Setting Up An Online Store In Canada

Written by Veronica Ott
Fact-checked by Caitlin Wood

Setting Up An Online Store In Canada

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The internet has opened many doors for Canadian entrepreneurs. A physical store to sell your products is no longer required because you can open a store online instead. However, operating an online store still requires a lot of effort – it can be more difficult than it sounds. You’ll need to put in the work to ensure your customer gets what they ordered and comply with laws and regulations. But in the end, owning your own store can be extremely rewarding and lucrative.

Things to Consider Before Starting an Online Store

In the 21st century, shopping online has become a regular routine for many Canadians. Opening an online store is an awesome opportunity to start or grow a business. That being said, before you start an online store, you should consider the below factors.

Your Business Name

Assuming that you’ve already put in all the other work involved in developing a business, the business name you choose is one of the final touches. Your business name should:

Be easy to remember and spell for your target market
Not be common or generic
Be available as a domain name
Align with your product
Align with your brand and image

Choosing Your Platform

With the boom of online shopping, various platforms have been created that are designed for businesses to host an online store. When picking a platform, you’ll want to consider aspects such as mobile-friendliness, plug-ins, price, integration with other systems, search engine optimization (SEO), and security. In simpler terms, the platform you choose should align with your business goals and existing processes. Shopify and Squarespace have frequently used platforms, but there are many more – so do your research.

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Dropshipping or Holding Your Own Products

Once your online store is set up, you’ll need to determine how your product will reach the customer. Online stores have two options: dropshipping and holding products. Let’s explore both of these options in-depth below.

Dropshipping

Dropshipping is the process of forwarding a customer’s order to a supplier who then ships the product to the customer on your behalf. Your customer will pay the retail price and you’ll pay the wholesale price to the supplier, the difference between the two amounts is your profit.

The benefit to dropshipping is you don’t hold any product which eliminates the need for a warehouse or packing supplies. You also don’t need to make a large purchase of inventory upfront and can list more merchandise on your store. Essentially, you’re outsourcing the entire storage, packing and shipping part of the sale to someone else.

That all sounds amazing right? Truth be told, it is, but there are some drawbacks. For one, you have no control over customer satisfaction. You can’t control when the product gets to the customer’s door and when something goes wrong, it will be reflected on you. There is nothing you can do when something goes wrong either because it’s out of your hands. In addition, customer returns are not easy and can be extremely time-consuming. To simplify returns, you can either eliminate them entirely or absorb the cost of returns.

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Hold Your Own Product

If dropshipping seems too risky for you and your business, your other option is to hold your own product. Every customer wants to get their packages as soon as possible. You have more control over that when you hold your own inventory. You’ll also know your product inside and out because you’re the one handling it directly. You’ll have control over the packaging which is an excellent opportunity to establish and build your brand. After all, opening a package is part of the customer experience. Lastly, you’ll save money on your product purchases because you’ll be buying in bulk.

All of these aspects of holding your own product might seem overwhelming. However, there is one added perk. When customers are dissatisfied with a product or service, they rarely communicate that to the business. Instead, they’ll usually tell their friends and family which will reduce the amount of business you get. The opposite is also true. When customers have a positive experience, they’ll tell their peers which will bring in more business to you. By controlling the entire process, you will be able to deliver better service which will improve future business and reputation.

The drawbacks of holding your own product are you’ll need to have a warehouse and there’s a bigger upfront investment. The warehouse will cost money and so will the packaging, labour, tracking systems, and product purchases. This can be a lot to manage, especially for a start-up business.

Understand Your Costs

The great thing about owning your own business is all of the earnings are yours, but so are the costs. In order to earn a profit, understanding and controlling your cost is essential. Online businesses have several costs that are mandatory for operation, listed below.

Website costs
Domain name costs
Employees (ie. web developer, website managers, etc.)
Registering a business
Marketing costs

Fortunately, one cost you’ll save on is large overhead costs, such as rent or utilities, given that you’re running your business from home. As for the other costs, it’s worth your while to shop around for the cheapest price. You also have the opportunity to negotiate prices as sellers rarely give their best price at first. At the end of the day, what you don’t spend goes directly into your pocket.

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Legalities With Setting Up An Online Store In Canada

Operating any kind of business means being aware and complying with laws, online stores are not excluded from legalities. Before starting to sell merchandise online, do your research into the following:

Business registration within your province
Business registration in other provinces (if you have clients outside your province)
Business incorporation
Consumer Protection Acts
Development of clear terms and conditions for your online sales
Bookkeeping
Taxes
Anti-spam laws

Keep in mind that there may be other regulations depending on the nature of your business and what you’re selling. Successful business owners prepare for the worst and hope for the best!

Get Online

The worldwide web has opened many doors for individuals looking to start a company. The barrier to enter the retail industry has greatly reduced which is phenomenal. Get online and start selling your merchandise over the internet today.