How to Start a Dropshipping Business in Canada

Canada has a lot of potential for creating a successful business. And dropshipping in Canada is similar to anywhere else in the world. 

But there are a few things to consider, such as registering for a Canadian business number, complying with the federal and provincial or territorial regulations, and finding winning products for Canadian customers.

We’ve expanded our dropshipping business and now successfully sell in Canada. By doing so, we’ve learned what to look for when doing product research for the Canadian market and all about running a dropshipping business in Canada.

In this article, we’ll share everything we know. So, hopefully, you can create your own dropshipping business in Canada.

Let’s get started.

Key Takeaways 

• Find winning products for the Canadian market using a product research tool that allows you to search for stores that sell in Canadian dollars or have a .ca domain.
• Over 91% of the Canadian population uses social media, making it one of the most connected countries. This makes social media a great way to advertise your products in Canada.
• You might need to register for a business number at a federal level and register your business name in your province or territory.
• The rules and regulations vary in Canada, depending on the province or territory you operate your business from and sell to.

How to Start a Dropshipping Business in Canada Step-by-Step 

The basic steps of dropshipping in Canada are the same as anywhere else. 

You find a product, find a supplier, build a store, market your product, and optimize your store. 

However, there are a few things we’ve learned that are specific to the Canadian market. We’ll share all the tips and tricks to help you build the most successful dropshipping business in Canada. 

We’ve also included a few free ways to help keep the cost down so you can get started right away.

1. Product Research for Canadian Customers

Before you start dropshipping, you need to find a product to sell.

We always recommend doing Canadian-specific product research. This will help you find out if the product will sell in Canada, as not all products sell well in all locations.

For example, in Canada, approximately half of residents buy their milk in bags. You could then find products for this, like a jug that’s designed to fit a bag of milk.

In comparison, the UK and US don’t have milk as readily available in bags. Therefore, this type of product wouldn’t sell in either of these countries.

So, how do we know whether a product is a winner? Well, as we’ve seen, we need to know that the product is in demand. 

As well as demand, we also look at competition and profit. This is for the following reasons:

• Demand - We’ve already looked at finding a product that Canadian customers will use. But we also need to consider how many people will actually buy the product. You can look at your competition's sales, trends, keyword search volume, and other things to confirm that customers are actively searching and buying the product you want to sell.
• Competition - How many other people are selling the same product? You want to find a product with little competition. And if there is competition, you need to be able to beat it. This could be with a better product, lower price, or by offering better service.
• Profit - This is the amount you’ll earn after you’ve paid for the product, shipping, fees, and advertising. You’ll need to ensure that you’ll make a profit for every product you sell.

As well as these, you should also consider if the product has any ad restrictions, the customer base, and the longevity of the product. We have an entire article on How to Do Product Research that explores these in-depth.

Now we know what to look for in a winning product, let’s find some. These are a few of our favorite free and paid ways to find winning products to sell in Canada.

Free Product Research Tool Trial - Best Free Product Research Method

There are lots of product research tools available.

Dropshipping tools usually provide the most accurate data so you can make the most informed decisions. 

The tools uncover hidden data that isn’t available anywhere else. You can dissect all of the data these tools provide to identify winning products to dropship.

Most of these tools offer a free trial. During the trial, you can use the features these tools offer. We’ve often found our winning products during the trial and then canceled our trial before committing to a subscription. 

We'll use Dropship as an example to show you how we do this. 

Dropship has a 7-day free trial, and we can use the Product Database tool to find winning products.

The Product Database tool lets us spy on Shopify stores. You can uncover other Shopify sellers' sales, revenue, and more. The Product Database allows you to search and use filters to find products that meet your criteria. You can then analyze the products to find winners.

To use Dropship’s Product Database tool for free to find winning products in Canada, follow these steps:

1. Sign up for Dropship’s free trial with this link. You can use your email address or sign up with Google, Facebook, or Apple. 
2. Open the dashboard and select Product Database. 
3. Click Advanced Filters.
4. Unselect all of the currencies and select CAD from the Store Currency filter.

Selecting CAD will only show products that are sold in Canadian dollars and, therefore, bought by Canadian customers.

You can then adjust the other filters to find products that meet your winning criteria. 

If you don’t know where to start with the filters, think about the number of sales you want to make. For example, if you want to make at least 15 sales a day, enter 450 into the minimum monthly sales box. 

We also recommend looking at the category filters. For example, we would avoid selling food items and electricals due to the restrictions and regulations. We could untick these categories to help narrow down the search.

