How to Start Retail Arbitrage in Canada

Retail arbitrage is a plain transaction repeated many times. A person buys a product at a retail price in Canada, lists it for sale somewhere else, and sells it for more than the purchase price plus the costs of selling it. The gap between the retail price and the resale price has to cover the marketplace fee, shipping, packaging, returns, tax, and the time spent sourcing and listing. This guide makes no claim about how large that gap is, or whether any particular product will sell. It covers the setup that applies whatever you sell: the business number, the tax threshold, the marketplace fees, the receipts, and the return rules.

The first distinction to get right is where the goods come from. Retail arbitrage buys goods that are already for sale at retail in Canada: clearance stock, seasonal lines, discontinued items, and ordinary shelf stock bought in a store or from a Canadian online retailer. The seller in that purchase is a retailer, the receipt is a retail receipt, and no customs process is involved. That is different from buying stock from a supplier outside Canada, which is a commercial import, and different from buying used goods in the United States for resale, which is also a commercial import. The guides linked at the end cover those two routes. If your stock arrives from outside Canada on your own order, do not plan it as retail arbitrage. Plan it as an import, with the import steps done first.

Step 1: Pick a narrow starting range and a channel

Start with one type of goods and one channel, not five of each. The reason is practical: every category has its own fee percentage, its own listing limits, and its own return behaviour, and you cannot price stock until you know all three for the exact goods. A small first buy, ten to twenty units of one line, tests the whole chain: sourcing, listing, packing, shipping, buyer questions, and the fee statement at the end of the month. A large first buy of mixed lines tests nothing except how much stock you can hold.

Before buying, read the fee table for the category on the channel you will use. On Amazon.ca, the referral fee is a percentage of the total price, and the percentage changes by category and sometimes by price band, so two items with the same sale price can carry different fees. Check whether the category needs an approval application. Amazon.ca lists some categories as requiring approval, with an application submitted through Seller Central, and the Professional plan is the plan that allows applying to sell in additional categories. If approval is needed, apply before buying stock for that category. Stock bought for a category you cannot list is stock you own with nowhere to sell it.

Also check the product itself before you buy. Sell only genuine goods, in the condition you describe, with the labels and packaging the buyer will receive. Keep the supplier invoice or retail receipt that shows where the goods came from. If a listing asks for approval for a brand, the approval step is part of the cost of selling that brand. Do not remove labels, repackage goods in a way that hides what they are, or describe a used or opened item as new. Buyer complaints about authenticity and condition are the fastest route to listing removal on a marketplace, and a receipt file is the only answer that works when a complaint arrives.

Step 2: Get the business number and settle the tax position

A business number is a nine-digit number the Canada Revenue Agency gives a business to identify it when dealing with the agency and other government programs. Register through Business Registration Online, the CRA online service for a business number and program accounts. Registration through that service gives the business number and account details at once. If you already hold a business number, check whether this activity needs a new program account added to it. The federal business number is not the same thing as provincial business registration, and a municipal business licence is a third, separate requirement in some places. Check the province and municipality where the business operates for those two, and do not assume one registration covers all three.

The tax question that matters most at the start is GST/HST registration. The Canada Revenue Agency treats a business as a small supplier while its revenue from worldwide taxable supplies is $30,000 or less in a single calendar quarter and over the last four consecutive calendar quarters. A small supplier does not have to register for GST/HST, but may choose to register voluntarily if it makes taxable supplies in Canada. Once the threshold is passed, registration is mandatory, and the timing depends on how it was passed. Passing $30,000 in a single quarter ends small-supplier status on the sale that crosses the line, and GST/HST must be charged on that sale. Passing $30,000 over four quarters ends small-supplier status at the end of the month following the quarter in which the threshold was passed. In both cases the CRA requires registration within 29 days of the effective date of registration. Track taxable sales by calendar quarter from the first sale, in a simple running total, so the crossing is visible before it happens. The threshold counts revenue from taxable supplies, not profit after expenses, and it counts worldwide taxable supplies, not only Canadian sales.

Once registered, charge GST/HST on taxable supplies from the effective date of registration, file returns on the schedule the CRA assigns, and keep the GST/HST paid on business purchases recorded separately from the purchase price. Whether any of that tax can be recovered, and how, depends on the CRA rules for the specific purchases and on registration status, so confirm the treatment for your purchases before building it into a price. Do not charge GST/HST before registration, and do not treat the threshold as an annual income figure: it is measured over calendar quarters, and a single strong quarter can trigger it.

