Easy Step-By-Step Walkthrough To Learn How to Start Selling FBA in Canada
DISCLAIMER: This article is intended for informational purposes. It’s important to note that these are general rules, and every situation can be different. Please consult with an appropriate tax or legal professional regarding your business.
Are you looking to grow the sales of the products you are currently selling on Amazon? If so, selling on Amazon’s international marketplaces is a great way to make more sales.
Do you remember when you first opened an Amazon Professional account to start your ecommerce business? If your experience was like most people, you spent countless hours on blogs, message boards, and YouTube taking in information. You learned about product research, maximizing your listings with keywords, the Amazon algorithm, and even tax laws and financial management.
And since you’re reading this, we can assume you want to take your business to new territories and start selling in Canada. It is a great way to add sales to your existing line of products without learning a completely new sales channel, like ebay or Walmart, or figuring out how to drive traffic to your own website.
Here’s a secret: If you’re already up and running in the US, it’s actually pretty simple to move into the Canadian market. And I’m talking about just using FBA like you do in the US. As you’ll see here, if you’re a US based seller you’ve already done most of the hard work.
There are a few very important things to know before you start selling on Amazon.ca. And I’ll give you the step by step guide to do this soon and successfully.
In this article we’ll go over 6 surprisingly simple steps to selling your products on Amazon.ca:
- Validating your product
- Registering yourself or your company with the CRA
- Adding your listings to Amazon.ca
- Sending (the right amount of) inventory
- Ways to make the most of the currency exchange
- Managing and growing your business
So where do you start?
Validate Your Product (and Competition!)
One of the fears of selling in Canada is doing a bunch of work setting up the listings and getting no sales. You can lessen some of that risk by seeing if products similar to yours are selling on amazon.ca.
You’re probably used to using a product research tool like Jungle Scout. Before you decide to sell your product in Canada, go to amazon.ca and take a look at sales numbers on Jungle Scout (or your favorite product research tool).
Search for a similar product to yours and see how well it’s selling.
More than anything, you want to see if those similar products are selling. Many sellers report getting about 10-15% of the their US sales in Canada.
At this point you don’t need to get too in depth with the numbers on other products or worry about marketing strategies. In fact, you probably won’t need to spend much time on giveaways or aggressive marketing in general. In my experience, they don’t work in Canada like they do in the US.
Generally some PPC will help you get up and running.
Right now you only want to see if those similar products are selling. And if they are selling and your products are selling in the US, that’s a really good sign. In my opinion, it is at least worth sending in a small batch.
But before you go and send inventory for your future Canadian customers, you’ll need to do a couple more things.
Register As A Non-Resident Importer
You’ve done your research on similar products and you’re ready to start selling on Amazon.ca. What now?
Before you do send any inventory to Canada, you’ll need to register with the Canadian Revenue Agency (CRA) to get a Business Number along with a Non-Resident Importer status and, potentially, for their sales tax (we’ll get to that in a moment).
Think of CRA like the Canadian version of the IRS. Except they don’t just handle income tax. They also handle federal sales tax (GST and HST).
GST is Goods and Service Tax, and it has a cousin called HST (Harmonized Sales Tax). This is the equivalent to sales tax in the US (only at the federal level).
If your worldwide sales (not just in Canada) are over $30,000 CAD (roughly $22,000-23,000 USD) you’ll be required to register for GST. Honestly, even if your sales aren’t at that point yet it’s still a good idea because you could potentially benefit from being able to get back some of the GST taxes you will pay at the border in Canada if you collect and file GST.
There are four provinces with their own sales tax called a Provincial Sales Tax (Quebec, Saskatchewan, Manitoba, and British Columbia). We’ll get more in depth on the very complicated tax system in another article. For now, we’ll deal with our “basic” GST.
To get started, you will complete form RC1. Once completed, you will send to the designated office based on your location it along with articles of incorporation/formation for your company (if you are incorporated or setup as an LLC).
Being a US based individual or company, the CRA wants to know who you are and what you’re selling. So you’ll need to register as a non-resident importer.
As mentioned earlier, you’ll be charged GST at the border for the value of the goods you’re importing. This amount can generally be used as a credit (keep reading) when you file for your sales tax at the end of the year if you are collecting.
In most cases, you’ll only need to file for your GST sales tax return once a year as long as your sales in Canada are less than $1.5 million CAD. Currently, as of this writing, the deadline to file a return and make your GST payments is April 1 for the previous years’ sales.
When you do file, this is when you’ll be able to use the GST you were charged on importing goods as a credit for what you owe in GST on sales. You’re not actually getting it back, but it gets deducted from the amount you owe.
This might sound complicated, but let me put it this way. The form to fill out to get registered is no more complicated than the form you would fill out to get a drivers license or passport.
Add Your FBA Listings To Amazon in Canada
To sell your products as FBA offers in Canada and offer Prime shipping to your Canadian customers from fulfillment centers in Canada, you’ll need to create new listings specifically for Amazon.ca.
The good news is that you don’t need to recreate the wheel here. You can basically copy your US listings. You’ll log into Seller Central on Amazon.ca (same log in info as Amazon.com), and add the listings based on your existing ASINs or UPC codes.
If you have a lot of products and don’t want to add them all individually, it is possible to do a bulk upload.
One pro tip is to make a bulk upload easier is to log a case with Amazon Seller Support to get access to the Category Listings Report. This report is basically pulling out a spreadsheet with much of the data you will need to create your bulk upload for all of your US based products. As a word of caution, you’ll want to make sure to use the correct browse nodes for Canada (categories and subcategories, which don’t always match the way categories are mapped in the US), and of course update your pricing for Canadian dollars.
