Drop shipping is a simple enough concept. You make arrangements with a wholesale supplier, manufacturer or distributor to sell their products direct online, as opposed to having an inventory of products in your physical location. You can offer these products on your own website, or via online auctions like eBay, or through a sellers’ market like Amazon.
When a customer orders the product, you pay the supplier the discounted price to ship it directly to the customer. There usually is no indication that the product came from another company, and many offer branding options to further create the illusion that the product came from your business (such as customized packing slips).
Customer Price – (Wholesale Cost + Expenses) = Your Profit
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The Dropshipping Business Opportunity
Drop shipping offers a unique opportunity for Canadian entrepreneurs to start a business without investing in product inventory. You won’t have to worry about being stuck with products that don’t sell, shipping, etc. You’ll also be able to have US suppliers ship to US customers if you like, without worrying about cross-border red tape.
The drop shipping business model can be permanent, temporary, or hybridized. It’s utilized in both small and large businesses because it’s cost-effective, versatile and easy.
For example, Namaste Vapes has an exclusive drop-shipping supply agreement with Ample Organics Inc. Ample Organics is Canada’s leading seed-to-sale software platform, currently used by the majority of Canadian licensed producers of medical cannabis. Namaste will connect its cannabis hardware and accessory platform via API integration with Ample Organics’ system. This will allow each of Ample Organics’ customers to purchase a large variety of devices and accessories.
How big does it go? Just ask Wayfair.ca, a company started at home that grew to one of the world’s largest online destinations for home decor. Over 90 percent of their products are drop shipped from a large marketplace of thousands of brands. Their total net revenue for Q2, 2020 was $4.3 billion USD.
Closer to home, TDOTPerformance.ca (who scored a Dragon’s Den deal with Michele Romanow in 2015), relies on drop shipping to keep inventory and fulfillment costs at a minimum.
“…drop shipping on demand means they don’t have to carry a lot of inventory, which is expensive,” Michele Romanow told the Financial Post.
Drop Shipping Risks
Most of the issues that used to arise, have been addressed for today’s dropshippers. For example, synced inventory management has all but eliminated fulfillment problems. The new and improved drop shipping business model has had a significant impact on profits. As a business model, dropshipping revenue growth increased by 44.8% in 2018, according to eCommerce Fuel.
There are only two major risks involved in dropshipping:
- Your reputation will ride on the reliability of your drop ship supplier.
- Your supplier may sell out of a product while you’re still taking orders.
Both of these concerns can be addressed by carefully selecting your suppliers. The larger drop shipping networks prevent these issues with integrated, automatic inventory updates and screening of individual suppliers. In less automated situations, consider having more than one supplier of the same product as backup in case an item is sold out. The best way to test reliability is to first place an order for yourself.
“We are 100% drop ship and we have a number of supply partners which are the largest of the large, so we have a deep and diversified catalog and plenty of inventory to work with,” said BettyMills.com CEO, Vic Hanna in an interview with DigitalCommerce360. The online medical supplies superstore has been in business for almost twenty years.
You will have to keep your wits about you, however. For example, some shady companies may offer products that should only be available from authorized dealers (such as Nikon Canada merchandise). If you resell these items, you could land in hot water and your customers could find themselves with a useless service agreement. When in doubt, contact the manufacturer or check their website. Using certified drop shippers through reputable networks (like those listed below) eliminates this issue.
Getting Started with Drop Shipping eCommerce in Canada
First, you’ll need to pinpoint a niche or two to focus on. If you need some help with that, please read 10 Hot Product Niches to Sell or Drop Ship Online in Canada.
If you’d like to set up your own website to sell drop-shipped products, there are eCommerce hosting solutions that accommodate the arrangement with apps (such as Shopify Canada).
The Shopify/AliDropship app setup is what a New Zealand teen recently used to bring in $1.2 million in his first year of dropshipping, averaging 25% margins. The most interesting part of his success is the vast majority of sales came from Canada and the US.
