According to Canada’s national statistical agency – Statistics Canada, over the past six years, the ICT sector has consistently outperformed the overall economy. Moreover, real gross domestic product (GDP) produced by Canada’s ICT sector between 2017 and 2018 increased by nearly $3 billion, reaching $86.6 billion, and e-commerce is the fastest growing segment in Canada’s digital economy. Current estimates suggest that this trend is set to continue, with gradual but increasing digitization and adoption of ICT products and services in all economic sectors.
According to expert projections, online retail in Canada is expected to generate a spend of $39.9 billion as per 2019 data, accounting for 9.5 percent of all retail transactions.
It has never been as easy to start an online business in Canada as it is now. The amount of your potential earnings using the internet directly correlates with the amount of effort that you are willing to put in, combined with your entrepreneurial instinct. This is a way to go, and not everyone can expect to skyrocket profits without due effort. However, if you want to start a successful remote home business, or you have spare time off work or study, or you believe you are the next e-commerce giant, then the Internet is the right place to for you, offering ample opportunities for fast and legitimate start.
Some 10 years ago, the online sales logistics were much more complicated and more resource-consuming than it is today. Moreover, there were no universal communication tools as smartphones and other gadgets that would allow you to launch an online shop without physical venue. Nowadays, it’s all up and running, and millions of people around the world prefer online shopping by smartphones to physically visiting malls and spending time on shopping offline. This tendency opens door to vast opportunities not only for the regular user, but also for entrepreneurs who have products or services to offer. You do not even need to be a developer or website designer to start making money on the Web right now.
However, one actual challenge exists now, which however can be seen as a potential and perspective source of inspiration for entrepreneurs: i.e. search for information specific to Canada to start an e-commerce business (or the transformation of an existing offline business into online, which is relevant in our era of the Internet).
Although any website can be designed as multi-functional and sale-oriented, we have compiled a specific checklist that will guide you step-by-step throughout the process of launching any business digitally in Canada. You will have saved time and resources if you consistently follow through the checklist to mark your progress without losing your track along the whole process.
In general, starting an online business is in many aspects similar to starting any other type of business in Canada. However, you will find that some steps may be relevant for one type of e-business, but not be required for another. For example, you may need a reliable e-commerce platform for online retail, while a simple shopping basket may be sufficient for selling information products, or you may as well go with a basic payment collection tools, as long as your product is well-developed, marketable, clear and understandable to everyone.
Follow our guidelines and you will find everything you need to start and set up your online business in Canada.
Checklist for starting a successful online business in Canada
- Choose your niche and company name.
One of the most challenging aspects of starting an online business in Canada is the correct choice a profitable niche. There is less competition in Canada than in larger markets such as the US. Nevertheless, in Canada as well, one may need to make extensive research to inform the right choice of products that are in demand and are not in a saturated niche or are easily accessible locally. You should also stay away from items that can be easily purchased from the United States (for example, items that can be shipped in an envelope easily and at low cost).
To get started, try to formulate your own unique offer. Find out exactly what your business can offer the world and why it is exceptional. Try to know or at least identify your customer. What are the best ways to reach out to them and serve their needs online? This information is critical to your strategic planning, both from pricing and from marketing perspective.
Using the following simple techniques will help you determine the niche in which you will receive the most return:
- Dropshipping may be your competitive edge
Dropshipping is a retail sale method where a you do not have to keep the products you sell in stock. Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party, and has it shipped directly to the customer. As a result, the seller doesn’t have to handle the product directly. Dropshipping is an ideal way to reduce the risk of choosing the wrong niche. Without worrying about inventory, you can choose almost any product through a website, auction or platform for sellers, for example, through Amazon.
Dropshipping itself is a business model, so you can always decide to continue selling this product or switch to some other, more profitable models.
The most popular direct suppliers are Wholesale2B and World Wide. E-commerce platforms such as Shopify make it incredibly easy to add products through apps;
- Testing Products Using Affiliate Programs
You can also check the popularity of the product through affiliate programs. All you need to do is to find the seller of the product (or similar) and use the direct links to track its sales rates. Obviously, you will need to make sure that they ship goods to Canada if the supplier is in another country. Your margin will be significantly lower than with dropshipping, but for some products this is a less risky option.
