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The Hidden Pitfalls of Selling on Amazon Canada

Amazon has recently been promoting unified accounts to US sellers, enabling the sale of MF (Merchant Filled) products into Canada.  I’ve noticed an influx of new sellers on the Canadian platform and I’m concerned that many are going to lose a lot of money.  I’m based in Canada, so I started out selling on Amazon.ca.  I’ve recently made a switch to moving more products over to Amazon.com though, for reasons you’ll see below.

Canada Isn’t the United States

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It may sound obvious, but a lot of people think of Canada like an extension of the States, and assume that the costs of selling will be similar. Unfortunately, those who think this way will be in for a rude awakening when they discover the many additional costs involved.

Shipping Costs

To put it bluntly, it’s very expensive to ship within Canada. Whether you use UPS, FedEx, Canada Post, or USPS international shipping, the cost is roughly double to triple that of the equivalent in the US!

Also note that Amazon Canada do not offer discounted UPS rates!  I repeat, there’s NO DISCOUNTED UPS in Canada!  (They’ve since added this but it’s still not as attractive as the US shipping rates) I had to adapt the types of products I sell here to compensate for this (small & light weight).  I also don’t suggest selling Merchant Filled products, as the individual outbound shipping costs make it next to impossible to be competitive or profitable.  If you’re going to sell on Amazon in Canada, I highly recommend using FBA, as it really saves a seller money and allows you to sell things that wouldn’t otherwise be possible vs shipping individual products yourself.

Duties and Courier Fees

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There may be duties or local taxes charged on your shipments entering Canada.  If you’ve not calculated these correctly, or completed the right paperwork, your buyer may be on the hook for these fees.  Many courier companies also charge a minimum brokerage fee anywhere from $35.00-$45.00!  Imagine your customer receiving an item they felt was a great deal and then being asked to pay duties and fees before they can receive their parcel.  Many won’t, and will refuse the delivery, which leads to the next point.

International Returns of Items

What happens when a customer in Canada wants to return a product to you in the US?  Well, I can say from personal experience that it’s complicated and expensive.  There are special forms to complete for customs.  Then there’s the issue of the cost to ship it back to the US, which in most cases just isn’t worth doing as it will be too high. So if a customer is really unhappy, a Merchant Filled US seller’s best recourse is to refund their money and let them keep the product.  This is another reason it’s a better idea to use FBA in Canada so they can handle all returns for you. After all, the idea is to simplify your business using the systems Amazon already have in place.

Exchange Rate Differences

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Although I’m sure you realize that Canada and the US have different currencies, do you also calculate the actual exchange rate differences when listing your products for sale in Canada?  As of the time of this post, the Canadian dollar is worth about $0.73 US.  So if you list something for sale for $25.00 CAD, that’s the equivalent of $18.34 USD.

In addition, the Canadian/US dollar is constantly fluctuating.  I’ve seen months where the Canadian dollar has dropped by over 7% against the US dollar.  Imagine the above scenario, selling at $25 CDN and then losing another 7% on the exchange rate drop.  You’d pocket just $17.06 USD on that $25.00 CAD sale!

Also, you must consider the fees that Amazon’s payment service or your bank will charge to convert those Canadian dollars into US dollars.  These are fees over and above the actual exchange rate and range anywhere from 2% to 5% on average.  In my example above, that $25.00 CAD sale could be worth as little as $16.20 USD after fees and exchange fluctuations.  You can see how quickly profits can be eroded.

Small Market Size

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Keep in mind that Canada’s entire population is estimated at just 11% of the US, with approximately 35.87 million people vs 320 million.  As a result, it’s a much smaller market and things can often take quite a while to move.  So you’ll need to be willing to patient and wait up to several months to sell out of items.

Sales Rank Can be Misleading on Amazon Canada

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If you’re used to sales rank numbers for products on .com, don’t apply those to the same products on .ca!  The catalogue of products on Amazon Canada is far smaller (about 25% of .com).  For example, an item in Home and Kitchen in Canada with a rank of 25,000 is the equivalent of a rank of about 100,000 on .com.   Also, because the catalog is so much smaller in Canada, sales ranks can swing drastically, with only a few sales.  You may see an item on .ca that looks really well ranked, but it only sells a few units per day in reality.  I’ve learned that you just can’t trust ranks in Canada and using services like CamelCamelCamel is more important than ever.

Conclusion

There’s a lot to consider before selling products on Amazon Canada.  You also need to be up to speed on import restrictions, bi-lingual packaging requirements(French and English) and other Canadian regulations before sending anything cross-border. I don’t intend to discourage you, my goal is to prevent you from potential financial losses and otherwise unforeseen complications.  Amazon Canada is a small, unique market that can make for a profitable supplement to your existing base of US customers if you select the right products and know your costs ahead of time.

Please share any experiences you’ve had selling into Canada below, or ask me questions either here or in our Facebook Group of over 4,900 people by clicking here.

So the good news is that as a Canadian, it’s really easy to sell in the US on Amazon.com and take advantage of the HUGE market.

My eBook How to sell on Amazon.com from Canada has sold hundreds of copies and teaches you everything you need to get started selling on Amazon.com from Canada.

Get your copy by clicking the eBook below:

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