Dropshipping – A Canadian Trend

Dropshipping is a business model where products are sold through an online store without having to carry any inventory. Dropshippers buy products in bulk from wholesalers and sell them directly to customers, usually at a lower price than what the wholesaler would charge. The main benefit of dropshipping is that it allows you to set your own prices and make your own schedule, which means you can work from anywhere with internet access.Dropshipping can be used as a way to generate extra income or supplement your current job. You don’t need any special skills or knowledge – all you need is some patience and willingness to learn new things.

Dropshipping is a business model where products are sold through an online store without having to carry any inventory. Dropshippers buy products in bulk from wholesalers and sell them directly to customers, usually at a lower price than what the wholesaler would charge. The main benefit of dropshipping is that it allows you to set your own prices and make your own schedule, which means you can work from anywhere with internet access.Dropshipping can be used as a way to generate extra income or supplement your current job. You don’t need any special skills or knowledge – all you need is some patience and willingness to learn new things.

Dropshipping is a business model where products are sold through an online store without having to carry any inventory. Dropshippers buy products in bulk from wholesalers and sell them directly to customers. One of the main benefits of dropshipping is that it allows you to set your own prices and schedule, which means you can work from anywhere with internet access.

Dropshipping can be used as a way to generate extra income or supplement your current job. You don’t need any special skills or knowledge. You will need is some patience and a willingness to learn new things.

More and more Canadians are turning to dropshipping as a viable alternative to other types of business. As a result, dropshipping has been steadily growing in popularity for several years. In this post we present an overview of dropshipping from a Canadian perspective. We also expand on the topic of dropping-shipping coffee and building an online coffee brand.

Dropshipping Trends

It is estimated that the global dropshipping trend was worth 128$ Billion in 2020. Several leading studies place the annual growth rate of this trend at a Compounded Annual Growth Rate of 23.7% to 32%. That means that by 2025 the trend could be worth as much as 450 Billion $USD.

Advantages of a drop-shipping business:

A dropshipping business offers many advantages to a Canadian business owner. Here are just a few:

• A dropshipping business typically requires few if any staff.
• A dropshipping business does not require costly monthly rent payments.
• A dropshipping business virtually eliminates most types of risk associated with traditional business models.
• In Canada, your home office or areas associated with your business can be written off as a business expense.
• Canadian business owners can also write off other expenses such as computers, office furniture, stationary etc…
• A dropshipping business can be operated from virtually anywhere.
• There are many types of dropshipping businesses to suit any type of personality or interest.
• Risk and complexity are reduced or largely eliminated

Let’s look at some of these benefits in depth…

A dropshipping business typically requires few if any staff.

Dropshipping is a model that is designed to reduce the time and effort that is needed to run a business. In a typical Canadian brick and mortar retail business, a customer must first interact with a staff member in order to purchase a product. With a dropshipping business, customers can purchase products directly from the business owner’s online store. This reduces the amount of customer interaction that is needed in order to purchase a product. Additionally, because a dropshipping business does not need to employ any staff, there is no need for businesses to provide benefits, such as healthcare, retirement, or paid leave. These benefits can be a significant strain on a typical Canadian small business. Additionally, specialized talent can be very expensive in Canada. Operating costs associated with fulfillment labour can also reduce the salaries of specialized talent such as marketers and designers. These costs can make it difficult to retain specialized talent and that can hamper a typical Canadian business trying to compete in global economy.

Very low startup cost when compared to a brick and mortar business

In Canada, where the cost of operating a brick and mortar storefront can be astronomical, dropshipping requires a relatively small amount of start-up capital. One of the barriers to starting a typical business is that you need a lot of capital to get it off the ground. In contrast, dropshipping can be started with very little money. As a minimum you will need:

• Online outlet store
• Dropshipping Suppliers
• Ads that drive traffic to your store

If you choose to drop ship on a platform like sharehaus.coffee, the basic subscription fee for setting up a basic online store is about $19 per month. An advanced, fully featured site cost about $99 per month.

In Canada, your home office or areas associated with your business can be written off as a business expense.

This means you can deduct the cost of furniture, equipment, software and other tangible assets used in conducting your businesses from your income taxes. The write-off limit is $500 per year for each qualifying entity (business). Qualifying entities are personal residences that contain an active work space suitable for carrying out professional duties (such as legal practice), ranches constituting more than half of the land owned by the taxpayer and farmland used primarily to produce crops or livestock sold at market.

A dropshipping business can be operated from virtually anywhere.

It’s true. If you have access to a high speed connection and a laptop, you can run your business. That means that you are free to travel and set you own hours. Canada a lovely place to live but in the middle of the Winter when the thermometer drops, it’s nice to escape to a warm destination. That desire is often hobbled by worries about minding a business. One often feels guilty about “getting away” to a warmer climate. But, if you business is entirely online, you can make your escape from the Canadian winter without missing a beat.

