How To Start Dropshipping on Shopify In Canada (2024 guide)

Starting a Shopify dropshipping business in Canada is an exciting opportunity for entrepreneurs looking to enter the ecommerce industry. In this guide, we’ll walk you through the key steps and strategies necessary to build a successful Shopify dropshipping online business in the Canadian market. 

Should you start a Shopify dropshipping business in Canada?

Absolutely, Shopify dropshipping in Canada is a viable and promising venture. In 2024, retail e-commerce in Canada is projected to rake in over $65.5 billion U.S. dollars, and by 2029, this number is expected to skyrocket to $104 billion U.S. dollars. This growth trajectory offers an incredible opportunity for entrepreneurs.

What makes dropshipping particularly appealing is its low-risk, high-reward model. You don’t need to worry about managing physical inventories or incurring warehousing fees. Plus, it allows you to tap into the Canadian market right from the comfort of your home.

Given that Canada is one of the largest countries in the world, the audience potential for your Shopify dropshipping business is immense. As you tap into the ever-growing Canadian e-commerce landscape, this broad reach translates to significant profit potential.

How Does Shopify Dropshipping Work in Canada?

Shopify dropshipping Canada is a streamlined approach to ecommerce that allows entrepreneurs to sell products without the need to manage inventory or handle shipping logistics. Here’s how it works:

The process begins when a customer purchases an item from our store. Subsequently, the supplier ships the order directly to the customer, and we earn a profit from the markup.

To make this happen, we need to use a robust selling platform like Shopify. Shopify optimizes our business with its extensive customization options and allows for unlimited product listings. Although Shopify does not generate organic traffic, we can employ effective marketing strategies to expand our reach in Canada.

Additionally, dropshipping in Canada is possible even if we reside in another country. However, we must know Canada’s tax requirements and business registration regulations.

Before Dropshipping on the Shopify store in Canada

Here’s a straightforward look at Canadian business regulations and tax implications for dropshipping businesses.

Understand Canadian business regulations 

Before launching your Shopify dropshipping outlet, it’s vital to grasp Canadian business regulations.

• Register for a business number at the federal level.
• Register your business name.
• Ensure compliance with local selling and operational regulations.
• Follow import rules, complete necessary declarations, and ensure products meet Canadian standards.
• Your online shop must have Terms and Conditions and Privacy Policies as mandated by the Canadian Office of Consumer Affairs.

Tax implications for dropshipping businesses in Canada  

Taxation poses a puzzle for dropshipping enterprises in Canada. You’re You must typically and remit Goods and Services Tax (GST) or Harmonized Sales Tax (HST), contingent on your operational region. GST stands at 5% federally, while HST bundles GST with a provincial rate, fluctuating from 13% to 15%. Some provinces tack on a Provincial Sales Tax (PST) to manage too.

When dealing internationally, factor in duties and import taxes. Maintaining meticulous financial records is crucial, given that the Canada Revenue Agency (CRA) mandates tax collection based on profits and discerning taxable versus non-taxable goods and services⁷.

How To Start a Shopify Dropshipping Business in Canada: A Detailed Guide

This detailed guide will walk you through the steps of starting a Shopify dropshipping business in Canada, providing essential tips and insights to help you launch and grow your ecommerce store successfully.

Step 1: Decide what niche, a general, or one-product you choose

Consider what niche market you target. This could be a specific product category or a single product that solves a particular problem or fulfills a need.

You have three options:

• General Store: Offers a variety of products across different categories.
• Niche Store: Focuses on a specific product category (e.g., fitness gear, pet supplies).
• One-Product Store: Promotes a single standout product.

Here are some pointers to consider when selecting your niche: 

• Seek High-Margin Profits: Aim to choose products within your niche that offer high profit margins, whether they are low-priced items at $20 or higher-priced items at $1,500.
• Consider Low Shipping Costs: Since shipping costs are out of your control in dropshipping, select products that are easy to ship. This strategy reduces shipping costs and maximizes profits, making the product more attractive to customers who may be hesitant about high shipping fees.
• Choose Appealing Products: Choose products that naturally attract customers and encourage impulsive purchases. When visitors visit your website, an appealing product can distinguish between a sale and a missed opportunity.
• Select Desirable Products: Utilize tools like Google Trends, Keywords Everywhere, Google’s Keyword Planner, or the Amazon Bestseller list to identify products that are currently popular. Choosing a product already in demand ensures you aren’t starting at a disadvantage.

