The most exciting and intimidating thing to happen in retail in the past couple of decades, is ecommerce. Canadian businesses and individuals now have the opportunity to sell online to a national or global market. The internet offers endless opportunities to start, grow and market at the retail level.
“The sale of a Sting album, Ten Summoner’s Tales, on Aug. 11, 1994 is credited as the first online transaction,” writes Cillian O’Brien for CTV News. “American Dan Kohn, a 21-year-old entrepreneur, sold the CD to a friend, who used a credit card to spend US$12.48, plus shipping costs.”
In 2021, there were 24.2 million digital buyers in Canada. Yet 46.4% of Canadian small-medium businesses still don’t have a website, says BDC. Only 8.5% of those who do have a website, have important online sales functionality like online payment processing.
Predictions for the growth of online shopping in Canada are very promising, according to eMarketer. 2022 should see Canadian ecommerce sales totaling over $96 billion!
Many believe they can’t compete online. Yet several surveys have found Canadians would prefer to buy from Canadian businesses. The problem is, they often can’t find merchants in this country who carry what they want. If you can fill that gap, you’ll attract Canadian online shoppers.
Virtually anyone can start an ecommerce business in Canada. You can expand your offline retail store to include ecommerce (multi-channel), or start an entirely web-based store, or sell a few things on the side. There’s an option for every budget and a market for almost any type of product. Even your location is flexible, with many entrepreneurs choosing to start out as an online home business.
- You can sell tangible products, information products, and/or services.
- Your target market can be business-to-business (B2B), business-to-consumer (B2C) or both (with wholesale).
- Sell on your website, online marketplaces (such as eBay or Amazon) or social media.
- Have your own inventory or choose dropshipping.
“This whole e-commerce ecosystem has made it really easy for the small business owner, a new young, early-stage entrepreneur, to just take an idea and turn it into a reality,” Jeremy Potvin, CEO of Weedbox said in an interview with BetaKit.
With global ecommerce sales growing, the potential is impressive. Canada came in at number six in 2019 for online retail sales growth, according to eMarketer.
I’ve operated everything from a very basic online store on a WordPress blog with PayPal, to larger inventories on ecommerce platforms. In over two decades that I’ve been working on the internet, I’ve watched it become so easy to start selling online that almost anyone can do it. Unfortunately, many Canadian retailers are still hesitant to try it. Individuals are more inclined to start selling online and many become successful.
Checklist: Starting an Online Store in Canada
This checklist for starting an ecommerce business in Canada is intended to be an overview, to guide you through the Canadian digital startup process. We’ve referred you to other posts for more information when applicable.
_____ Decide which niche you’ll be entering and choose a business name. If you’re still looking for a niche, read:
10 Hot Product Niches to Sell Online in Canada
How to Choose the Best Products to Sell Online in Canada
When you’ve decided on a business name, register it.
_____ Figure out exactly what your business is offering to online shoppers and why it’s exceptional (also known as your Unique Selling Proposition). Define who your buyer is, and how you can reach and serve them online. This information is critical to your online business strategy, from pricing to marketing.
_____ Open a business bank account and PayPal account. It will make it much easier to track income and expenses. It also makes it easy to save for your income taxes and GST/HST payments.
_____ Funding can come from a variety of sources. Check out Government financing and Government grants for Canadian businesses, or private sector financing. Keep an eye out for tech or innovation programs and grants that you may qualify for.
_____ Financial management is critical in order to become and remain profitable. User-friendly accounting software like the popular TurboTax Canada makes it much easier. Outline your budget to determine exactly how much you’ll need to earn for a healthy bottom line.
_____ Begin the branding process by choosing a company colour scheme and have your logo designed.
_____ If you’ll be selling tangible products, you’ll need to find suppliers (unless you’re producing them yourself). Research wholesale suppliers and get your inventory in place. If you don’t want to deal with inventory or shipping, consider dropshipping.
_____ Domain registration and selecting a website host is one of the most important steps you’ll take when starting an ecommerce business in Canada. We have unique requirements and legal concerns in this country that many entrepreneurs are unaware of, which results in mistakes that waste both time and money. Learn how to make a wise decision with our checklist for choosing a website host.
_____ Accepting payments online is easiest (and most secure) if it’s included in the shopping cart or ecommerce platform you choose. Whether you process payments through a payment gateway or have an in-house solution, you’ll need to familiarize yourself with PCI security standards for account data protection.
_____ Hire a website designer or learn how to design the site yourself. Ecommerce platforms often have a wonderful selection of templates and are made specifically for people who have little technical knowledge of design. Some can also provide design services.
_____ Hire a copywriter for sales pages and product descriptions, or learn how to do it yourself.
_____ Content is crucial to attract customers to your website and for organic search engine optimization. It will also establish your level of expertise and reflect the quality of your product or service. Freelancer is a popular site for finding freelance writers/bloggers.
_____ Security is of utmost importance in ecommerce. There are two main categories of security for online stores, security for customers (secure transactions, privacy, etc.) and security for our website (hacking, fraud, and so on). There are relevant Canadian laws that we have to consider too. Even the search engines judge sites based on the security measures they have in place, such as SSL/HTTPS encryption. We have an ethical responsibility to protect consumers, just as we expect to be protected when we shop on other websites.
“In this digital world, Canadians must be able to trust that their privacy is protected, that their data will not be misused, and that companies operating in this space communicate in a simple and straightforward manner with their users,” says Canada’s Digital Charter. “This trust is the foundation on which our digital and data-driven economy will be built.”
_____ Decide how you’re going to ship your products and what your shipping rates will be. You can charge the actual amount, a flat rate, offer free shipping, or any combination thereof. Flat rate overages and free shipping will be absorbed by your company. Chances are, you’ll add that to the cost of your product. It’s a delicate balance, so you may have to do some testing and make adjustments accordingly.