Income from reselling is business income, and it is taxed on the profit, not on the full sale price. That is a general statement about how business income works, not advice about any one person's return. Keep the purchase cost, the sale price, the marketplace fees, shipping, and packaging recorded per sale or per batch, so the profit figure at year end comes from records rather than memory. If the activity grows past a handful of sales a month, a separate bank account for the business makes that record far easier to keep clean.

Step 3: Work the fee table before you set a price

Every sale on Amazon.ca carries a plan fee and a referral fee. The Individual plan charges $1.49 per item sold. The Professional plan charges $29.99 per month. Both are charged in addition to selling fees. Amazon describes the Individual plan as suited to sellers under 30 units a month, and the Professional plan as the plan for sellers who want to advertise, qualify for top placement on product detail pages, use advanced tools such as application programming interfaces and reports, and apply to sell in additional categories. The break-even point between the two plans on plan fees alone is just over 20 items a month at $1.49 each, but the plan choice is also about the tools and category access, so decide on more than the monthly arithmetic.

The referral fee is where most new sellers misprice. For every item sold, the seller pays a percentage of the total price, including item price, shipping cost, and any gift-wrapping charges, or a minimum amount, whichever is greater. The percentage is set by category. Home and Kitchen is 15 percent with a $0.40 minimum. Clothing and Accessories is 10 percent for a total sales price under $20 and 17 percent at $20 or more, with a $0.40 minimum. Grocery and Gourmet is 8 percent at $20 or less and 15 percent above $20. Toys and Games is 15 percent. The full table is on the Amazon.ca pricing page, and it changes, so read the row for your category on the day you price, not from a summary written months earlier.

Fulfilment adds a third layer when you use Fulfilment by Amazon. The per-unit fulfilment fee covers picking and packing, shipping and handling, customer service, and product returns, and it is set by the size tier and shipping weight of the product. On the pricing page, an envelope up to 100 grams costs $4.46 per unit, a standard item up to 100 grams costs $5.92, and a standard item from 900 grams to 1 kilogram costs $8.49. Products priced under $14 receive rates $0.80 less than the standard rates. Storage is charged monthly on the daily average volume the inventory occupies: $40 per cubic metre from January to September and $77 from October to December for standard-size inventory, with lower rates for oversize inventory and additional fees for aged inventory held over 180 days. If you fulfil orders yourself, Amazon charges shipping rates based on the product category and shipping service the customer selects, and passes that amount to you as a shipping credit. Professional sellers set their own shipping rates except for books, music, video, and DVD products, while Individual sellers use Amazon set shipping rates for all products, even when the credit is less than the actual shipping cost. Price with the shipping credit you will actually receive, not the postage you wish it were.

Other marketplaces charge differently, and this guide quotes no fee for any marketplace other than Amazon.ca. Before listing anywhere else, read that marketplace fee schedule the same way: plan or listing fee, percentage fee, fulfilment or payment-processing fee, and refund fee. A refund on Amazon.ca carries a refund administration fee equal to the lesser of $5.00 or 20 percent of the referral fee, with the referral fee itself refunded. Build one returned item in every ten or twenty into the pricing test for a new line, and see whether the line still works. If it does not, the line is not viable at that buy price, whatever the listing page suggests.

Step 4: Buy with a receipt you can defend

The receipt is the whole proof of cost. The CRA requires expense receipts to show the date of purchase, the name and address of the seller or supplier, the name and address of the buyer, and a full description of the goods or services, plus the vendor business number when the seller is a GST/HST registrant and the purchase price is $100 or more before tax. A store till receipt usually shows the store name and the items, but not the buyer name or address, and often not a full description beyond a short product code. At the time of purchase, write the missing detail on the receipt: what the goods are, in words, and that they were bought for resale. Keep the receipt with a note of the date bought, the quantity, and the price paid per unit. If no receipt is given, write the seller name and address, amount, date, and transaction detail in an expense journal on the same day. Memory a month later is not a record.

Photograph or scan receipts as you go. Thermal till receipts fade, and a faded receipt at year end is the same as no receipt. Store the images in one folder per tax year, named by date and seller, and keep the paper originals with them. Keep a simple stock list alongside: item, date bought, quantity, unit cost, date sold, sale price, fees, and return status. That list is what turns a pile of receipts into a profit figure, and it is also what answers a buyer question about when an item was bought and from where.

Keep records for at least six years from the end of the last tax year they relate to. Keep separate records for each business you run, and keep computerized records clear and easy to read. The CRA states that a business owner remains responsible for adequate records even when a bookkeeper, accountant, or software provider keeps them. If a platform holds the sales history, download it regularly rather than relying on the platform to keep it. Platforms change their reporting, accounts close, and a record that exists only on someone else's server is a record you do not control.

