Dropshipping can be a great way to make money online, and for many online sellers, eBay is the perfect starting point. We’re here to discuss the challenges that dropshippers can face, how to combat them, and how to launch a successful dropshipping business using eBay.
What Is Dropshipping?
Traditionally, retailers keep an inventory of the products they offer on hand, often purchasing these products in bulk at a wholesale price from a manufacturer. Dropshipping eliminates the step of keeping inventory, instead enabling the seller to purchase wholesale products individually and then sell these for a profit online.
Ecommerce websites such as eBay and Amazon allow sellers to place their listings in front of a large audience with minimal processing fees.
How Does Dropshipping on eBay Work?
There are millions of products on eBay, but did you know that many sellers who are on eBay never actually handle or keep stock of the items they sell online?
Instead, they source their products from a separate online seller, often at a wholesale price, and list the sourced items in their own eBay store. Many sellers will use the exact images, product titles, and descriptions provided by their dropship suppliers.
Once a sale has been made, the dropshipper will fulfill the order through their dropship company, which will supply and ship the item to the customer.
Because the goods are shipped directly to your customers, you as the dropshipper simply acts as a sort of middleman between the supplier and the consumer, sourcing products in bulk and selling them at a good retail price on eBay.
Dropshipping is allowed on eBay, provided the seller guarantees delivery within 30 days of the end of the listing. Although the shipping time and item quality are not directly in the seller’s control, eBay places full responsibility in their hands.
Anyone with an eBay seller account can start dropshipping on eBay! You’ll want to begin by deciding on what products to sell, and then sourcing those products from a wholesaler or other supplier that can guarantee quick and reliable shipping.
You won’t see a huge return with just a few sales; the key to successful dropshipping is volume. Most dropshippers only net a few dollars per sale.
Factors such as pricing, marketing efforts, and timing can make or break a dropshipping strategy.
The biggest benefit of having a dropship store is that you don’t have to be in possession of the products you’re selling before you list them.
Once you’ve sourced a reliable supplier to use for order fulfillment, simply create your eBay listings and decide when to post, how to market, and what price point you think will get you a high volume of sales and earn a profit.
Once you’ve listed your products on eBay and the sales start coming in, your next priority is to build and maintain a fabulous reputation with your customers by fulfilling their orders and promptly dealing with any issues that may arise.
Dropshipping on eBay: Pros and Cons
There are pros and cons to dropshipping on eBay rather than creating an ecommerce store:
It’s Easy. Dropshipping on eBay is as easy as making an account and setting up your first listing. There’s no need to face the hassle and costs of setting up your own online store or ecommerce blog.
Less Need for Marketing. Your eBay listings will be placed in front of millions of online buyers, saving you time and money on marketing, SEO, and paid traffic.
More Traffic for Less Effort. The much larger audience ensures you make sales more easily and get the best prices for your products.
Listing Fees. eBay charges a small fee per listing (the first 50 listings are free) as well as up to 10 percent of your total sale price (known as a “final value fee”). With the already-slim profit margins through dropshipping, these fees can quickly add up. Keep in mind that the key to making money by dropshipping is volume.
Less Customization. Selling products on eBay is a great way to start an online business, but fewer customization options for your shop and listings can make it more difficult to stand apart from your competitors.
Frequent Monitoring Needed. You’ll need to stay on top of your listings if you want to maintain the volume needed to make money through eBay sales. There are online tools available that can help you streamline the re-listing process.
Ultimately, it’s up to you to decide where you want to place the bulk of your time and effort when selling wholesale products online, but for many sellers, dropshipping on eBay is a simple and effective way to make money.
Here are our top tips for starting a successful drop shipping business on eBay.
7 Tips on eBay Dropshipping
1. Minimize Your Workload
High volume is the key to gaining a competitive advantage and making money with eBay dropshipping, as profit margins tend to be very small, often only a few dollars per sale. Online sellers try to sell as much as they can in a short amount of time. High volume means more work, as you must process and fulfill every listing individually.
To streamline this process and reduce your workload, find products that can be posted as multiple-item listings. This way, you’ll only have to make the listing once, leaving you free to take care of fulfillment and handle returns when necessary. Be sure to set a longer duration for these eBay listings to avoid the need to re-list.
2. Keep Control of Pricing
The reason millions of online buyers flock to eBay on a daily basis is the promise of getting the best price for the items they buy. This can be a challenge for dropshippers, because while the final sale price may fluctuate, the supplier charges a fixed cost no matter what.
Additionally, eBay listings require a listing fee plus a percentage of the final sale price (as much as 10 percent), which can cut into your meager profit margins.
Thankfully, there are several ways to maintain your profits. When dropshipping for eBay, you have the option to set a Buy It Now listing, which offers your item at a fixed price, meaning you can ensure you pull in your desired profit.
Another advantage to using the Buy It Now option is the insertion fees are fixed, often for a lower price, no matter if you create an individual- or multiple-item eBay listing.
If you still want to allow your eBay buyers to bid for your products, carrying the potential for a higher profit, you can try setting a reserve price. This is a minimum price that the seller is willing to accept for an auction item.
With reserve pricing, insertion and final value fees will vary, so be sure to adjust your reserve price accordingly. This feature ensures better profits, but can be frustrating to online buyers, as the reserve price will not be visible to the customer.
The best way to control your profit margins is to set a high starting bid that ensures you will cover your fixed costs. Be sure to factor in costs from your supplier (including shipping, taxes, etc.) as well as eBay’s listing and final value fees.
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