Start with a simple affiliate network. Check out the best affiliate program networks for Canadians which offer a variety of options. Distribution of goods by affiliate network programs may turn out to be the best marketing research method, which will bring you both profit and inform you on the best ways to deliver the product to the buyer.
In addition to e-commerce, you can also choose software development, applications and mobile games as your niche. Learn more about the ways of incorporating a mobile app and game development company in Canada here: Registering a mobile application and game development company in Canada
The name of the company and your future brand should be unique, not repeat the existing ones on the market, be simple and, if possible, be associated with the goods or services that you provide online.
- Incorporate a company in Canada
Once you have decided on a market niche and brand, proceed with registration of a company in Canada. This brings a number of benefits for you, in particular:
- Status of the Canadian company name, which will be beneficial from reputational perspective in almost all countries of the world.
- You will have an opportunity to benefit from the tax incentives which a Canadian partnership offers.
- You may be able to attract investments or available credit resources;
- You may become eligible to permanent resident status in Canada with good prospects for obtaining Canadian citizenship.
Learn more about types of companies in Canada in our article Forms of company ownership in Canada.
- Open a commercial account
You may choose to open a commercial account with a bank in Canada or another country where the bulk of your customers are located. Another viable option would be to open an account in the payment system, as it will be faster and often more beneficial in terms of variable costs than a bank account.
Visit our website to learn more of the options of opening and maintaining corporate accounts in Canada.
Even if you are currently working only as an individual, having a business account in a payment system or one of the banks in Canada will greatly facilitate the tracking of your income and expenses.
It will also enable you to save on your income taxes and payments on GST/HST (analogues of VAT and sales tax).
In addition, you can get a special credit card to track your expenses and benefit from deferred payment option if you have a positive credit history.
- Seek funding
Search of funding resources is not necessarily the first thing to conisder at the initial stage, but it certainly helps. Check for government funding options, subsidies for Canadian businesses, or private sector funding. Keep track of technology or innovation programs and grants that you can apply for just because you do business online.
You may also consider crowdfunding if you have a particularly innovative idea.
- Manage your finances from day one
It is crucial to make earning and keep doing profitable business. In addition, appropriately set up and functional financial management processes will save your resources and help you through the calculation and payment of taxes. Handy, easy-to-use accounting software is priceless tool which can hardly be overestimated, e.g., the popular TurboTax Canada. Here, it will be advisable if you draft your budget and determine exactly how much you need to earn in order to make tangible profits and be able to pay all your bills on time.
- Plan your income
Understand your income sources. Do you promote services, provide affiliate marketing, sell digital or physical products? The good news about online business is that it practically does not matter where you are located physically.
Explore most of the potential business options that would be of interest to you and in which you have at least minimal experience as a user or supplier (developer). As soon as you identify the area where you wish to develop and expand your business, go forward with testing it and proceed to implementation. You can change your mind or revisit your income strategy any time at later stages, but you need to start somewhere.
- Register a domain and select a reliable hosting
This is one of the most important steps you will take when starting an online business in Canada. There are some unique requirements and legal drawbacks in this country, which many beginners are not aware of, and this may eventually result in errors which may cost you considerable time and financial resources to recover.
- Select a data management platform
You then proceed to selecting the data management platform you will be using to demonstrate your goods or services (for example, WordPress). Many of the hosts nowadays come up with popular free platforms which are easy to install and rather user-friendly. Make the best use of the free features at first stages.
- Select an e-commerce platform
Choose an e-commerce platform suitable for working in the Canadian market and beyond. If you intend to grow, then make sure that the platform can grow and expand with you. It’s a good idea to try to reach out with your products and/or services to giant aggregators (from Alibaba to EBay).
- Select your payment system
Accepting payments via the Internet is the easiest (and most secure) way of earning by e-commerce. Moreover, it may already be included in one of the e-commerce platforms which you have selected for your needs. Whether you process payments through a payment gateway or if you have your own payment solution on your website, you need to familiarize yourself with PCI security standards to protect the data of your payer accounts.
Payment security issues are very important and should not be left to chance. Therefore, if you do not have the opportunity to attract experienced professionals to develop your own payment gateway, it is best to sell everything on platforms where payments are accepted in the most secure way.