Step 2: Choose the dropshipping product

Choosing the right dropshipping products is vital for your Shopify store’s success in Canada. Start by selecting a niche that interests you and has a significant audience. Conduct in-depth market research to identify trending products with strong demand and potential for good profit margins.

Consider these products’ unique selling propositions (USPs), such as innovative designs, superior quality, or exclusive supplier partnerships, which can differentiate them from competitors. Beyond demand, evaluate the potential profit margins, accounting for costs like goods sold and shipping, and calculate the return on investment (ROI) to ensure financial viability.

Step 3: Define the ideal target audience

Identify your ideal customers based on demographics, interests, and behaviors. Understanding your audience will help you tailor your marketing efforts effectively.

• Demographics: Determine the age, gender, location, and income level of your ideal customers. Understanding these basic demographics will help you tailor your marketing messages to resonate with them effectively.
• Interests and Hobbies: Identify your target audience’s buying behaviors and preferences. This will allow you to align your products and marketing efforts with their interests, making your offerings more appealing to them.
• Behaviors and Preferences: Analyze your target audience’s buying behaviors and preferences. Consider factors such as shopping habits, brand preferences, and pain points they may experience.
• Challenges and Pain Points: Identify your ideal customers’ challenges and pain points, making them more compelling to your target audience.
• Communication Channels: Whether it’s social media, email, or other channels, knowing where your audience spends their time online will help you reach them more effectively with your marketing messages.

Step 4: Competitive research 

Analyze your competitors in your chosen niche. Look at their product offerings, pricing, branding, and customer reviews to understand their strategies, pricing, and product offerings. Identifying gaps or areas where you can differentiate will help you position your store uniquely in the market.

• Evaluate Competitor’s Product Offerings: Look closely at your competitors’ products within your chosen niche. Pay attention to their products’ variety, quality, and unique features.  
• Assess Branding and Messaging: Study your competitors’ branding elements and messaging. This includes their logo, website design, tone of voice, and overall brand identity. Identify aspects that resonate with customers and consider how you can differentiate your brand.
• Review Customer Feedback and Reviews: Read the customer reviews and feedback for your competitor’s products and services. You should pay close attention to positive and negative feedback to understand customer preferences, paint points, and areas for improvement.
• Identify Unique Selling Propositions (USPs): Consider USPs’s products such as product quality, customer service, and exclusive features, ccreating a compelling reason for customers to choose your offerings over competitors.
• Spot Opportunities for Differentiation: Look for gaps or areas where you can differentiate your Shopify store from competitors. This could involve offering unique products, providing better customer service, or implementing innovative marketing strategies.

Step 5: Choose the right dropshipping supplier 

Research and partner with reliable dropshipping suppliers who offer quality products and efficient shipping. Consider these factors:

• Research and Vetting: Conduct thorough research to identify potential dropshipping suppliers. Look for suppliers with a proven track record of reliability and quality by checking reviews and testimonials from other dropshippers to gauge their reputation.
• Efficient Shipping: Consider the shipping times and methods offered by the supplier. Opt for suppliers that can fulfill orders quickly and reliably to ensure customer satisfaction.
• Product Range: Evaluate the supplier’s product range to ensure it matches your niche and provides a diverse selection, as this can attract a range of customers and increase sales potential.
• Shopify Integration: Take advantage of Shopify’s integration with various dropshipping apps to streamline the supplier selection. Explore different apps to find one that offers the features and functionality to manage your dropshipping business efficiently.

Step 6: Build your Shopify store

The next step is to set up our Shopify dropshipping store in Canada. Store owners can follow a detailed guide to establish our online stores in this article: “How To Dropship With Shopify – Our Complete Guide.”