5. Click Search.
6. Look through the product and click on any of the products that look like winners to analyze them in-depth.

You can continue to adjust the filters to help you find winners for the Canadian market.

7. Once you’ve found your winning products, make sure to cancel your trial so you’re not charged.

Explore Canadian-Specific Marketplaces

Amazon and Walmart are some of Canada's most popular e-commerce platforms [1]. 

These platforms are where Canadian shoppers spend. And we can use them to help us find products that sell well in Canada.

Before you start researching, make sure you visit the .ca versions of the marketplace. You might also need to enter a local Canadian postcode for the marketplace.

How to Do Product Research on Amazon

• Best Sellers List - Amazon has a list of all the top-selling products in each category. We know that all of the products in this list are guaranteed to have a high volume of sales. This meets our first criterion - demand. We know the products are in demand. 

You can then go through the best-sellers to find products that are also profitable and have low competition. 

For example, with a quick search, we can see that two of the best-selling clothing products on Amazon.ca are orange t-shirts. We can then research why. 

Canada has a national holiday called The National Day for Truth and Reconciliation, commonly known as Orange Shirt Day. The date is celebrated in September. 

Again, we wouldn’t have known this as we don’t live in Canada. 

This gives you an instant product idea for Canadian customers. 

Neither of the products on Amazon has many reviews, meaning you should be able to compete. This checks another box - low competition.

And you could donate a certain amount of your profits to the organization to support the cause. Neither of the existing suppliers is associated with The Truth and Reconciliation Commission or makes any donations. This could help set your product apart from the competition. 

• Autofill Search Bar - As you type a word into Amazon, it will offer suggestions to make the shopping experience easier for the regular customer.

We suspect the suggestions are made based on other buyers' behavior. We can therefore guess that the suggestions are popular and best-selling products.

We can use these suggestions to discover products with a high demand.

For example, we can type in Card to the Amazon search bar. It will then offer ten suggestions. 

We can then choose one of the suggestions and investigate it further. So, we’ll enter Card Shuffler. Once we enter this, it will suggest another ten products.

You can go through these product suggestions to identify winning products.

How to Do Product Research on Walmart

• Grab Our Top-Sellers - Walmart has a section called Grab Our Top Sellers Now on the main page. All of these products are the current best-selling products. There are products from all niches. For example, when we checked, there were kid’s toys, art supplies, games, electronics, and more.

We recommend looking into each product and seeing if it could be a winner for your store.

If you don’t find anything the first time you check the list, check back later, as the list is frequently updated.

• Autofill Search Bar - Like Amazon, Walmart also autofills the search bar as you type.

You can use the same method we discussed in the Amazon section to find winning products.

But Walmart also offers category suggestions.

For example, when we type the word Card into Walmart, we’re offered suggestions in clothing, grocery, party, toys, and sports.

You can then explore these categories to find winning products.

Use Canadian Social Media Posts and Groups

Canada is one of the best-connected countries, with a high percentage of the population regularly using social media.

So, you can use it to find out what Canadian customers are looking for and interested in, which can lead us to find winning products.

We’ve used Facebook, Instagram, and TikTok for product research, and these are our favorite methods for using them:

How to Do Product Research on Facebook

• Location Facebook Groups - Facebook has tons of groups that bring together like-minded people. You can find groups that are relevant to your niche and find out what products could be popular. It’s also a great place to gain feedback on your product ideas. 

One of the other benefits of Facebook groups is that you can set the location for the group. So you can input the area you want to sell in and get location-specific advice.

How to Do Product Research on Instagram

• Canadian Influencers - Looking at the products influencers are using and promoting can help you identify trending and popular products that might be good to dropship. 

We recommend looking for influencers in the area you want to sell. You can then see what engagement they get on each post and look at the reaction from commenters. This can help you determine whether a product is going to be successful.

• Location Search - Instagram users can tag their photos with the location they were taken. You can search for places within Canada and look at what people are posting to give you product ideas. 

We also recommend looking for local businesses using the location search. You can see which products are popular and selling well.

How to Do Product Research on TikTok

• Hashtags - TikTok has lots of creators that create videos with product recommendations. You can find these using hashtags like CAAmazonFinds. 

Often, the products are small gadgets, making them perfect for dropshipping.

You can look at the engagements and comments to get an idea of products that might be successful.

Paid Product Research Tools

We’ve looked at using a free trial for product research tools.

But if you haven’t finished your product research during the trial or want to continue using a tool after the free trial, you’ll need to subscribe to a paid plan.

