I am trying to start a dropship business from Canada Ontario and wonder about only selling to the USA and maybe to Canada after. I see that I do not have to add GST/HST etc until I reach 30k in sales. I guess my questions are as follows:
Thank you for your answers, even if you can't answer them all. I hope to start this business by October, middle of or end. I may have follow up questions after. Cheers.
Julie here from Shopify Support.
It's great to see that you're doing your due diligence prior to launching. These are some great questions.
When it comes to choosing your target market, there are a few things you need to consider. First, how do the shipping costs between the United States and Canada differ? If it is significantly cheaper to ship to one country as opposed to the other, then it may be worth taking advantage of the more affordable option for the time being; there's a lot to say about starting small and simple.
Second, what kind of products are you selling? Aside from geographics, have you considered who your target market is? Having defined your ideal customer will really help you target your ads effectively and whether geography plays a part. If you still aren't sure if you should stick to selling in one country, then you can always run an A/B split test with Facebook Ads to see which country your ads perform better in.
If you end up selling primarily in the United States and you are using Shopify Payments, you can actually choose to sell and get paid in different currencies. This would allow you to sell your products in USD and receive the converted payouts in CAD, without needing to set up a US bank account. This is an excellent feature that Canadian merchants can take advantage of and definitely provides you with an opportunity to profit off the currency conversion.
In regards to dropshipping apps, most merchants tend to start out with Oberlo, dropshipping products from AliExpress. However, the app you use ultimately depends on the types of products you are selling. If the same products on Wholesale2b and SaleHoo can be found on AliExpress, then it may be worth sticking with Oberlo, as Shopify offers full support for this app. Aside from product availability, shipping times are another important factor. The largest downside to dropshipping is lengthy shipping times, so if these apps offer speedier shipping options, then I would personally lean towards that. As for SaleHoo in particular, it's important to note that SaleHoo isn't an app in our App Store, so there is no direct integration with Shopify for automatic ordering.
To touch on your question around taxes, you're totally right - in general, in Canada you need to register for a GST/HST account if you sell products or services that are taxable and your worldwide revenue is more than $30,000 CAD over the past 12 months. If your sales are lower than the threshold, then you don't need to register for a GST/HST account, and you don't need to collect or remit taxes. You can find more information on this here.
Deciding whether you should start charging customers taxes right away is something I recommend consulting with a tax professional on. If you decide to charge sales tax, then you can take advantage of Shopify's automatic tax calculations to automatically charge customers the appropriate tax rates that apply in Canada. You can learn more about setting up Canadian taxes here.
As for payment gateways, it's highly recommended that you use Shopify Payments, as long as your products are in line with our Terms of Service. Shopify Payments is the simplest way to accept payments online, as it eliminates the hassle of having to register with a third-party provider. It also allows you to track your payouts directly through your Shopify Admin and gives you the ability to accept all major payment methods. Even better, with Shopify Payments, you actually don't have to pay the 2% transaction fee that would typically apply if you were to use a third-party gateway.
Most merchants choose to use Shopify Payments along with PayPal Express. The best part about using both payment gateways is that even if the transaction is processed on PayPal, as long as Shopify Payments is enabled as an option, you still won't be paying any transaction fees. If an order is processed via PayPal, the only fees that will apply will be directly from PayPal. If an order is processed via Shopify Payments, however, the only fees that will be applied will be standard credit card fees. You can check out a breakdown of credit card fees for each Shopify plan tier on our pricing page.
I hope this helps! As you gear up towards your store launch, please let me know if you have any further questions.
Thank you for your help and support. I want to start selling bicycle accessories through epackets as some say it's much faster to deliver. I don't think I will include taxes for now, if I can do the 30k then I will start that process as well as ask them about charging on my site, but for now tax won't be inlcuded.
I don't really want any of the things I will be selling on my site to come from Canada as I think that's considered a base of operations in Canada and would force me to get a business license and or apply for GSH/HST where I am. However I think I can still sell products from Ali (China) to Canada through Oberlo and avoid these issues but I am not sure at the moment.
I have not looked into facebook ads as of yet, I am just weary of their operations, so for now I don't think I will go that route for now.
If I understand correctly, I can use Shopify payments and I won't be charged Paypal fees? I am not sure how that works because I thought I needed a Paypal business account to start receiving and sending payments from where ever I am getting the products from. I guess I will have to read their terms of service or wait until they start asking questions about the account activity.
I will check the links you provided me with as well.
Thank you again for the help, be in touch.
You're right - ePacket Delivery is the most popular shipping method amongst dropshippers, most notably because it's quick, available internationally, and offers customers the ability to track their package.
I'm glad you've come up with a plan for taxes. It's great to be aware of the possibility that you will need to do so as a business, and that obtaining a business license is also something to consider down the road. It's great to see that you're taking the time to carefully weigh your options.
Apart from Facebook Ads, have you considered any other marketing activities instead? A great next step would be to create a marketing plan if you haven't done so already. This will help you create a pre-launch strategy so you can ensure you have a clear plan in place as to how you will reach potential customers and convert them into buyers. We also have a free Marketing 101 Webinar I encourage you to check out. This is a great opportunity to connect with a marketing professional and learn more about what you can do to market your business. We hold numerous sessions per day, so you should be able to find a session that best fits your schedule.
In regards to transaction fees, if Shopify Payments isn't enabled, then an extra 2% transaction fee from Shopify would be applied to every order. However, because you have Shopify Payments enabled, you won't be subject to transaction fees, even if the order was processed on PayPal- you will just be responsible for the fees that PayPal themselves charge (what those fees look like would be determined by PayPal, so this would be something you would need to check in with them about). We have some further information about using PayPal which touches on transaction fees I recommend checking out here.
When it comes to ordering the products from your suppliers, however, how you do so is entirely up to you and would depend on the payment methods the supplier accepts. Some merchants use PayPal to fulfill orders, while others use a credit card.
I hope this clears things up! Let me know if you require any further clarification or if you have any more questions.