Here is a brief overview of building a Shopify store: 

• Step1: Create a Shopify account
• Step 2: Choose the business name
• Step 3: Connect the store domain
• Step 4: Design and customize your Shopify store, such as themes, logo, images, product information, etc
• Step 5: Optimize your product listings
• Step 6: Create a professional homepage
• Step 7: Set up store policies & legal pages
• Step 8: Customize the Shopify navigation menu 
• Step 9: Choose store currency and payment method
• Step 10: Configure checkout settings & shipping zones

Step 7: Import products to your Shopify store 

There are two methods (manually or automatically list products) for identifying our suppliers for importing products to our Shopify dropshipping store in Canada. 

For the manual importing method, store owners should go to the supplier’s website and copy the product details. After that, these data will be pasted into our Shopify stores.  

Another method is automatic importing, saving us from manual work. With this way, transferring products from the supplier’s website to our Shopify stores is fast and easy. You can refer to AutoDS with four straightforward automatic importing methods: 

• One-click importer
• Single product uploader 
• Adding multiple product IDs/URLs
• Bulk importer

Step 8: Promote your store with marketing campaigns 

Implement marketing strategies to drive traffic to your store. This could include social media marketing, email campaigns, influencer partnerships, and search engine optimization (SEO). 

• Craft a Marketing Plan: Develop a comprehensive marketing plan outlining your strategies and tactics to attract potential customers to your store.
• Utilize Social Media: Leverage popular social media platforms such as Instagram, Facebook, and Pinterest to showcase your products, engage with your audience, and drive traffic to your store.
• Engage in Content Marketing: Create informative and engaging content related to your niche, such as blog posts, articles, or videos. Share this content on your website and social media channels to establish your brand as an authority in your industry and attract organic traffic. 
• Explore Paid Advertising: Consider investing in paid advertising channels like Google Ads or Facebook Ads to reach a wider audience and drive targeted traffic to your store. Set clear goals and budgets for your ad campaigns to maximize their effectiveness.
• Collaborate with Influencers: Partner with influencers and bloggers in your niche to reach their followers and potential customers. Influencer partnerships helps increase brand awareness and drive traffic to your store through authentic recommendations and endorsements.

Step 9: Analyze and optimize your store 

Regularly monitor your store’s performance using Shopify analytics. Identify areas for improvement, such as:

• Utilize Shopify Analytics: Regularly review your store’s performance metrics using Shopify’s built-in analytics tools. Track critical indicators such as sales, conversion rates, and visitor behavior to gain insights into your store’s performance.  
• Monitor Sales Metrics: Keep a close eye on your sales data to identify trends and patterns. Analyze factors such as top-selling products, average order value, and sales by traffic source to understand what drives revenue growth.
• Evaluate Conversion Rates: Assess your store’s conversion rates to determine how effectively you turn visitors into customers. Identify any bottlenecks in the conversion process and implement strategies to improve conversion rates, such as optimizing product pages or streamlining the checkout process.
• Listen to Customer Feedback: Actively solicit and listen to feedback from your customers to understand their needs and preferences. Use feedback surveys, reviews, and customer support interactions to gather insights and identify areas for improvement.
• Optimize for SEO: Continuously optimize your store for search engines to improve your visibility and attract organic traffic. Conduct keyword research, optimize product descriptions and meta tags, and build quality backlinks to enhance your store’s search engine rankings.
• Implement A/B Testing: Experiment with design elements, pricing strategies, and marketing tactics through A/B testing. Test variations of your website and marketing campaigns to identify what resonates best with your audience and drives the highest conversions.
• Stay Updated with Industry Trends: Keep abreast of industry trends and best practices in eCommerce to stay competitive. Regularly research and monitor your competitors to identify new opportunities and stay ahead of the curve.

Top 5 Shopify Dropshipping Suppliers You Should Know 

Choosing the right supplier for dropshipping is vital as it builds customer loyalty and increases profits. Here are the top 5 dropshipping suppliers for our Shopify business in Canada. 

Amazon 

Amazon is a global marketplace that offers a vast array of products.  Amazon’s diverse product range suits dropshippers catering to a wide range of niches, from general lifestyle products to specialized items like electronics or beauty products.

