Is Selling On Amazon Canada And Mexico Worth It? Probably Not!
Expanding your business to new markets can be an exciting prospect for any online seller. With the popularity of e-commerce platforms like Amazon, it's natural to consider selling on multiple Amazon marketplaces. However, when it comes to selling on Amazon Canada and Mexico, it's important to carefully evaluate the potential benefits and drawbacks. In this blog post, we will discuss why it may not be worth it for sellers to venture into these markets, highlighting the high fulfillment costs, challenges with returns, increased bookkeeping expenses, and the limited sales volume compared to the U.S.
1. The High Costs of Fulfillment
One of the key factors to consider when expanding your business to different Amazon marketplaces is the cost of fulfillment. Amazon charges fees for storing, packaging, and shipping your products to customers. Unfortunately, selling on Amazon Canada and Mexico often comes with higher fulfillment fees compared to the U.S. marketplace. These additional expenses can significantly eat into your profits and make it challenging to maintain a competitive edge in these markets.
2. Returns and Unfulfillable Items
Another issue that can impact your profitability when selling on Amazon Canada and Mexico is the handling of returns. When customers in these countries initiate a return, the majority of these items are reported as unfulfillable. Consequently, these items need to be returned to you and restocked if you wish to sell them again. This process can be time-consuming, costly, and result in the loss of potential sales.
3. Increased Bookkeeping Costs
Selling on Amazon Canada and Mexico will also lead to increased bookkeeping costs, which further cuts into your profits. Even if you have minimal sales on these platforms, you will still incur higher costs due to the need to upgrade your accounting software, such as QuickBooks Online, to account for currency conversion. Amazon data from these marketplaces comes in pesos (Mexico) and Canadian dollars (Canada), necessitating a more advanced version of your bookkeeping software, which comes with additional costs. The upgrade cannot be reversed once completed. Additionally, COGS for those platforms will need to be manually calculated if you are a retail or online arbitrage seller using InventoryLab.
4. Limited Sales Volume in Canadian and Mexican Markets
Another important factor to consider when deciding to sell on Amazon Canada and Mexico is the relatively smaller market size compared to the U.S. While these markets can offer opportunities, they are significantly smaller in terms of customer base and sales volume. Therefore, selling in these marketplaces may not yield meaningful growth in your business's overall sales volume. We typically see a clients volume on these platforms average only about 5% of U.S. total sales.
Conclusion
Expanding your business to new markets like Amazon Canada and Mexico may seem like an appealing opportunity, but it's crucial to carefully weigh the potential benefits and drawbacks. The high costs of fulfillment, challenges with returns, increased bookkeeping expenses, and limited sales volume compared to the U.S. market should be considered when making this decision. Sellers should assess whether the potential profits and growth in these smaller markets justify the additional costs and efforts involved. Focusing on selling on Amazon U.S., with its larger customer base, lower fulfillment costs, and more streamlined operations, may provide a more fruitful avenue for increasing sales and maximizing profits.