_____ Digital marketing is a natural fit for any online store. You’ll need to set up social media accounts, newsletter software (such as Aweber), etc. Whatever digital marketing method you use, try to call attention to the fact that you’re a Canadian business if your primary target market is in Canada. You’ll need data and competitive intelligence to ensure you’re maximizing sales, which can be easily obtained and managed through popular tools like SEMrush. Additionally, starting an affiliate program is a cost-effective way to accelerate your launch and bring in sales indefinitely.
_____ Exceptional customer service can give you a serious competitive advantage and provide invaluable insights. Web-integrated call management and tracking systems facilitate multi-channel tracking and management of customer communications.
_____ Consider omni-channel options, such as selling on social media or in-store pickup and returns.
_____ Brand loyalty and repeat customers can be nurtured through your email list, a loyalty program, apps, sales & deals, and price matching. The earlier you put these magnets in place, the better.
_____ When it comes time to build your team, I recommend a virtual staff whenever possible. The gig economy has really taken off in Canada. You can find a website manager, copywriter, content writer, or accountants that work in the cloud. There are virtual assistants who can handle anything that can be done remotely, from administrative tasks to marketing.
Should You Use an Ecommerce Platform?
The easiest way to integrate offline and online business, B2C and B2B, drop shipping or any number of options is to choose an ecommerce platform that does it all, like Canada’s Shopify. While you can hire a developer to build a store from the ground up, using an ecommerce platform saves you a lot of time, headaches and money.
Using Shopify as an example:
- You won’t have to set up payment processing, synced inventory, or any number of other necessary functions or processes. It can be easily managed in-house, allowing you to edit your product catalogue and make other minor changes without any technical knowledge.
- As you grow and scale your business, there are countless tools, compatible apps, templates and package upgrades that you can use that meet your requirements.
- Enjoy perks like cheaper shipping rates with Shopify Shipping.
- Easily sell on your website, online marketplaces or social media through marketplace integration, facilitating sales on eBay, Amazon, Facebook and more.
- You’ll save an enormous amount of time and brainpower, so you can focus on building your ecommerce business.
“Look for a solution that will allow you to focus on the things that really matter, which is creating good products, good assets, and a good customer experience,” says Carson McComas, founder and CEO of Fuel Made, in an interview with Practical Ecommerce. “Do not spend much time in the weeds from a technical standpoint. That’s kind of a pitch for Shopify.”
What’s the Alternative?
If you don’t need robust ecommerce software, it’s relatively easy to register a domain name, set up hosting, and add standard ecommerce functionality (included in most website hosting packages). We only use and recommend Green Geeks for domain registration and hosting. Hosting usually comes with templates and a somewhat automated setup process that most can navigate on their own. If not, the host should have resident experts in their particular platform that you can hire to set it up for you.
Alternately, you can go with your own hosting as above, and install WordPress with a couple of clicks (free). Use the WooCommerce plugin to set everything up for online sales.
If you opt to proceed without an ecommerce platform, there are a few things you’re going to have to set up yourself through your website.
Website domain, hosting and design
Secure Socket Layer (SSL) Digital Certificate for HTTPS
Payment processing: Third party (such as PayPal), merchant account, on-demand, offline payments, and digital wallets.
Inventory catalogue, management and syncing
Customer Relationship Management (CRM)
Customer service systems
Additional functionality specific to your needs, such as a separate wholesale portal or affiliate program management.
Order fulfillment & tracking
Analytics / data tracking
Frequently Asked Questions
- Are there specific laws that apply to online sales?
The Canadian Office of Consumer Affairs offers an Internet Sales Contract Harmonization Template in Electronic Commerce, which covers contract formation, cancellation rights, credit card charge-backs and information provision.
- Do I need a business license if I’m only selling online?
Once you know the name and address, the first step for many is business registration, which may include registering in multiple provinces if you intend to do business nationally. Contact your local branch of the Canada Business Network for information specific to your province. To find out how to apply for a business license, search for information specific to your province using BizPal. The results will include the government resources you need.
- How do taxes work for online stores in Canada?
Tax information and reporting requirements for doing business online are available on the Government of Canada CRA website.
- Do I have to charge sales tax on online sales?
If you have a Canadian-friendly ecommerce platform, the taxes will be automatically calculated at the point of sale. If not, we recommend consulting with an accountant.
“In every province or territory of Canada, we must pay a federal tax on most items we purchase,” says Seethrough Web. “In most provinces of Canada, we must also pay a provincial tax. Sometimes these taxes are displayed separately (federal: GST, provincial: RST, PST, or QST), sometimes they are combined into a single, harmonized tax (HST).”
- Do I need insurance to operate an ecommerce business in Canada?
Business insurance for an online business is similar to offline business insurance, but the focus and amount of coverage may differ. For example, an ecommerce business will need to focus more on shipping-related insurance coverage. You’ll also need to consider insurance related to cyber security. Liability insurance is recommended for a home-based business in Canada.
We have a lot of information here about starting an online business that you can browse through. Otherwise, I recommend starting with ecommerce and digital marketing courses on Udemy. Udemy courses are low-priced or free, including many from recognized experts. Your local library is a great resource too, especially if you’re on a tight budget. You’ll often find books that are specific to Canada that guide you through starting an online store.
??? What obstacles have you faced when growing or starting an ecommerce business in Canada? We encourage you to ask questions in the comments below or discuss this and other online business topics in the Online Business Canada Facebook group!
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Melody McKinnon's formal education is in business management, which she enhanced with more than 60 certifications revolving around business, marketing, health, general sciences and writing. In over 20 years of working online, she has owned or managed both educational and eCommerce websites.
Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on CanadiansInternet.com, CanadianFamily.net and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.