The #1 Essential Guide to eBay Dropshipping (Including What You Need to Avoid)
eBay dropshipping – an untapped opportunity or a dangerous eCommerce black hole? We’ll dive into this topic and hopefully give you a better idea of if this is right for you.
The Growth of eBay
eBay is an online auction service that allows users to sell products to customers across the world.
The user base of eBay, like that of other eCommerce marketplaces such as Amazon and AliExpress, has been consistently growing for several years. In the second quarter of 2019, the platform had over 182 million users.
Of course, this massive number of site users has drawn the attention of online retailers and those in the eCommerce industry.
How Does eBay Work?
You can locate, bid on, and purchase practically anything on eBay – from automobiles to jewelry.
Sellers on eBay list their items with a beginning bid to attract customers. That said, customers are more inclined to bid on a product if the starting bid is lower than the average starting bid.
Customers place a bid on the product for a set number of days until the product is ultimately sold to whoever has the highest bid. This process can be seen as sort of like an auction in a sense.
Sellers can also include a ‘Buy It Now’ button to maintain control over the product pricing and allow buyers to purchase at a fixed price without bidding.
What is eBay Dropshipping?
eBay dropshipping is a technique of order fulfillment in which the seller does not have to maintain an inventory of products.
Instead, each time a consumer places an order, the order is forwarded to a third-party supplier. This third-party supplier subsequently produces and distributes the items directly to the client on behalf of the retailer.
Thus, the seller never interacts with the items directly, nor do they maintain a warehouse or stockpile inventories. This is how you can see where eBay dropshipping would fit in.
Is Dropshipping on eBay allowed?
Although, even if dropshipping, in general, is perfectly legal, how eBay dropshipping works is a different story entirely.
eBay Dropshipping Policies
According to the company, dropshipping is permitted on eBay; however, it is limited. When it comes to eBay dropshipping, it is theoretically permissible as long as you “fulfill orders directly from a wholesale source.”
So, what exactly does that imply? In simple speak, you MUST acquire products from a wholesaler to advertise them on eBay.
What items aren’t allowed to be sold on eBay?
You can’t partake in eBay dropshipping if you resell items from another retail website or marketplace, such as Amazon, AliExpress, or any brick & mortar store.
According to eBay dropshipping guidelines, “Buying the item from another merchant or marketplace that sends the item straight to your consumer is not permitted on the eBay platform.”
Dropshipping from Amazon to eBay is thus not permitted. This means you cannot offer an item on eBay, purchase it from Amazon, and then ship it to your eBay buyer.
It’s important to note that eBay is very rigorous about these guidelines too. They have clearly stated that they will delete or reduce your listings in their search results if you do not adhere completely. Furthermore, if you’ve been selling on the site for an extended period, they may even reduce your rating or status on the marketplace. Ouch!
What You Need to Know about dropshipping on eBay
There is only one method for dropshipping on eBay – buying directly from wholesalers or suppliers.
So, here’s a visual representation of how it works.
Set up an eBay Seller account.
Establish a business presence on eBay by registering as a seller. eBay dropshipping may be as simple as creating an eBay Seller account. A separate eBay store is an option, but it isn’t necessary to increase your investment.
However, you’ll have to pay a charge to list your business. Always keep in mind that there are several eBay sites for different countries, so make sure you sign up for the correct one based on where your intended audience resides.
Choose your products and dropshipping supplier.
You’ll need to select your items and dropshipping service. Before you start selling on eBay, do some research and figure out what you want to sell.
The next step is to register as a retailer with the manufacturers and distributors of the items you want to sell. Ask them if they would be willing to ship to your consumers as a dropshipper.
A unique return label with your company’s name and address should be included with your order so that your consumers know who sent it.
Sell your products on eBay at a higher price than the wholesale cost.
Taking your time is critical here. You may use photographs from the supplier’s website or, much better, your own if you have samples to upload professional images of the items. Write in-depth descriptions of your products and make sure your listings are search engine optimized.