There are tons of tools available, and each tool does something slightly different. 

Some will let you spy on Shopify stores, and others on Amazon sellers. 

Some tools will only show best-selling products, and others will reveal sales and revenue.

To help you find the right tool for your dropshipping business, here are a few of our favorites:

• Dropship - In the free trial section, we already saw that Dropship shows the sales and revenue data for each Shopify product. As well as this, it also reveals store information, such as the theme, number of products, best-sellers, ads, and much more.
• Helium 10 - Helium 10 is an Amazon product research tool. It uncovers the sales and revenue of other Shopify sellers. You can also search for winning keywords and manage and scale your Amazon business using the software.
• Koala Inspector - Spy on Shopify stores as you browse using the Koala Inspector Chrome extension. You can see the best-sellers, store apps, and tons of other data.
• Dropship Spy - Unlike other spy tools, Dropship Spy doesn’t reveal store or seller data. Instead, it allows you to unlock trending products. Dropship Spy recommends products that it thinks are winners based on sales trends and other key indicators. You can then explore these products to see if they’ll be winners for your store.

We’ve written an entire article that explores each product research tool in more depth and has a few more recommendations. Check it out to find the right product research tool for your business.

I hope you’ve managed to find a winning product using one of the methods mentioned. But take a look at our article on How to Find Winning Products if you need a few more tips and tricks.

2. Find a Supplier to Ship to Canada 

So, you’ve got a winning product idea.

It’s time to find a supplier to source the product from.

There are tons of suppliers available. You could find a local supplier or use a supplier directory. Some of the most popular supplier directories are SaleHoo, Worldwide Brands, Wholesale2B, Doba, and many others.

But our favorite and most used is AliExpress.

AliExpress is a directory made up of small businesses, many of which are based in China. It’s perfect for dropshipping, as you can source and buy individual products. It also integrates with different dropshipping software, so you can easily manage and automate your dropshipping business.

AliExpress sells millions of products, and you can source almost anything. Before you start searching for your products, make sure to adjust the shipping location and currency. You can select Canada from the Ship To dropdown and CAD as the currency.

Just enter the product name into the search bar, and it will populate tons of results.

Often, there will be multiple suppliers that sell the same product.

Choose your supplier based on the product quality, cost, shipping information, and warranties. To find out this information, you can message several suppliers. 

When you message the suppliers, we recommend asking the following questions:

• What is the cost per piece?
• How much is shipping?
• Which shipping carrier do you use?
• How long does it take to send the product from when you receive the order?
• What is the warranty, refund, and return policy?
• Do you facilitate dropshipping? (e.g., the branding needs to be removed, no supplier invoices added to the packages, integrating with automation tools, etc.)

Once you’ve received your answers, you can compare the results and order samples from a few of the top ones. You can then compare the samples and choose a supplier.

If you want to save time and money initially, you don’t have to order samples. Instead, you can ask the suppliers for images and videos of the products. 

We personally always order samples. We find it saves us money in the long run as we can test the products ourselves and confirm the quality before we sell them.

We’ve written a few articles that can help you find and choose the right dropshipping supplier. These go into more detail and include everything you need to know so you can make the best decision. Check them out here: How to Find Dropshipping Suppliers and What to Consider When Choosing a Dropshipping Supplier. 

3. Create a Store for Canadian Buyers 

You’ve done the hard part. You’ve found a winning product and a supplier. 

It’s time to build a store to sell your products. 

You can create a store on several platforms, like Wix, Squarespace, WordPress, and BigCommerce. But our favorite platform is Shopify. 

Shopify currently has a promotion for new users. You can create a store for $1 per month for the first three months. 

Shopify is super easy to use, and you can create a store for your products in no time. 

If you want help setting up your store, check out Nawras’s YouTube tutorial. He goes through everything you need to know about Shopify and building your first online store.

Shopify connects with all the top payment processors, like Visa, Mastercard, and American Express. As well as these, Apple Pay and Google Pay are both available on Shopify. 

This is great for Canadian customers, as over 29% of Canadians have completed a purchase using a digital or mobile wallet [2]. Accepting payment methods that are familiar and secure, like Apple and Google Pay, can help encourage sales.

Shopify also makes it easy to dropship, as you can connect with tools like AutoDS to automate your order and fulfillment process. It will automatically send the orders you receive to your supplier. Your supplier can then ship the products to your customers and send you the order tracking details.

4. Market the Products 

Your store is ready to accept orders. It’s now time to find some customers.

