How to Start an Amazon Business in Canada (in 5 Easy Steps)

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1. Establish a Canadian Amazon Seller Account & Choose a Selling Plan

Go to Sell.Amazon.ca, sign up for a new account, and choose to be a reseller (someone selling others’ products) or brand owner (selling your own items or private label products).

Create an account as an individual or professional seller. If you intend to sell in volume, you’ll need to sign up as a professional because you’re likely selling more than 30 items monthly.

As an individual seller, you’ll pay Amazon $1.49 for each sale you make. An individual seller account is suitable for an independent seller who’s just starting on the platform, selling fewer than 30 items per month, and who doesn’t need access to Amazon Canada’s advanced seller tools.

If you take the professional route, you’ll pay a monthly fee of $29.99, regardless of how many items you sell. A professional seller account is recommended for a business owner who is familiar with the platform, sells more than 30 items per month, and may want access to Amazon Canada’s advanced tools, such as Amazon Launchpad. 

When registering your account, you’ll need to provide the following information:

• A business email address
• A valid credit card
• Your phone number
• Your bank account information (so Amazon Canada can deposit earnings into your account)
• Tax information (use your Social Insurance Number if you’re a sole proprietor)
• Government-issued photo identification (passport, driver’s licence) to verify your identity

Amazon Canada will verify your account before you can begin listing and selling products.

2. List the Products You Will Sell

The great thing about starting a business on Amazon is there’s no shortage of things you can sell, and Amazon outlines all the product categories and the conditions under which you can sell. 

Amazon makes it easy to list products, but you’ll need a product identifier, such as a GTIN, UPC, ISBN, or EAN, to specify the exact item you’re selling when creating your product listing. You’ll also need a stock-keeping unit (SKU), a product ID you create to track your inventory. 

You’ll want to be as detailed as possible – a seller is more likely to quickly add your product to a cart if they don’t have any lingering questions. 

Include details such as the price, product condition, available quantity, shipping options, and the name, brand, category, and product descriptions. Don’t forget to include images of each item.

Research the product categories on the platform and utilize Amazon’s “Best Sellers” lists to identify the most popular products among consumers. For instance, electronics, books, and beauty products are consistently top sellers on Amazon Canada.

Optimize your product listings by incorporating relevant SEO keywords and search terms into your product titles. If you’re the first to sell a product on Amazon, you’ll have to create a listing from scratch. 

If the same product is already available from another seller, you’ll match an existing listing, which is quicker as most of the product details are already filled in for you.

3. Select Fulfillment by Amazon or Fulfillment by Merchant

A crucial aspect of selling on Amazon Canada is getting the item to your customers, whether they’re in this country or elsewhere – that includes packaging, shipping, tracking and even returns.

Choosing a fulfillment method is necessary. There are two options:

1. Fulfillment by Amazon (FBA): Amazon stores, packs, and ships sold products on your behalf, including handling customer service and product returns for a percentage-based fee on each unit sold.
2. Fulfillment by Merchant (FBM): You’re responsible for storing, packing, and shipping sold products to your customers directly.

FBA allows you to take advantage of its more than 175 fulfillment centres worldwide and removes the hassle of maintaining in-house inventory and shipping. 

But be aware that if your inventory sits unsold in an Amazon fulfillment centre for more than 271 to 300 days, you’ll be charged a fee starting at $156. Check Amazon’s inventory surcharge details here. Amazon also provides a free FBA Revenue Calculator to assess what FBA fees you will be charged.

FBA makes sense if you’re looking to scale up your business quickly as a professional seller. It also makes your business eligible to participate in Amazon’s annual Prime Day, where Prime members receive exclusive access and deals on products over several days. It has been compared to other major shopping events, such as Black Friday and Cyber Monday.

Alternatively, FBM allows you to store and ship products directly to customers yourself and pay Amazon a shipping rate based on the product category and shipping service selected by the customer (it passes the amount on to you in the form of a shipping credit). 

You can also take advantage of Amazon’s Buy Shipping tool to work with its trusted network of shipping partners, ship and confirm your orders, and track your shipments.

4. Know the Tax Implications

Starting an Amazon business in Canada has tax implications to consider. How much tax you pay depends on how much you sell. 