If you use WordPress, there are plug-ins specifically designed for drop shipping, like AliDropship. If you plan to sell on eBay, you’ll find some drop shipping companies are authorized eBay dealers with integrated features to make auction selling easier, such as Wholesale2B.
For additional guidance, please read The Best eCommerce Software Platforms for Drop Shipping.
Fees are intended to cover the shipping service and/or to give you access to wholesale prices on a large number of products (which are usually only available to volume purchasers). Charging a fee is not a red flag. However, there are good services available and there are scams, as is the case with any business arrangement. Again, going through reputable drop shipper networks will greatly reduce these risks.
Our Checklist: How to Start a Drop Shipping Ecommerce Business in Canada guides you step-by-step, as you explore this method of order fulfillment.
Finding Wholesale Drop Shipping Products
You have millions of products to choose from. If you need some help choosing which products to offer, please read How to Choose the Best Products to Drop Ship Online in Canada.
The next big challenge in drop shipping can be finding suppliers. Finding manufacturers isn’t a big problem, but most won’t deal with individual sellers and I don’t know of any that will drop ship direct to individual customers. They operate on volume purchases from companies placing large orders. Drop shipping is usually offered at the distributor level. That said, if you can prove that you’ve consistently sold thousands of their “widgets” some manufacturers may consider a special arrangement. At that point, however, you should consider having your own inventory of best-selling products.
It’s important to note that you don’t need to find Canadian dropshippers, you just need to find wholesale suppliers that will ship to Canada (or you could choose to not sell to Canadians at all). The beauty of the Internet is that the World is your marketplace. If you’re looking for Canadian dropshippers, Spocket is based in Canada and makes an effort to recruit Canadian suppliers.
You may partner with individual companies that have existing drop shipping programs, or approach any company to ask if they’d be willing to drop ship. For example, it’s common for print on demand (POD) companies to offer drop shipping. We have 7 Print-on-Demand (POD) Drop Shipping Suppliers for Canadian Sellers to help you with that.
You could also gain access to a dropshipping directory with thousands of products from a wide range of companies. Several of the choices below offer a variety of ways to access products from multiple suppliers, it’s just a matter of deciding which structure suits you best.
A Note on Drop Shipped Product Pricing
Chances are, you’re going to pay a higher price than you would if you were ordering a thousand of each item. There are people who don’t understand the concept who will post dire warnings about prices not being truly wholesale, but that’s their inexperience talking. Naturally, you want a large enough discount to allow for a reasonable profit margin and some research is involved to ensure it. However, you can’t expect to get the same wholesale price as volume purchasers when you’re buying the product one at a time. Plus, they’re doing the investment, storage, and shipping for you.
You’ll learn where to set your expectations as you go along, but in my experience the average margin is 15-40% (marketplace fees can reduce profit margins if you sell through them). If you find a product is selling really well, you can explore stocking the product yourself and pursue volume wholesale prices.
Drop Shipping Networks & Wholesale Suppliers that Serve Canadian Sellers
Wholesale2B – Wholesale2B has everything you need and is very easy to use. The majority of our drop shippers choose to work with Wholesale2B, in fact. They have several plans that facilitate selling over 1.5 million products on eBay, Amazon, Google, or through a website (your own or through a turnkey website). They ship to most of the World, including Canada, the US and the UK. Wholesale2B guarantees “the lowest dropshipping prices,” so you can be assured of profit margins large enough to make your business successful. Take them for a test drive with the free trial.
AliDropship – Offers two affordable and versatile WordPress solutions. Both include over 100,000 suppliers offering free worldwide shipping to your customers, along with two combined revenue streams (product sales profit and affiliate commissions on those sales).
Concerns about shipping delays from Asia may soon be a thing of the past, as marketplaces like Alibaba open eCommerce processing centres in Canada. Now is the time to position yourself as a Canadian source of these low-priced goods.
You can either buy the plugin and do it yourself (standalone or integrated with WooCommerce), or pay a one-time fee to have it all set up for you.
- The plugin is the best in the business, featuring store themes, search and one-click product import, auto-updates from suppliers, auto pricing, auto order placement, and a control panel for tracking and reporting.