Step 5: Returns, condition, and the policy in writing

Returns are where arbitrage sellers lose money they did not budget for, and where buyers form the view that decides repeat business. Set the policy before the first listing, in writing, on the channel where you sell. Cover four points: how long a buyer has to return an item, what condition it must be in, who pays the return shipping, and whether any restocking charge applies. Make the policy match the marketplace rules for that channel. On Amazon.ca, returns are part of the fulfilment service when you use Fulfilment by Amazon, and the refund administration fee described above applies when a refund is issued. On other channels, the channel return window and the payment processor dispute window may both apply, and the stricter of the two will decide the outcome.

The legal background in Ontario is narrower than many sellers assume. The Consumer Protection Act sets out refund requirements in some circumstances for certain types of agreements, but does not provide a general right to return or exchange goods. The terms of the agreement between the business and the consumer may decide whether a refund is required in a particular situation. A buyer does have the right to ask for a refund if a business misrepresents a product or service. Other provinces have their own consumer protection statutes, and the position may differ, so check the statute for each province you sell into before writing a policy that claims a Canada-wide rule. The practical point stands everywhere: a written, honoured return policy costs less than a dispute, and a policy that promises more than the marketplace allows will be overridden by the marketplace on the sale that tests it.

Describe condition with care. New means new, sealed where the product is normally sealed, with all parts and documentation. Opened, used, refurbished, and damaged each need their own words, and the photographs should show the actual item, not a stock image of a perfect one. If an item is missing a part, say so in the listing, not in a message after the sale. If a product has an expiry date, a best-before date, or a safety recall, check it before listing. Food, cosmetics, health products, and children's products carry safety and labelling rules that go beyond a general resale guide, and this guide does not cover them. Do not sell a line in those categories until the category rules for that product have been checked on the regulator and marketplace pages for the product itself.

What this guide does not carry

This guide carries no claim about earnings, margins, or which products sell well, because those depend on the buy price, the fee table, and demand on the day, and any figure quoted here would be stale or invented. It carries no fee figure for any marketplace other than Amazon.ca, because no other marketplace's fee figure could be verified on an official page. It carries no provincial business registration fee, because registration fees differ by province and by structure, and none could be verified on an official page. It carries no statement about provincial sales tax rates beyond GST/HST, because the rate depends on the province of supply and the goods. It gives no personal tax advice and no legal advice about any specific dispute. The figures it does carry are the CRA $30,000 threshold and 29-day registration rule, the Amazon.ca plan and referral fees, and the CRA record-keeping requirements, each as stated on the official page listed under Sources. Recheck the Amazon.ca pricing page before every new line, and recheck the CRA threshold page before each tax year.

Related guides:

• How to Get a Business Number in Canada — the nine-digit business number and the CRA program accounts that sit behind it.
• How to Register for GST/HST in Canada — the registration steps, effective dates, and filing position once the threshold is passed.
• How to Charge GST/HST in Canada — what to charge, on which supplies, and how the charge appears on an invoice.
• How to Import Used Goods from the USA to Canada for Resale — the commercial import route, for stock bought outside Canada rather than at Canadian retail.
• How to Start Importing Items from Europe to Canada — the Europe route, where CETA origin and the $20 mail line change the landed cost.

Sources

• Canada Revenue Agency, "When to register for and start charging the GST/HST" — the $30,000 small-supplier threshold over four consecutive calendar quarters and in a single quarter, the effective dates of registration, voluntary registration, and the 29-day registration rule —
• Canada Revenue Agency, "Business records" — the duty to keep records of all transactions, income records showing date, amount, and source, expense receipts showing date, seller and buyer names and addresses, full description, and vendor business number at $100 or more before tax, and the six-year retention rule —
• Amazon.ca, "Sell on Amazon | How pricing works on Amazon.ca" — the Individual $1.49 per item and Professional $29.99 per month plans, referral fees as a percentage of the total price or a minimum, category percentages including Home and Kitchen, Clothing and Accessories, Grocery and Gourmet, and Toys and Games, Fulfilment by Amazon per-unit fees and storage rates, and the refund administration fee —
• Government of Ontario, "Returns, exchanges and warranties in Ontario" — no general right to return or exchange goods under the Consumer Protection Act, the agreement deciding refund requirements in particular situations, and the right to ask for a refund where a business misrepresents a product or service —