So you want to sell e-commerce goods to Canadians eh? Good call.
How should you do it? It’s up to you really but there are clear advantages and disadvantages to the different methods available.
Best Method: Fulfilled from within Canada. Import your commercial inventory to Canada and sell it from a marketplace fulfillment facility or third party logistics facility. Using this method ensures quick shipping to Canadians. Also, on commercial inventory imports, you will only pay 5% import GST + import duties on the declared value. All GST is recoverable.
Second Best Method: Remote fulfillment programs. Amazon has this. They will fulfill your orders from USA stock and take care of all duty, import tax and overall tax compliance. This is a great program for “testing” Canada. At checkout, Canadians will see additional charges for duties and they will need to wait longer for the items…So, it’s better to import inventory in the long run BUT if Canadians are buying your product then it is a good sign that selling direct will be profitable for you. With Amazons Remote Fulfillment, you basically flip a switch and they take care of everything….if you do well, you should seriously examine direct FBA.
Third Best Method: Remote fulfillment via website/direct sales. NOT marketplace sales. Using this method, you can often customize the checkout charges and add an “International Shipping Fee”. You could then send items to Canadians via DDP incoterms (For a better client experience) and recover the cost via your “International Shipping Fee”. When sending single items cross-border to Canada, both the federal GST and provincial taxes are charged. Total tax could be 5-15%. Duties are also charged. To be profitable, you will need to recover these costs…or ship DDU (Delivery duty UNpaid) – but that is a terrible client experience because the customers goods are often held at the border until they make a payment to the shipping carrier. With this method, there is an option to register for, charge and thereby recover the GST/HST or Quebec sales taxes you pay to send items to Canadians – as deductions.
Least Preferred method: Remote seller fulfilled marketplace sales. With this method, you have no control over checkout charges. Often you are also obligated to send items via DDP incoterms. This means you will be absorbing the federal and provincial Canadian taxes at the border (Based on RETAIL vs wholesale costs too) in addition to import duties. Do not do this unless the profit margins on your products are ridiculously high OR you have a highly customizable/physically large/very expensive product for which you MUST direct fulfill.
Want to chat more about this? Let’s talk.