The nice thing is once your listings are created you don’t have to do it again (until you are ready to add more products).
Send Inventory (Start Small and Build from There)
A lot of sellers get concerned that they will need to create a whole new shipment to inventory to Canada. The good news is that you can start with a smaller portion of an order you are already placing or from your existing inventory.
Let’s say you get an additional 10% sales in Canada, compared to your sales in the US. That 10% rule is a good place to start when thinking about your long term planning.
For example, let’s say you typically order 1,000 units with your supplier for sales in the US. If you have your supplier ship directly to Amazon (or if you’re using a prep company), have them split your shipments to go to both Canada and the US. Of the 1,000 units, maybe send 900 to the US and 100 to Canada.
To start out, you can send in even fewer units going to Canada just to try it out.
I’ll often send just a handful of units of a new SKU to Canada just to test the market and see how they sell. It’s much better to start small, and scale up from there. +
Remember, this isn’t a get rich quick move – you are building a long term sales channel. It’s better to start smaller and adjust as you go.
This will help you to not have excess inventory, and it also gets the *algorithm going.
*A note about the algorithm: While it is basically a separate algorithm from Amazon in the US, you’re not completely starting from scratch. The reviews from the US will carry over on the listing page. These won’t be visible from the search page, but they will be visible when customers click into the product listing.
Maximize Currency (AKA Don’t Throw Away Money!)
Before we start to talk about currency, I want to clear up some of the anxiety here. Ready?
Calculating currency is 6th grade level math. Seriously! It’s basic ratios and isn’t as complicated as you might think.
You will sell your products in Canadian dollars, and you will need to convert those dollars back to US dollars.
When you do this, you will never get the exact exchange rates that you see online on sites like xe.com. Those rates are rates are called mid-market rates, basically what large institutions charge each other.
Unfortunately, there’s no way around this. There are always fees to move money from one currency to another. The goal is pay as little as possible.
When you have Amazon send your foreign disbursements into your US account, you will lose around 3-4% for the convenience of them converting your money back into US dollars.
However, before you move the funds you can make a couple strategic moves.
Instead of moving the money to your US bank, and paying for fees tied to your Canadian sales, pay these before transferring the funds. Some of this happens automatically, like your referral and fulfillment fees. These are subtracted before disbursement of funds, just like it is in the US.
When the time comes to move funds, use a currency exchange company like Payoneer. They only charge around a 2% fee, compared to a 3-4% fee you might see from Amazon. This seems like a small savings, but that 1-2% can add up quickly.
Payoneer will also keep this money in a Canadian account. It’s not a traditional bank account, as US based individuals or companies generally can't open a Canadian bank account for their US business.
Think of Payoneer as a holding tank for your CAD funds.
Many sellers will charge their PPC automatically to a credit card. Your bank is going to charge you in USD regardless of where you spend the money. To do this they’ll convert the money from CAD to USD. And because there’s a conversion you’ll lose a little bit in the exchange, and you will be paying with dollars that you already converted.
This is basically paying twice on a conversion when you could avoid any conversion of currencies for PPC.
A better idea is to have your PPC come out of your account before you receive your disbursements. You’ll be charged for your PPC in CAD and will “pay” in CAD, so there’s no conversion and no lose because of a currency conversion. Basically you are saving from the double conversions of putting your PPC charges on a US credit card.
Whenever possible, have fees come out of your disbursements or pay in the local currency before any conversions are made.
Manage and GROW
Once your listings are live, all you have to do is manage and grow your business. You’ll notice that your PPC keyword data is likely going to be very similar to your US products.
Once you have everything rolling in the Canada, you really won’t have to check on things in Canada as often as you do in the US.
That’s because it’s much less competitive in Canada than it is in the US. This is a good thing! Because of the hopes you have to jump through to enter into the Canadian market, a lot of sellers get scared off from even trying.
This is good news for you if you are willing to do the work on the front end, take advantage of it.
You’ll also find that your customers in Canada are similar to the US. We’re not all that different with how we shop. In fact, most of Canada’s population lives within 100 miles of the Canada/US border. It's not uncommon for people on either side to have friends on the other.
As your US business grows, so should your seriously adding Amazon in Canada as another sales channel for your business. You can use it as a launching pad to other platforms.
To recap these 6 steps:
- Validate your product by doing some quick market research
- Register yourself or your company with the CRA
- Adding your listings to Amazon.ca
- Send an appropriate amount of inventory to Canada
- Use strategic tricks to maximize the currency
- Manage and grow your business just like you do in the US!
One Last VERY Important Tip
One thing that is an absolute must is paying your taxes. Just because you made the money in another country doesn’t mean Uncle Sam isn’t going to take his due. You’re paying sales tax (GST) to the Canadian government, and you still need to pay income tax to the US government.
My advice? Hire a tax professional. If you don’t have a CPA, get one! You should do this anyway, even if you’re not selling in Canada. The internet is a great resource for information, but it’s well worth the money to hire a professional.
Xero and QuickBooks both have versions that do foreign currencies. They’re worth buying to manage your CAD funds separately. A2X accounting software will take your Amazon data and plug them straight into Xero or QuickBooks.
These are just a few tools, and there are many out there. Use what works for you, just make sure to use something.
If you’re ready to get started, go to canadachecklist.com. I’ll give you a free in-depth checklist of everything I’ve covered here.
Remember: if you finished 6th grade math, and can figure out how to fill out a form to get a driver's license or passport, you can do this!
If this was helpful to you, share this with other Amazon sellers.
