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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

UnknownIt 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!ptg01637396

 

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

1297191096179_ORIGINALThere 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

CG-and-CBP

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

cp-cdn-dollar-012815Although 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 $0.83 US.  So if you list something for sale for $25.00 (CDN), that’s the equivalent of $20.65 (US).

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 $19.30(US) on that $25.00 (CDN) sale!

Also 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 (CDN) sale could be worth as little as $17.85 US after fees and exchange fluctuations!  You can see how quickly profits can be eroded.

Small Market Size

Population_Density_Map_of_Canada

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

spin-the-wheel-ff-cpIf 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 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 flag below:

 

 

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This Post Has 28 Comments
  1. I haven’t been selling as long or as seriously as others have, but all of my competition on the products I currently have listed is from US or overseas sellers. Not sure if they know what they are getting in to.

    1. Dawn,
      I’m seeing a lot of sellers selling on the .ca platform offering FREE shipping and ridiculously low prices on items. I think they’ll be in for a rude awakening when they figure out what the shipping will actually cost them. And after the exchange rate and fees, repatriating their profits into their native currency, it will hurt all the more!

  2. Dude, thanks for this incredibly informative post! I’m so glad I stumbled across it, definitely not gonna expand now to CA after all, it sounds really expensive and risky and just totally not worth the bother. THANK YOU!

  3. Thank you Duncan, I was sitting here racking my brain about getting into amazon.ca and just reading this made up my mind. Also add this to your list… as I was trying to list items in amazon.ca they are not found on amazon.ca. Amazon told me that I have to create each listing because I am 100% FBA in the U.S. and that transfer tool does not apply to my listings. So considering that I have 4000 items to list that would be a pain! Thanks again.

  4. So I am based in ontario, and I wanna sell on amazon. Is it better for me to sell on amazon.ca or amazon.com? Since I wouldn’t have to lay duties if I sell on .ca is it worth it? Or is it still easier to ship and sell to .com???

    1. Hi Laura,
      I’d suggest starting out selling on Amazon Canada. It’s a smaller market and things take longer to sell, however it’ll give you a chance to learn the ropes without the increase competition and complications of selling in the US. I was selling $2,500/mo on Amazon Canada when I started out, and with Q4 (4th Quarter Christmas) coming up, you could do well by stocking up on toys on clearance this summer to sell later. All the best!

      1. I have gotten into a real mess .. I went with a US drop shipping company which have excellent reviews .. and pushed my products to Amazon.ca .. I am new and not sure at all what I am doing .. because of the exchange rate I was and am .. losing 30-40 dollars a sale .. I went in completely blind and I am still trying to figure it .. out .. ideally I would like to find a Canadian drop shipper/wholesaler and do Amazon.ca .. at this point I am at a total loss financially and mentally on what step to take next .. I just know I am determined to give it a shot .. I am hoping I can find what I am looking for here in Canada ..

        1. Hi Alison,
          Ouch! I’m sorry to hear about this! I tend to stay away from drop shippers and stick with wholesalers and retail/online arbitrage. If you’re new to selling on Amazon, and don’t have experience in retail I’d start out small and learn the ropes first. Are you just selling in Canada for now? Hope it all works out for you and that you didn’t lose too much on this decision?!

      2. I have gotten into a real mess .. I went with a US drop shipping company which have excellent reviews .. and pushed my products to Amazon.ca .. I am new and not sure at all what I am doing .. because of the exchange rate I was and am .. losing 30-40 dollars a sale .. I went in completely blind and I am still trying to figure it .. out .. ideally I would like to find a Canadian drop shipper/wholesaler and do Amazon.ca .. at this point I am at a total loss financially and mentally on what step to take next .. I just know I am determined to give it a shot .. I am hoping I can find what I am looking for here in Canada ..

  5. Hello Duncan

    Thanks for the great article and info, I am just starting out selling but want to send a split of inventory to .ca and .com, how can I get an account to sell to the amazon.com? I am a Canadian, would I have to get an U.S. address to create an account under amazon.com? Would I be able to send inventory to the U.S. FBA centers? What sort of customs and duties I have to beware of when selling to the amazon.com as a Canadian?

    Thanks in advance.

    1. Thanks Jon! If you recently registered for an account, I think it should automatically be a “unified” account giving you access to both .ca and .com. You will need a US return address for .com, and I’d suggest using a prep and ship or freight receiving company for that. Running an import export business is complex, and selling through Amazon is no different. I can’t discuss duties and customs practices here, as I’m no expert and it’s a lot of specific information for the products you send and your own personal circumstances. Personally, I try to source everything within the US so I don’t have to deal with cross border headaches. My advice would be to sign up for the Proven Amazon course, if you haven’t already. It’s really helped me build my business and is totally worth the one time fee. Plus, they continually add new content at no extra charge, making it invaluable! You can sign up by clicking here

      1. Thanks for the advice, i’ll definitely take the course to improve my skills. Also would you recommend a prep and ship company to a tax free state near a U.S. fulfillment center? And are there any in Canada you can recommend?
        The fulfillment center in Canada is in Mississauga, so I was wondering if there is are any in Toronto close to the amazon.ca FBA center. Also would you have to register a GST # to sell in the Amazon.ca? I heard some said you don’t because amazon.ca will take care of it, and some said you do because you’ll have to file to CRA. So I wonder what’s your take on this?

        Thanks for the info!

      2. Hi, quick question on this topic if I may? I am Canadian and just started selling on Amazon.ca. I have yet to receive a payment, that is how new I am, LOL.

