunge, sign up to sell on Amazon.ca! Armed with your BN, GST registration and your choice of shipping method you’ll be ready to take on the great white north!
5. Being smart with your Canadian dollars
As we mentioned above, Canadian dollars aren’t worth the same as US dollars. Amazon’s currency converter service will repatriate your earnings for you, and convert them into US dollars on a recurring basis. While this appears to be hassle free, it could end up being costly. A specialist international payments provider could save you hundreds of dollars in conversion costs. An alternative provider of this type of service is WorldFirst. You can manage your account online and bring your revenues back 24/7 in just three clicks. Click here to see how we could help boost your bottom line.
Already a WorldFirst client? Contact your account manager to help get you set up with a CAD account so you can bring more of your Canadian earnings back home.
One final note, this is by no means a comprehensive list of everything you’ll need to do to get started selling in Canada, we hope it gives you enough information to start researching Canada for your own business!
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