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Amazon is the largest online retailer in Canada, and it’s not just Jeff Bezos enjoying the financial fruits of this empire. Over 80,000 Canadians sell goods on the platform, generating a combined revenue estimated at over $2 billion CAD dollars per year. However, for that revenue to be profitable, sellers need to be aware of the best shipping methods for Amazon sellers.
The shipping methods Amazon sellers use must serve to protect profits and keep customers happy. However, despite the ease of which to shop and sell on Amazon, shipping purchased goods to customers can be a challenge.
“Shipping costs directly impact an online seller’s profitability, especially when operating a store on Amazon,” says Greg Woo, Director at Ship Expert.
“Having to compete with other sellers, customer expectations – and Amazon itself – means sellers need to be as frugal as possible. The shipping method an Amazon seller uses must be carefully evaluated so it doesn’t negatively affect their bottom line.”
In this article we’ll explore the primary Amazon Canada shipping method, FBA, as well as alternate shipping options, and provide tips on how to decide which method is best for Canadian Amazon retailers.
What shipping method does Amazon use in Canada? To get goods to customers, there are two primary pathways for Amazon sellers in Canada to choose from:
With FBA, Amazon manages fulfillment, shipping and associated logistics on behalf of the seller. In an FBM scenario, the merchant, or seller, assumes total responsibility for fulfilling orders and shipping them to customers.
As you may have expected, implementation and use of the different shipping methods isn’t quite as cut and dry as the description we shared. Let’s get into the details.
Fulfillment by Amazon (FBA) is the preferred shipping choice for many Amazon sellers. FBA allows sellers to leverage Amazon’s extensive logistics network and outsource key elements of their order fulfillment process to Amazon.
It saves sellers from having to warehouse and track inventory, prepare packages for shipping, and schedule shipping and delivery services in addition to other tasks
FBA involves sellers sending their inventory to an Amazon warehouse, where the items are stored and managed. Amazon then takes care of product fulfillment, shipping, and customer service (including returns management) on behalf of the seller.
Moreover, Amazon keeps sellers informed on inventory details, like low inventory levels, alerting sellers when it’s time to refill their warehouse items.
While any Amazon seller can access FBA services, it’s best for those who ship consistent, high volumes of products on a regular basis.
For dropshipping retailers, Amazon FBA is probably a no-brainer. The dropshipping model is designed so product inventory can go directly from a supplier to Amazon warehouses.
However, FBA is not a free service, and smaller retailers, or those with narrow profit margins, may prefer to source shipping elsewhere.
| ⚡Pro-Tip: Choosing FBA not only gives sellers access to Amazon's substantial logistics capabilities but also offers a significant advantage towards winning customer trust: Products fulfilled by Amazon are marked with a 'Fulfilled by Amazon' tag that indicates the product meets Amazon’s quality standards. |
Fulfillment by Merchant, or FBM, is when an Amazon seller chooses to manage fulfillment and shipping services on their own, without outsourcing those needs to Amazon. It does not mean the seller doesn’t leverage other 3PL providers for their fulfillment and shipping needs, it just means they choose to not use Amazon’s resources.
With FBM, Amazon sellers are responsible for managing every aspect needed to get the goods they sell into the hands of their customers. From the moment they’re notified of a sale, to the moment it lands in their customers hands – and beyond – the seller has complete control.
In an FBM shipping scenario, Amazon sellers can choose how much, or how little of the shipping and logistics process of their product’s journey they want to be involved in. These tasks include (but are not limited to):
FBM is best for retailers that want complete control and visibility over their shipping and logistics processes, who ship smaller volumes each month, who want to personalize packaging, or for those who find it more cost-effective to use alternate shipping and logistics providers.
For example, an artisan who sells delicate, handmade ceramics in Amazon’s Handmade Store, may not want to store their inventory in a distant warehouse where the risk of product damage may be higher than if stored in their home. For them, it may make more sense to handle fulfillment and shipping on their own to ensure goods are packaged accordingly.
Or, if a retailer finds a provider with better shipping rates than those offered by Amazon, they may opt to manage shipping themselves, or outsource those services to another provider.