The best way to do this is to run ads. 

Dropship has an Ad Spot tool. It’s one of the latest features, and it allows you to search for and spy on your competitor's ads.

This can give you inspiration for your own ads and show you what’s working and what isn’t. 

For example, let’s say you’re selling Cat Toys. You can enter the term Cat Toys into the Ad Copy box and click Search. This will display all of the ads that have Cat Toys in the caption, headline, or description. 

You can see the copy, images, buy button, and seller for each ad. You can also see the engagement, which includes the reactions, comments, and shares. We can’t see the number of clicks each ad gets, but we can guess that the more positive engagement an ad receives, the higher the number of sales.

If you don’t want to run ads, you can generate sales in several other ways. Some of our favorite ways are the following:

• Use your own social media pages to promote your products
• Contact influencers to promote your products
• Create an email sequence to send to your email list

5. Analyze and Optimize 

Congratulations! You’ve made your first few sales! 

Now, it’s time to review every aspect of your dropshipping business to see if you can generate more sales and increase your profit.

We look at the following areas:

• Store - What is your conversion rate? This is the number of users who actually purchase your product after visiting your site. 

Let’s say you have 10,000 people open your website from your ad. And of that 10,000, 400 purchased your product. That would mean your conversion rate is 4%. The average e-commerce conversion rate is around 2.5% to 3% [3].

If you’re not hitting a 2.5% conversion rate, think about why. 

Think about adding more payment options and checking if there are any issues with the checkout. You could also edit your product pages and test different copy, colors, and images and see if it improves your conversion rate.

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• Ads - How are your ads performing? Are they reaching your desired audience? Could you run them on different platforms to generate more traffic?

If you want to check your numbers, you can use our free calculators. These are the following:

• Return On Ad Spend (ROAS)
• Break Even Return On Ad Spend (BEROAS)
• Cost Per Acquisition (CPA)

• Product - What’s feedback on your products? Are your products generating profit? Are you getting a high number of returns?

• Product Feedback - Customers will often ask questions before purchasing your products. Look at questions that are asked frequently and consider addressing these questions in your listing to help customers.

You can also look at your reviews and see if there are any common complaints or specific features your customers like.

You can fix the complaints and highlight the features on your product page.

If you provide detailed product pages, your customers will know what they’re buying. This will leave them less surprised and reduce the risk of refunds and returns.

• Refunds and Returns - Look at the rate at which customers are refunding and returning your products. If you have a high rate of returns, try to find out why. 

It could be to do with the product quality, delivery time, that their expectations weren’t met, they found the product for a cheaper price, or anything else. 

Once you know the reason, look at how you can fix it.

• Profit Margin - Consider whether you’re meeting the expected amount of profit per product. You might have had to increase your ad budget to generate sales or drop your price to compete. 

Keep an eye on your profit margin. There’s no point selling these products if you’re not making any money. 

If you need help evaluating your numbers, use a Profit Margin Calculator. It’s free for anyone to use. Simply enter your product numbers, and it will show your potential profits. 

Do I Need to Register My Dropshipping Business in Canada?

Although we’ve sold and imported products to Canada, we are not professionals. All of the information we provide is based solely on our own experience. We always recommend consulting a professional before operating your business.

In Canada, you will likely need to register for a business number. You get registered automatically for a business number when you incorporate federally or in certain provinces and when you apply for certain CRA programs [4]. 

Each province and territory in Canada has its own regulations, licenses, permits, and legal requirements.

To confirm exactly what you need, we recommend checking BizPaL. This site is a free service for Canadian businesses provided by federal, provincial, territorial, and local governments. You can enter your region and industry, and it will tell you exactly what you need for your dropshipping business in Canada.

For example, we can enter ‘Toronto’ and ‘Business-to-business electronic markets, and agents and brokers,’ and it will suggest a variety of permits we might need. 

You can then click on each activity tab and check the required and suggested permits relevant to your dropshipping business. 

In this example, it suggests the following for Starting a Business:

• Business Number Registration - Federal
• Federal Incorporation - Federal
• Ontario Business Name Registration/Corporation Registration - Provincial

It then suggests the following for Serving, Selling, Exporting, and Importing:

• Canada Customs Coding Form - Federal
• Export Declaration - Federal
• Canada Customs Invoice - Federal

As well as several others. 

You can look through these to find out exactly what’s required for your dropshipping business. 

Legal and Tax Obligations for Canada 

We’ve already covered how to find out what business licenses and permits you’re required to have.