- AliDropship also offers three dropship store packages, featuring their WP plugin, custom design, deep niche research, product setup, payment gateways, free domain name, and more. In the marketing department, they provide integrated marketing tools, SEO, branded social media pages, social media promotion tool, and a promo video.
Their client ratings on various platforms are very impressive, in the range of 4.5-5 out of 5 on Facebook, Trustpilot and Sitejabber.
World Wide Brands – Lifetime access to upwards of 10,000 genuine wholesale companies and drop shippers (no monthly fees). They have an industry-leading wholesaler qualification process that ensures your business is connected to reputable wholesalers with REAL factory-direct wholesale prices. The same certification process protects you from wholesale scams, fake suppliers and middlemen. Their product analysis tools are priceless. Members also enjoy dozens of drop shipping training videos, market research, mobile access, and a discussion forum. They were recently ranked as a Top 50 Business Opportunity by Home Business Magazine. The Better Business Bureau (BBB) gives World Wide Brands an A+.
SaleHoo Canada – Thousands of verified drop shippers and wholesale suppliers, along with direct shipping manufacturers. You have the option of using their web store to start selling instantly. They also have a community for anyone who sells online. You’ll find the free trial reassuring as you research almost 2 million products.
Spocket – A Canadian drop shipping solution that boasts a growing list of Canadian drop shippers, along with American and European options. Suppliers offer a variety of products in a full range of categories. The app syncs with your store so you can fill your orders with one click and manage the entire process from start to finish. You can even order product samples through the dashboard, further ensuring your customers will receive quality goods. Get started for free (no credit card required).
Individual Companies Offering to Drop Ship Their Products
There are individual companies that offer dropshipping to Canadian sellers. Some have active public programs, while others may consider it if you contact them directly. The Canadian Trade Index is a great place to start if you want to contact companies about drop shipping their products.
Following are a few companies that have existing drop shipping programs or wholesale merchandise for Canadians:
Dreamhug – Weighted blankets in Ontario available for drop shipping or wholesale purchase.
Printful – Order custom design products to dropship or sell direct online under your own brand. Customize over 140 products, including T-shirts and other clothing, decor, posters, phone cases and more. Sell from your website, including all major eCommerce platforms.
Vitabase Health Supplements – Vitamins and supplements with global shipping.
Fragrance Net – 16,000+ discounted brand name fragrances, aromatherapy, skincare and hair care products.
Grosche – Kitchenware company offers drop shipping in both Canada and the US, along with wholesale options.
Wordans – Canadian clothing wholesaler specializing in t-shirts, tank tops, sweatshirts, jackets, hats, work clothes, accessories, etc.
Nu-Look Fashions – Canadian Fashion wholesaler offering wholesale clothing, including knitwear, formal wear, office wear, sportswear, cruise/resort wear, and evening wear.
Tee Hatch – Print-on-demand (POD) t-shirts in Vancouver, BC. Drop shipping across Canada.
T-Print Canada – Drop ships custom t-shirts from Alberta.
Art of Where – On-demand printing of your artwork on their products. Drop ships from Montreal, Quebec, or New York.
Wedding Star – Almost 3000 wedding accessories can be drop shipped to Canada and they pay the duty charges.
If you’d like some help in selecting which companies to work with, check out our list of the Top 4 Drop Shipping Suppliers for Canadians.
Drop Shipping Tools to Beat Your Competition
I recommend having an eCommerce website no matter where you’re selling, but you can opt to only sell on eBay, Amazon and other online seller markets. These markets can be more challenging due to the side-by-side competitive environment, but you can win the game with proper data and market analysis. To that end, you can capture, analyze and refine billions of data points from Amazon with Jungle Scout, plus research competitors and even find suppliers.
We will update this post periodically as we find more drop shipping and wholesale suppliers that work with Canadians. Please bookmark the page or follow us on Twitter so you don’t miss any updates.
??? Are you new to drop shipping in Canada or do you have some experience to share? Please comment below or discuss this and other online business topics in the Online Business Canada Facebook group!
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