Dropshipping 101 for Small Businesses

In 2018 the total value of the global drop shipping market size was over 100 billion USD, according to a market analysis report. That figure is expected to grow exponentially by 2025. Many individuals are flocking to this new business opportunity as a result of the expanding market.

With a greater opportunity for dropshipping in Canada comes more significant competition. So if your business is considering expanding into the dropshipping industry, it’s essential to do your research. This guide to dropshipping will discuss how to start dropshipping for small businesses, including the best products and suppliers to use.

What is Dropshipping?

Dropshipping is the method of selling products using a third-party supplier to deliver directly to the customer. Dropshipping does not require you to manage an inventory. You buy items wholesale from a particular dropshipping supplier, who in turn ships that product from their warehouse to your customer.

In simple terms, dropshipping is the business model of selling another business’s product while taking a share of the profits. E-commerce dropshipping is one of the most common forms of this business model.

How Does Dropshipping Work?

Inventory management is a complicated process, one that many small businesses or self-employed individuals that sell products don’t want to deal with. Instead, these businesses can turn to dropshippers and suppliers to source and deliver the products they sell. So how exactly does this process work?

As the owner of your online business and dropshipping store, you must first choose the products you wish to sell. You can either sell your selected products on your own website or use another e-commerce website to do so. After sourcing and settling on various products from a dropshipping platform and having your e-commerce store set up, you can begin making sales.

Once a transaction is completed, you will need to forward the order and customer details to your chosen supplier. The dropshipper will receive, fulfill, and ship the order directly to the customer on your behalf. Profit from the sale is then split between you and the dropshipper.

Is Dropshipping Legal in Canada?

Yes, dropshipping is legal in Canada. However, to conduct any type of business in Canada, you will need to register with your province or territory to make it official. To register the company, you will need to choose a business structure- either as a sole proprietorship, partnership, or corporation.

Whatever structure you choose when starting a dropshipping business, you must also be aware of the income taxes and sales taxes associated with running a business and dropshipping in Canada. You must also ensure that the dropshipping goods are legally allowed to be sold in Canada if they are coming from outside the country.

Dropshipping in an E-commerce Setting

If you decide to start dropshipping, you will first need to set up your business online, with e-commerce functionality. However, if you do not want to operate your own store to sell items, specific well-established e-commerce platforms do allow you to dropship on their sites.

Such sites that have allowable eCommerce dropshipping include:

What Are the Best Dropshipping Products to Sell?

Choosing the right products for dropshipping is a vital part of the business process. Consider what individuals will want to buy online versus in-store and what goods consumers feel comfortable purchasing without handling first.

According to Shopify, some of the most popular dropshipping goods that customers will buy include:

  • Clothing apparel and accessories
  • Health care and personal products
  • Home and bedroom decor
  • Hobbyist and niche products
  • Electronics and gadgets
  • Office supplies and products

One thing to keep in mind when selecting your dropshipping items- smaller is generally better. Smaller-sized goods mean lower shipping costs for your company overall. Bulkier, heavier items can cause shipping expenses to rise and delivery times to increase. The easier it is to get the products to your potential customers, the less hassle it will be for your business overall.

Any niche products that will be hard to find locally or in-store are also good ideas. Consumers are more likely to search online to look for what they need if it cannot be found in their area.

Benefits of Dropshipping

Businesses might opt to start dropshipping to take advantage of the many benefits associated with this sales method. Such benefits include:

  • It takes less equity to start up this type of business
  • No need for complicated inventory processes
  • Simplifies the business’s services for easier management
  • Low costs for inventory and order fulfillment for greater profit margin
  • Sell more products with less risk
  • Makes it easier for customers to find niche products

Risks of Dropshipping

Before deciding whether dropshipping is right for you, it is also advantageous to consider the downside to this business method. The associated risks of dropshipping include:

  • The possibility of defective items or shipping complications due to storage and delivery of products that are outside of your control
  • Lack of quality control as the inventory does not pass through your hands
  • Lower profit margins as a portion of each sale go to the drop shipper
  • There is an over saturation in the market since dropshipping is easy to set up and manage

Finding the Right Suppliers

Sourcing the right suppliers is essential to making your dropshipping business successful. The aim is to find a trustworthy drop shipper who offers quality products and reliable delivery. There are a few things you should keep in mind when selecting a dropshipping supplier.

When conducting your research, consider doing the following:

  • Look for reviews and testimonials. What are the reviews saying? How many reviews are there?
  • See how easy it is to find information on them. How long have they been in business? Where is it based, and who runs it?
  • Determine the delivery details. How long will it take to ship products to the customer? What country are the products coming from? What countries does the supplier ship to?
  • Find out their policy for goods. What is their return policy like? Do they refund or replace damaged items? Do they have customer support to deal with this?
  • Talk to the suppliers directly. Will they send you samples of their products you would like to sell? How large is their inventory? What is their scalability like? Do they provide any insurance or protection?

Best Dropshipping Suppliers in Canada

There are a number of qualified dropshippers in Canada that you can work with. Shop around and check multiple suppliers before settling on one to work with. This list of drop shippers in Canada can help you get started on your search.

Wholesale 2B

Working with Wholesale2B means gaining suppliers that can easily sync to eBay, Amazon, Shopify, and other e-commerce platforms to make selling their products as seamless as possible. You can register with them for free and start browsing their millions of dropship products to determine what works for you. This service also provides a dropship website with admin features and hosting capabilities.

CJ Dropshipping

This drop shipper works with sellers and customers worldwide, with warehouses in China, the US, Thailand, Indonesia, Germany, and more to come. CJ Dropshipping provides automatic order syncing and invoicing, shipment tracking, and millions of products to choose from.


When you sign up with AliDropship , you will gain a turnkey business website that can easily be populated with millions of products for quick setup. Two main tiered packages offer various features for a one-off payment. The premium package will see you with a fully functioning online store, help from a personal manager, and life-long marketing support.

Salehoo Canada

SaleHoo Canada offers a database of over 8000 suppliers, thoroughly vetted and verified, that you can choose from. By paying an annual fee, you will be able to work with these suppliers, take advantage of the video tutorials and selling guides to create a marketing strategy and begin selling online.


With over 100 million products sold through Oberlo , this dropship company offers users free and paid plans that allow you to find and customize products to populate your online store with. Gain 24/7 customer support and a product database that offers the latest metrics on the best-selling items. Oberlo supports six languages and can be used in English, French, Spanish, Italian, German, and Brazilian Portuguese.

If you decide to take on dropshipping for your small business, then you need the right tools to help you manage the associated expenses and revenue, like QuickBooks Online accounting software.

With revenue and expense tracking, financial reporting, and invoicing and billing features, users can take advantage of this comprehensive set of tools to improve their business processes. Try QuickBooks Online for free and start selling today.

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