But there are a few other things to consider to ensure your dropshipping business is legal in Canada. These are the following:

Duty and Taxes on Imported Goods

Products mailed to Canada can be subject to Goods and Service Tax (GST).

Goods worth less than $20 CAD are exempt from GST. 

So, if you’re sourcing your products from abroad, it’s always worth considering this during your product research.

If you’re importing products worth more than CAN$20, make sure to factor the GST into your profit margin.

Some provinces collect Harmonized Sales Tax (HST) instead of GST [5]. 

Corporation or Business Tax

Your business might be required to pay income tax at federal and provincial or territorial levels [6]. 

If your business makes over $30,000 CAD, you might need to collect GST and HST from your customers.

Restricted Products

Canada restricts certain products from being imported, and some require a license to be sold.  

Make sure to check that you can legally sell your products in Canada before adding them to your store.

Intellectual Property

The Canadian Intellectual Property Office protects designs and inventions using trademarks, patents, and copyrights.

If you infringe on someone's IP, they can take legal action against you.

You can use the Canadian government website, Google Patents, and the international database to check whether a product is registered. If it is, you can’t sell them.

Should You Dropship in Canada? 

In short, yes. Canada has an increasing number of online shoppers and a high GDP.

Canadian shoppers have the means to spend, and the expanding e-commerce market suggests it could be a good place to start a dropshipping business.

But if you’re still not sure if it’s right for you, check out the pros and cons below.

Pros

• E-Commerce Revenue - In Canada, the revenue generated by retail e-commerce is set to increase from 62 billion in 2023 to 94 billion in 2027.

This increase in e-commerce sales suggests Canada could be a good place to start a dropshipping business. 

• High GDP - Canada has the ninth-largest economy as of 2023 [7] and a higher GDP than the UK and many other countries we consider good for dropshipping.

If the GDP is rising, it suggests that the economy is healthy. This also suggests that residents have the means to spend, so dropshipping in Canada could be profitable. 

• Social Media - Canada is one of the most connected populations, with a social network penetration rate of 89%. 

The high number of social media users means that you should be able to reach your potential customers using Facebook and Instagram ads.

Cons

• Population and Country Size - Canada is a vast country with a smaller population than the UK and the US. The population density is four people per square km, compared to the US, which has a population density of 37 people per square km, and the UK, which has a population density of 280 per square km [8].

This could mean you have a slow delivery time. Which makes it hard to compete with e-commerce marketplaces like Amazon.

• Business and Tax Rules - As with starting a business in most countries, you need to comply with Canada's laws and restrictions.

This can be complicated to adhere to and might require some professional advice.

Frequently Asked Questions 

Do I Need a Business Licence to Dropship in Canada?

Each province and territory has its own rules. We recommend checking the rules in the area in which you want to operate your business from the official BizPaL site.

Is Dropshipping Profitable in Canada?

Absolutely! But it’s all about finding the right product. 

Make sure to do Canadian market research before launching your product.

How Much Do Dropshippers Earn in Canada? 

On average dropshippers earn around 20% and 30% profit from their sales. So it depends on the number of products you sell. 

There’s no limit to the amount you can earn dropshipping. 

The more sales you make, the more you’ll earn.

Is Dropshipping Legal in Canada? 

Yes, it’s legal to dropship in Canada. Just make sure you check and comply with any federal, province, territory, and local regulations, laws, and restrictions. 

Can I Dropship from Canada?

Yes, it’s legal to dropship from Canada. As long as you abide by the Canadian laws.

Can I Dropship to Canada? 

Yes, although make sure you check that you’re allowed to import the products and if there are any customs or taxes you need to pay. 

Can I Dropship on Amazon in Canada? 

Yes, Amazon does allow you to dropship on its site. However, there is a dropshipping policy and criteria you need to meet. 

It can be hard to compete on Amazon, as we believe it pushes products that are sold by Fulfillment by Amazon sellers. 

We prefer to dropship through our own website rather than on Amazon. 

Can I Use AliExpress to Dropship to Canada?

Yes, you can order your products from AliExpress and sell them in Canada. 

AliExpress allows you to filter suppliers by either those based in Canada or those who can ship to Canada. This makes it easy to find the right AliExpress products and suppliers for your dropshipping stores.

Final Thoughts

We hope you’ve been able to use our step-by-step method, as well as the tips and tricks in this article, to start a dropshipping business in Canada. 

If you haven’t started yet, make sure to check your product ideas using Dropship’s Product Database tool using the 7-day free trial.