        You mentioned that I could sell on .com as well? I just signed up last week so I am assuming my account is unified. Can I check somewhere? I see where I can add my banking info to the .com section. Does that mean since I can see that and the .uk as well, I can sell on both of those too? I sure would love more info on where to find out how(through my .ca platform or have to set up accts on .com and .uk?)

        Also, if my sister who is American(based in TN) is my partner, can I use her address for the American address I need then?

        I would love any more resources you could direct me to. While I would love to take that course you mention, my funds are kind of tied up right now…I have the time to read and learn free though, 🙂

        thanks for all your help! this was a great read.

        1. Hi Melanie,
          If you registered a .ca account in Canada, I don’t think it can be unified. You’ll need to open a PRO .com account to have access to a unified account(for .ca and .mx), I believe. Amazon UK is a totally separate account, and will need to be registered on the .co.uk site. It’s a little complex (VAT Tax rules etc) setting up a UK account, and their market is a lot smaller than the US market so I’d probably steer clear of it until you have decent sales on .com.

          You can definitely use your sister’s address in the US. You could also use a Prep and Ship company if you don’t want to handle boxes or touch packing tape (it’s what I use for 90% of my shipments). Amazon.com accept Canadian banks for deposit as well, or you can use a service like Payoneer.

          To raise capital, I’d begin with low cost, high profit items like current textbooks. You can use the free Amazon seller app to start scanning books at your local thrift stores. You can also scope out Craigslist and local garage sales & library books sales. My Facebook group is a great place to ask questions and get started. You can join by clicking here: https://www.facebook.com/groups/354929748032897/
          All the best,
          Duncan

  6. hi,

    I am Canadian from BC and I am wanting to sell my handmade crafts through Amazon Handmade. I am starting to second guess this though because it is only in the US and there seems to be alot of headache to the process. So I am now thinking to try out with Amazon.ca and sell as an individual first and see how I do and then switch to the Fullfillment program when it seems worth it to do. Can you tell me if that sounds like a good idea? I have never sold online at all. I am new to all this.

    thank you,

    Kim

  7. Great article! I’m currently from Ontario Canada and looking to get into amazon FBA/PL. I am contemplating whether to sell on .COM or .CA. My main question is how can we predict sales volume if BSR isn’t accurate. I’ve been using tools like JungleScout and CamelCamelCamel but the BSRs are based on.COM numbers. So is there no way to figure out sales volume? Thanks!!

    1. Same question here, I’ve been sending baby stuff and iPad covers that are well ranked I guess from the US data base because almost 3 weeks now and no cigar. It would be really helpful to have a junglesscout type of tool for Canadian base sellers.

  8. Hi Duncan,
    I bought your e-book and it is great, I really learned a lot! I have been selling on ebay and writing reviews for Amazon products for commission on a few of my websites. I am interested in private labeling my own product because it will be very simple to market.I am Canadian I want to sell on both .ca and .com, when I ship to the .com do i ship to ups in the states and then have them ship to fba warehouses using the American discount ups labels? or do I ship to fba warehouses directly? I know cost of shipping will be around $80.00 going into the states as long as my shipments are below $250 retail each. I have done my research and found a guy in Canada “Brian the Beaver” who buys Canadian clearance “arbitrage” and sells only in .com and has had much success. Its just the how and where to ship into the United States that I am confused on.

  9. Can anybody recommend a logistic company with competitive rates to ship to FBA warehouse in USA from Canada?

  10. Great article!
    But as I understand it, if I sell thru Amazon.ca FBA, most of these pitfalls will not be experienced? I will just have to get the goods there, but once in the Amazon warehouses I should be golden (golden in canadian size standards…).

    No?

  11. Great article!

    We are a US company and have been selling on Amazon.ca since end of 2015 (we use FBA). Our sales started out slow during the first few months and it increased pretty nicely during the spring of 2016. Just in the past 2 months, our sales have been dropping drastically, I mean we are talking about as low as $500-$1000/month. There are other USA companies who sell our products but we definitely own the buy box and have the best price since we are using FBA. Everyone else is charging an arm and a leg for shipping. My question is, what are the general habits of a Canadian shopper? Do they buy on Amazon.ca or Amazon.com?

    We also use FBA in USA (we’re a first party seller) so would FBA in the US ship to Canada?

    1. I think most Canadians go to .ca and check it out but also compare on .com
      Not all products on .com are eligible to ship to Canada.

  12. Hi Duncan,

    My question is about selling books only. I am an author with a Kindle ebook coming out. The print version will be available as well. I don’t expect to sell many print editions but I wanted to have it available. I want to do the fulfillment myself for the same reason. Do I set up a .com sellers account? If Canadians buy copies, and I ship within Canada, it would be in US dollars?

  13. Something to add to this is that now if you are in Canada and are shipping to Amazon.ca you can get discounted rates through UPS like they offer in the USA. Makes shipping across Canada much, much cheaper.

  14. Hi there, just came across this post via a google search. Thanks for the info!
    I am looking into sending a small shipment to Amazon FBA warehouses in Canada to essentially protect my brand, because there are third party sellers listing it at ridiculous prices with international shipping from the US. Do you have a post or a suggestion for where to look for steps involved, e.g. the customs and import process, necessary paperwork, etc? Do you know if it is even possible to simply import a small shipment (under $1000 value) as a US registered LLC, or do I need to sign up for a Canadian equivalent in order to send a shipment, or can I go through a third party to import it on my behalf? It might be more trouble than it’s worth, but I just want to explore the options as I say to protect the brand and deter these unauthorised third party sellers. (plus there’s no harm in expanding into new markets I suppose!). Thanks in advance sorry for all the questions!

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