Risk and complexity are reduced or largely eliminated

Dropshippers benefit from business systems that are developed and operated by the suppliers. That means that the enormous risk and complexity of making and shipping the product is dramatically reduced or eliminated. This frees the dropshipper to focus almost exclusively on marketing the product. Having time to market the product is a huge and often overlooked advantage.

Advantages of a drop-shipping coffee:

A coffee dropshipping business is a little different in that it offers it’s set of perks. Let’s look at some of the main advantages of dropshipping coffee to your fellow Canadians.

Subscription model

Coffee is an ideal product for drop shipping because it lends itself to creating a subcriptions based business. Let’s face it, you work hard to acquire your clients. It can be challenging and expensive to constantly find new clients. Canadians spend an enourmous amount of time online and are extremely aware of marketplace offerings and as a result once you have foubd a client, it is important to maximize your ROI that acquisition cost.

Good news! Clients continuously consume and run out of coffee. This makes it easy, and very important for coffee dropshipping busineses (in particular) to offer a subscription service.

Subscriptions turn an initial sale into an ongoing relationship and allow you to capitalize on your initial marketing investment.

Bundling – It’s about more than coffee

An average sale for a typical coffee company might range between 20-40$. While this is certainly nothing to sneer at, bundling can increase this total sunstantially. For example, what about a recurring subcription to a bundle that includes two bags of coffee, an assortment of tea, and a surprise item (cap, or a mug, or a small peice of coffee gear)?

That might retail for closer to $100. You get the idea. Coffee is an example of a product that facilitates the sale of other, related products. This is called an add-on sale.

Low barrier to sale

Unlike luxury vaccums, jewelery or patio furniture, Coffee is a relatively inexpensive product for Canadian consumers. This might seem like a disadvantage at first, but the savvy marketer knows that this simple fact presents a unique opportunity to taylor a custom offering to nearly every type of client. For example, some visitors are simply passing through, and will not hesitate to spend a small amount of money on sampling a unique coffee. Others are looking to make a regular purchase, and will spend periodically to get that specific type of coffee that is only available from a smaller local brand. Whatever the case may be, a bag of coffee is never the subject of much deliberation. This is extremely useful to introducing your brand to more and more Canadians.

Disadvantages of a drop-shipping business

A dropshipping business also bring a few notable disadvantages for Canadian business owner. Fortunately these can be successfully mitigated with the right strategies. Here are a few things to consider (as well as some workarounds) prior to getting started:

• A dropshipping business requires a significant effort to market.
• A dropshipping business requires some specialized knowledge of commerce systems.
• A dropshipping business might not offer very large margins.
• It may be difficult to source original product for your dropping business.
• Your dropshipping activities may impact your local producers adversely.

A dropshipping business requires a significant effort to market

Build it and they won’t come. What? That’s right. Building your website is only the first step. You must also put significant effort into building  community of followers who will want to buy from you. Whether that community come in the form of a mailing list, Instagram following, or people you know from some social activity, without a community you’re dead in the water.

A dropshipping business requires some specialized knowledge of commerce systems

What’s a pixel? Google tag manager? Bounce rate? If this all sounds like a foreign language, better start reading. Or hire someone who is familiar with emarketing. In today’s internet, and understanding of basisc emarketing concept is key and without it you business will be like a ship without adigital rudder. Or, as we say in Canada…like flapjacks witout maple syrup.

A dropshipping business might not offer very large margins

Yup. That’s right. Your margins might be a little slimmer however that’s not necesserily bad since you also left a whole bunch of your business expenses behind, care of your suppliers. For example, how much rent did you pay last month? I bet you said zilch, zippo, nada, or something like that. What about wage expense? None… okay… you get it.

So what’s left is really just the NET PROFIT and that’s really all you want anyway.

It may be difficult to source original products for your dropping business

That’s true, but by using a private label supplier like Sharehaus.coffee your product can be unique to you. Also, sourcing goods from local suppliers, will provide you with original and unique goods that might not be readily availbale through global distribution channels.

So, the old adage “think local”  really is helpful in  finding unique products for your dropshipping business.

Your dropshipping activities may impact your local producers adversely

Also true. It’s not fun to put your friends in the community at a disadvantage by importing cheap goods from overseas. Instead, show you care about you community, and sustainability by opting to source your products from local suppliers. You will be surprised to find just how many interesting, high quality products you will find by simply looking withing 50km radius of your town. So if you care about your community and the people around you, you can include them in your dropshipping business by making them your preffered suppliers instead of sourcing from overseas.

Dropshipping – A worthwhile endeavour?

Yes, dropshipping is an absolutely worthwhile endeavour and one that can bring economic security and prosperity into your life. It allows marketers to focus on marketing and manufacturers to focus on manufacturing. Specialization and division of labour is of course a cornerstone of  advanced civilization.
If you are just starting out in business and want to get your feet wet without being exposed to a large amount of risk and complexity, then dropshipping may be just the ticket you have been searching for.