Highlight features

• Vast product range across various categories.
• Fast and often free shipping with Amazon Prime.
• Trusted reputation for quality and reliability.
• Convenient one-stop shopping experience.
• Robust seller support and resources.

CJDropshipping

CJDropshipping is a popular choice for Shopify dropshippers, known for its wide product selection and global warehousing options.  CJDropshipping caters to Shopify merchants looking for a wide range of affordable products, particularly in categories such as electronics, fashion accessories, and home decor.

Highlight features

• Extensive product sourcing directly from manufacturers in China.
• Automated order fulfillment and shipping services.
• Customization options for products and packaging.
• Competitive pricing on a wide range of products.
• Dedicated customer support for Shopify merchants.

Costco

Costco‘s niche is particularly suitable for dropshippers targeting customers looking to purchase goods in bulk, such as families, small businesses, or organizations.

Highlight features

• Bulk discounts on a variety of products.
• High-quality products with a trusted reputation.
• Exclusive deals and perks for Costco members.
• Convenient one-stop shopping for bulk needs.
• Reliable customer service and support.

DreamHug

DreamHug is a Shopify dropshipping supplier specializing in high-quality bedding and home textile products, such as luxury home decor enthusiasts or individuals seeking comfort and style in their living spaces.

Highlight features

• Luxurious bedding and home textile products.
• Customization options for branding and personalization.
• Fast and reliable shipping for prompt delivery.
• High-quality materials for premium comfort.
• Dedicated customer support for product inquiries.

eBay 

eBay is a global online marketplace offering a platform for dropshippers to sell various products and customer demographics, from vintage collectibles to brand-new electronics.

Highlight features

• Auction-style listings and Buy-It-Now options.
• Global reach for diverse customer demographics.
• Seller tools and resources for managing listings.
• Flexible selling options for various product categories.
• Buyer protection and dispute resolution services.

Common Issues and Solutions When Shopify Dropshipping in Canada 

When dropshipping in Canada through Shopify, several common issues may arise. Here’s a breakdown of these issues, along with their respective solutions:

Shipping Delays and Costs

• Problem: Shipping delays and high shipping costs can negatively impact customer satisfaction and eat into profits.
• Solution: Choose suppliers who offer reasonable shipping times and costs to Canada. Consider using multiple suppliers or fulfillment centers strategically located to minimize shipping times. Additionally, offering free shipping thresholds or flat-rate shipping can help mitigate the impact of shipping costs on customers.

Currency Conversion and Exchange Rates

• Problem: Dealing with currency conversion and fluctuating exchange rates when dealing with international suppliers and customers can lead to financial uncertainty.
• Solution: Set prices in Canadian dollars to provide clarity for Canadian customers. Use Shopify’s built-in currency conversion feature to display prices in customers’ local currencies. Consider using payment gateways that support multi-currency transactions to simplify the payment process for international customers.

Import Duties and Taxes

• Problem: Import duties and taxes can surprise customers and lead to dissatisfaction if not properly disclosed or managed.
• Solution: Clearly communicate potential import duties and taxes to customers at checkout. Provide information on duties and taxes for specific products or regions on your website. Consider offering duty-paid shipping options or including duties and taxes in the product price to provide a seamless purchasing experience for customers.

Legal Compliance

• Problem: Navigating Canadian business regulations, including tax laws and consumer protection regulations, can be challenging for dropshipping businesses.
• Solution: Stay informed about Canadian business regulations and ensure compliance with federal and provincial laws. Register your business and obtain necessary permits or licenses as required. Consult legal and tax professionals to ensure your business operations align with Canadian laws and regulations.

Customer Service and Communication

• Problem: Providing timely and effective customer service, including handling inquiries, returns, and complaints, can be demanding for dropshipping businesses.
• Solution: Implement clear communication channels and response protocols to address customer inquiries promptly. Provide detailed product descriptions and policies on your website to set clear expectations for customers. Utilize customer service tools and automation to streamline communication processes and improve response times.

Bottom Line 

Starting a Shopify dropshipping business in Canada is an accessible journey for those with the right knowledge and tools. After going through this topic, you can now choose products, define your audience, and craft compelling marketing campaigns.

Shopify Dropshipping Canada: FAQs