If you exceed $30,000 of sales in Canada in 12 months, you must register for a GST/HST account with the Canada Revenue Agency (CRA), collect sales taxes from customers (which is done by Amazon), file sales tax reports, and remit the taxes to the CRA. 

Registering before you reach the threshold allows you to claim back the sales tax paid on expenses, including the 5% tax charged when products are imported to Canada (it’s your responsibility even when done through a third party to pay this tax).

You must also report your income and pay taxes on it. Canadians selling on Amazon are considered small businesses and need to submit Form T2125 with their annual tax returns. 

You must report all earnings, including money you earned from American buyers – all transactions should be converted into Canadian dollars. 

In addition, if you go the professional seller route or process more than 50 transactions per year, you must submit Form W-8BEN to Amazon so that it may pass the information to the Internal Revenue Service in the U.S.

5. Market Your Products

If you want to make and grow sales, you need to let consumers know you exist and what you offer. That means digital marketing.

Consider buying Amazon Canada’s PPC (pay-per-click) advertisements to boost your visibility, utilizing social media networks, building a dedicated email marketing list, or hiring social media influencers to promote your products and website.

Encourage your customers to leave a review of your products and reply to customer reviews professionally (especially negative ones) to help build trust and demonstrate your commitment to delivering top-notch customer service.

What Insurance Do Amazon Sellers in Canada Need?

We mentioned that we’d return to the topic of protecting your finances and reputation with customized liability insurance – and it is critical!

Any independent seller or business owner is liable for the products they manufacture, distribute, or sell, whether online or offline.

Amazon sellers insurance (a form of e-commerce insurance) provides financial protection against the risks you are exposed to as an online seller or business owner using the Amazon marketplace to sell goods. 

Amazon requires all sellers who earn more than $10,000 in monthly sales to carry liability insurance, whether you use FBA or FBM to deliver your products to customers. 

An Amazon sellers insurance policy typically includes the following coverages:

• Product Liability Insurance: Product liability insurance covers third-party bodily injuries and third-party property damage caused by the products you sell (including food), even if you didn’t manufacture them.
  
  For example, if one of your customers claims that a portable phone charger they bought from you on Amazon Canada overheated or exploded, causing them physical harm, this coverage is designed to cover the injured person’s medical expenses and your legal defence fees if they sue you.

• General Liability Insurance: General liability insurance covers third-party bodily injuries and third-party property damage caused by your business’s usual operations or that occur on your commercial property.
  Although you’re selling products online through Amazon Canada’s marketplace, general liability insurance also includes coverage to deal with allegations of defamation and false advertising. Online sellers are not immune to defamation and false advertising claims.
  
  Many general liability insurance policies include product liability insurance coverage.

• Cyber Liability Insurance: As an online business owner or seller, you’re constantly at risk of suffering a cyber-attack, ransomware attack, or data breach that could upend your operations and compromise your and your customers’ confidential information.
  
  Cyber liability insurance covers costs associated with electronic incidents, such as cyber-attacks. It’s designed to cover the costs of restoring affected computing systems and software, as well as paying for notification and credit monitoring fees and providing funds for your legal defence if you are sued by customers affected by an attack on your site, cloud storage, or computing systems.

• Commercial Property Insurance: If you also own or lease a commercial property for your business, commercial property insurance is vital to include in your policy.
  
  It covers damages and losses to your commercial property, business contents, and inventory caused by fire, water, natural disasters, theft, and vandalism.
  
  Many commercial property policies also include business interruption insurance (or it can be added to a commercial property policy). It covers your lost income and operational overhead if you’re forced to close temporarily for repairs following an insurable loss, such as a fire.

How to Get Customized Amazon Seller Insurance Quickly

Zensurance is Amazon Canada’s preferred liability insurance provider for Amazon sellers.

More than 350,000 Canadian small business owners and independent professionals across various industries trust Zensurance to provide them with customized, low-cost business insurance, including Amazon seller insurance.

Complete our online application for a free quote in less than five minutes.

Our team of knowledgeable brokers will shop our partner network of over 50 insurers to find the right coverage that suits your needs and budget, answer your questions, and tailor a policy to fit your Amazon seller business so you can focus on selling and growing your bottom line.

– Reviewed by Alexandria Anthony, Team Lead, Property & Hospitality, Zensurance.