- Design your website
Hire a website designer or start learning how to design your own website. Many website hosting services, e-commerce platforms, and information platforms (such as WordPress) have ample selection of ready-made templates and are intended specifically for people who have little design experience. Some of the best e-commerce platforms can also provide design support services such as Canadian Shopify. Why not use their services to increase the attractiveness of your online resource to your customers?
- Quality content
Content is critical to attracting customers to your site and for organic search engine optimization. It will also establish your level of expertise and reflect the quality of your product or service. You need to write or purchase quality content from day one.
- Social media
Internet marketing is a natural fit for any online business. You need to set up social media accounts, email marketing tools and so on. Whatever method of digital marketing you use, try to emphasize your being a Canadian business. Surveys by many marketing agencies constantly confirm that more than 60% of Canadians who make international purchases online, opt for domestic retailers or services. At this stage, also take some time to research the keyword cloud, which will help you reach out to wider range of users with information about your products and services by means of multiple search engines. In addition, launching an affiliate program can speed up launch and increase sales and conversions in the long run.
- Search engine optimization
Implement search engine optimization (SEO) to generate organic traffic leading to a steady and consistently growing demand for your products and/or services. Create legitimate backlinks to increase your search engine rankings. Make effective use of images/infographics/memes and encourage sharing on social networks, etc.
Your duty, however, is not limited to launching a website and generating traffic. You need to track, analyze and adjust your strategy based on the generated data. The sooner you start tracking and monitoring, the faster your sales and traffic will grow. Use Customer Relationship Management (CRM) tools that are incorporated in your information management system or e-commerce (CMS) platform and do not forget to set up Google Analytics.
- Exceptional customer service
Competitive advantage is directly linked with exceptional customer service. Besides, constant interaction with, and feedback from, your customers is a valuable source of information for developing and improving your business. Network-integrated call management and tracking systems provide multi-channel tracking and management of customer communications.
Engage an experienced online manager with a wide range of skills and background in online business. This may be your best decision at the start of your successful online business in Canada. By using outsourced solution, you will save yourself from the need to spend all your time studying and implementing best practices, learning from scratch. Instead, from the beginning of the journey you will be able to focus on the most crucial, i.e. commercial component of your business and bypass your potential competitors by profits as well as by faster expansion. Try to find an online manager who can help you with multiple tasks: from website management and marketing to compiling a content plan and graphic design.
Frequently Asked Questions
Do I need a business license for online business in Canada?
When you have made up your mind about your company name and venue, the next step would be to register a company in Canada, which may be through incorporating a company in one, several, or all provinces in Canada, if you intend to conduct business at the national level. Contact our professional consultants at firstname.lastname@example.org to gain insight on your market niche, type and place of incorporation of your company in Canada.
How do taxes work for online businesses in Canada?
Taxation mechanisms in Canada may vary depending on your line of business. Therefore, we will not be dealing with taxation issues in detail in this article. Yet, it is worth mentioning that Canada has adopted reasonably facilitated approach to taxation of startups, more specifically IT startups and international business projects.
If you set up an e-commerce platform which is designed specifically for Canadian market, it is likely that taxes will be automatically calculated at the point of sale.
Are there specific laws that apply to online business?
The Office of Consumer Affairs in Canada offers a model of sales contracts in e-commerce that covers contracting stage, cancellation rights, credit card refunds, and information.
Do I need insurance to conduct online business in Canada?
Business insurance for online businesses is similar to offline business insurance, yet the focus and coverage may vary. For example, the e-commerce business will need to focus more on shipping/delivery-related insurance, even if you sell products through/on Amazon. You also need to consider cybersecurity insurance. Liability insurance is recommended for home businesses in Canada. However, this may depend on the type of your business and whether you produce your own product/technology.
Can I just buy an existing online business?
If you are looking for an online business to buy, then check reputable stock exchanges and use their escrow service for a secure transaction.
If you have additional questions on conducting international business, then send a request for a free consultation by email: email@example.com and we will find answers to all of your questions about starting your online business in Canada, and also will accompany you in the course of further development and expansion of your project.
We guarantee confidentiality of the information received.