Because you’ll likely be competing with other vendors who use the same source, you’ll want to discover methods to set yourself out from the crowd.
It’s also critical to pick the correct pricing point. Low enough so that it’s competitive, yet high enough so that it’s profitable.
Communicate with the supplier.
When you make a deal, give your customer’s information to the supplier. Then, every time a transaction is completed, be sure to notify your supplier and provide them with the shipping information for your consumers.
The supplier is in charge of packaging and delivering your product directly to your buyer. However, eBay’s terms require that you, as the seller, are still responsible for guaranteeing that the item is delivered safely and on time.
A second option is to buy in bulk from the supplier and then send the inventory off to a fulfillment service if you can’t locate a wholesale source willing to drop ship to your eBay clients.
Dropified vs. Oberlo, which do you choose? Check out our guide of: Dropified vs Oberlo: Choose the Best Dropshipping App
If you choose to go that route, they will keep track of your inventory, package your items, and send them on your behalf. Purchasing shipment management software will allow you to automate this procedure while also locating the most cost-effective shipping methods.
Although it’s important to note that as a result, the business risk would be more significant than with typical dropshipping since you would have to purchase a large amount of inventory upfront with no guarantee it will all sell.
The Advantages of eBay Dropshipping
A few examples of the various advantages of dropshipping include:
Dropshippers take relatively less risk since they only acquire products when clients order them. There is no requirement for minimum order quantity since the seller does not purchase inventory ahead of time.
It’s an excellent business model for beginner entrepreneurs who want to experiment with their ideas or even for seasoned entrepreneurs who want to branch into a new area.
With the eBay dropshipping marketplace, there is a lot of room to automate the majority of your dropshipping operations. This means you will have less time spent on minor operation details and more time to grow your business.
With eBay dropshipping, you can choose to purchase it from a manufacturer at a discounted rate known as a wholesale price. This helps to increase your net profits.
In some instances, depending on where you’re dropshipping from, you may even be able to take advantage of inexpensive shipping rates (sometimes even free delivery), which helps keep expenses down for both you and your client.
Conserve time by concentrating solely on a few administrative responsibilities as well as marketing and customer service activities.
Packing, shipping, and carrying inventory can be three of the most time-consuming and expensive parts of eCommerce. With eBay dropshipping, you don’t have to worry about any of those.
Large Variety of Product Options
You have the option of selling products from a vast selection of dropshipping niches. Alternatively, you may browse product marketplaces and instantly add any product to your store with a single click. This way, you can market products that have already shown to sell well, you know, winning products.
Our Final Thoughts on eBay Dropshipping
In our opinion, we believe it’s better to establish your own store brand than use eBay dropshipping. To go the route of dropshipping on eBay, you must purchase inventory from wholesalers, pay listing fees, and risk being thrown off the platform when regulations change.
In addition, you are putting your hard work and efforts into driving business to eBay, not your own brand. If you manage your own online business, you can control your client base, remarket to them via social media and email, and establish a lasting brand that will gain success and go as you choose. (Kinda like what we talked about in our debate between using Shopify vs. Amazon)
Because let’s be honest, we’re sure you know the store name “Nike,” but do you even remember the seller’s name of the last item you purchased from eBay?
eBay Dropshipping as a Sustainable Business Model
If you’re looking at entering into the world of eBay dropshipping or starting your own business, it can help to have support (such as an experienced dropshipping mentor!) to assist you in getting started and guide you along the way.
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Frequently Asked Questions
Is it worth dropshipping on eBay?
Honestly, no. Their guidelines make it a bit more complicated than it seems, then you have to pay fees, and you don’t even get to own your client base for dropshipping on eBay.
Is dropshipping on eBay profitable?
Not as much as you would think. Research has shown that dropshipping on eBay has some of the lowest profit margins than other eCommerce methods in general. For example, on average, eBay dropshippers have a front-end profit margin of 6% compared to other eCommerce ventures, which average around 30-40%.