The number of Canada-based sellers on Amazon is increasing, with more than 50% of all sellers earning over $50,000 a year from Amazon retail sales alone. However, competition on the platform is fierce, and being able to increase sales does require well-honed shipping strategies.
| “The right shipping method will allow an Amazon seller to offer customer-preferred shipping options, such as 2-day deliveries or free shipping. It will keep profit margins in the black and be set up to utilize a seller's resources wisely. Whether it’s through FBA, or independently, has to be determined by the individual seller.” Greg Woo, Ship Expert |
So, which is a better option for Amazon sellers in Canada: FBA or FBM? The answer is simple: It depends. Consider the following table to start exploring the best shipping options for your needs.
| Shipping Feature | Fulfillment by Amazon (FBA) | Fulfillment by Merchant (FBM) |
| Fulfillment Responsibility | Amazon handles storage, packaging, shipping, and customer service | Seller is responsible for all aspects of fulfillment and shipping |
| Inventory Management | Amazon manages inventory in their warehouses | Seller manages own inventory, whether at home or in a private warehouse |
| Customer Service | Handled by Amazon, including returns and exchanges | Managed by the seller, including customer inquiries and returns |
| Shipping Costs | Costs are typically included in FBA fees, but can be high | Seller has full control over shipping costs and providers and can access discounted shipping rates. |
| Delivery Speed | Often faster due to Amazon’s extensive logistics network | Depends on the seller’s chosen shipping methods and logistics |
| Sales Volume Suitability | Best for sellers with high sales volume | Suitable for sellers with lower sales volumes or special product needs |
| Control Over Branding | Limited customization for packaging | Full control over packaging and branding |
| Profit Margins | May be lower due to FBA fees | Potentially higher if managed effectively |
| Ease of Scaling | Easier to scale with Amazon's resources | Scaling requires more effort and resources from the seller |
| Product Qualification | Products need to meet Amazon’s criteria for FBA eligibility | No specific product criteria beyond what is listed on Amazon |
| Logistical Support | Extensive logistical support from Amazon | Seller must either self-manage or hire third-party logistical support |
| Prime Eligibility | Automatically eligible for Amazon Prime | Possible through Seller-Fulfilled Prime, but with requirements |
Beyond service and flexibility, it’s crucial for an Amazon seller to know how much each shipping method will cost. Below are the standard fees Canadians should expect to pay to use Amazon’s FBA services. For a complete list of FBA fees, visit the Amazon.ca seller’s pricing page.
Costs of non-Amazon shipping services aren’t as easy to define. It’s best to use the numbers below and compare them to prices gathered from other providers.
| FBA Fee Type | Details |
| Fulfillment Fees | Charges based on product size and weight. Fees cover picking, packing, shipping, customer service, and returns. For example, standard-size items weighing up to 100g are charged at CAD $5.92 per unit. |
| Storage Fees | Monthly charges based on the volume of inventory stored. For standard-size items, the fee is CAD $36 per cubic meter from January to September, and CAD $64 per cubic meter from October to December. |
| Additional Fees | Includes long-term storage fees, high-volume listing fees, refund administration fees, and surcharges for dangerous goods like lithium batteries. |
| Optional Programs | Costs for optional services like advertising and specialized FBA programs (e.g., Subscribe & Save, Multi-Channel Fulfillment). |
Deciding whether to use FBA involves weighing its considerable benefits against potential drawbacks. This section outlines the key pros and cons to help Canadian sellers make an informed decision.
Advantages of FBA:
Disadvantages of FBA:
While FBA can be your one-stop-shop for all logistics after a customer purchases from your Amazon store, it may not be the best option for you. Higher shipping costs, minimal visibility into inventory care and packaging processes, and other valid concerns may mean it’s better to manage these crucial aspects of your business on your own.
Fortunately in Canada, ecommerce retailers have good alternatives to pick from. At Ship Expert, retailers can access discounted shipping services - with zero volume minimums. While this is enticing to all retailers, for smaller Amazon retailers that don’t want to pay FBA fees and premiums each month, they can still enjoy low-cost shipping options.
Other ways ShipExpert helps Amazon sellers in Canada:
To learn more about ShipExpert, and how we can benefit your Amazon business strategy, contact our team.
Director, Ship Expert
Greg Woo is a seasoned expert in the logistics and distribution industry, with a career spanning over two decades. He has a comprehensive understanding of shipping and distribution needs, and has extensive experience integrating with e-commerce stores as well as customer specific WMS (warehouse management systems) and ERP’s (enterprise resource planning software). His tenure in the industry and established courier and LTL partnerships have allowed clients to benefit from reduced shipping expenses, as well as improved operations through software and specialized integrations.
Greg is currently the Director at Ship Expert Inc., a role he has held since February 2015. Prior to his role at Ship Expert, Greg held significant positions at Juxto, a telecommunications and managed internet service provider.
