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Wealthy, well-connected transport links, and a growing ecommerce market signal Canada as a top country to consider for setting up a dropshipping business.
Country information
Location
Canada is north of the USA and shares maritime borders with Greenland and the French archipelago, Saint Pierre and Miquelon. It is the second-largest country after Russia but has a sparse population of 38.5 million in 2022, according to data from the United Nations.
Language
Both English and French are the official languages of Canada.
Wealth
According to Statistics Canada, the average household net disposable income in 2020 was CAD 55,700 (USD 42,411). This is higher than the global average of USD 30,490, as per statistics from OECD Better Life Index.
The World Bank placed Canada as the ninth wealthiest country in the world for 2021, with a gross domestic product of USD 1.99 trillion.
Source of wealth
One of the largest economies globally, Canada earns its wealth from the mining of gold, zinc, nickel, and copper, the production of oil and gas, and impressive real estate and financial sectors.
Dropshipping in Canada
Here are the top reasons to start dropshipping in Canada:
The ecommerce market
The International Trade Association (ITA) reported in 2022 that 75% of the Canadian population are digital shoppers. This figure is expected to rise to around 77.6% by 2025. Such a sizeable ecommerce market suggests room for niche dropshipping start-ups.
Ecommerce revenue
With a revenue of USD 35.5 billion in ecommerce sales for 2021, Canada was listed as the tenth biggest market for ecommerce by ecommerceDB. The growth rate is forecast to stay in line with the global average of 6%. Monthly ecommerce revenue has been USD 3 billion since the beginning of 2022, according to Statista.
Insider Intelligence reports that retail ecommerce sales will grow by 15% in 2022 to reach USD 80 billion in revenue. This makes up 13.6% of the total retail sales in Canada.
Internet use
As a powerful developed nation, Canada has an extremely high number of internet users. A total of 36.89 million (96.5%) Canadians access the internet as of February 2022 ( DataReportal). They spend an average of 6 hours 45 minutes per day online.
A Statista survey from April 2021 found that the largest segment of online buyers (33%) were millennials aged 27-40 years old, followed by boomers (30%) aged 65-75.
Product categories with high sales
The annual spend by Canadians online for each category of consumer goods as per DataReportal , 2022:
The same report highlights that 51.1% of Canadian internet users purchase a product online every week.
Use of smartphones
Canada has an extremely high smartphone penetration rate of 93.6% as of 2022, says DataReportal. It is found that there is a marginally higher number of Canadians that access the internet with smartphones (86.5%) rather than desktops (84.3%).
A survey by Statista of 2,034 Canadians in 2022 found that 56% said they used a smartphone when asked which device they use for online shopping.
Competition
The top five biggest players in Canada's ecommerce market in 2022, as per Ecommerce Guide:
Although these are the largest kingpins for ecommerce, it's not to say there isn't room for smaller players to gain from a highly targeted segment. It has been noted that Canada was relatively slow to adopt ecommerce compared to other countries such as the US. As such, it might be easier to find gaps in the market.
Delivery expectations
The main driver for Canadians to make an online purchase is free delivery, as found by DataReportal, 2022. As many as 68.7% of internet users aged 18-64 said that this was the biggest draw for placing an order with a website.
Next-day delivery was mentioned by 32.6% of Canadians as also being a push for them to buy.
Logistics network
The terrain in Canada is mostly plains with mountains in the west. As 90% of the Canadian population live within 160km of the US border and industries are concentrated in the southeast, transportation has few difficulties.
Freight transportation by road is the most common way to move goods between businesses and consumers. An extensive network of roads, highways, and railways creates a reliable infrastructure, according to the Government of Canada.
Summary
Ecommerce is growing rapidly in Canada with opportunities for dropshippers to set up a successful business. Offering services such as free delivery, discounts, and goods not provided by the big ecommerce players, there is potential to make a good profit.
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