With a constant stream of loyal customers and great business growth potential, eBay is a highly attractive marketplace for many first-time sellers and small businesses.
What’s more, drop-shipping on eBay has opened the door to this huge audience without the need for upfront capital.
Requiring far less financial input than a regular store, eBay drop-shipping could provide an excellent gateway to online retail for sellers just starting out or looking to test the water.
So, how do you drop-ship on eBay? What are the pros and cons of drop-shipping on eBay? And ultimately, is it worth it?
Below, we have outlined our complete guide to drop-shipping on eBay to help you determine whether it’s the right model for your online business or not.
What is a dropshipping business?
Dropshipping is an order fulfillment method where a business is not required to keep their products in stock.
Instead, every time a customer makes a purchase, the sales order is then passed onto a third-party supplier, who prepares and ships the products directly to the customer.
Therefore, the seller never handles the products directly, nor do they stock or own inventory.
A dropshipping business model means that sellers only purchase inventory from a dropshipping company, typically a wholesaler or manufacturer, as and when needed to fulfill customer orders.
How to dropship on eBay.
Dropshipping on eBay has recently come under a lot of restrictions.
This does not imply that it is impossible, but it does indicate that in order to avoid negative repercussions, sellers must exercise extra caution to adhere to eBay’s dropshipping policy.
So, this is how the procedure looks.
1. Set up an eBay Seller account.
An eBay Seller account is all you need to begin dropshipping. By opening an eBay store, you could increase your investment, although it’s not required. But be ready to pay listing costs.
Keep in mind that there are numerous eBay sites for various nations across the world, so be sure to join up for the appropriate one based on where your target audience resides.
2. Choose your products and dropshipping supplier.
Decide what you want to sell on eBay first after doing some research.
The next step is to register as a retailer with the companies that supply the products you want to sell. Ask them to dropship to your clients by getting in touch with them.
In order for your clients to know that you shipped the item, it’s crucial to make sure the supplier is willing to include a unique return label on the package that includes your company name and address.
3. List your items on eBay at a marked-up price.
Take your time with this; it’s vital. Upload expert product photographs, preferably ones you took yourself if you had samples or from the supplier’s website. For the best search visibility, create thorough product descriptions and optimize your listings.
You should keep in mind that you’ll likely be in competition with other vendors that use the same provider, so you’ll need to find strategies to set yourself apart from your rivals.
The right pricing point must be picked as well. It must be both low enough to compete with other listings of a similar nature and high enough to make a profit.
3. Pass on your customers’ details when you make a sale.
Every time you sell something, get in touch with your supplier and offer them the shipping information for your consumers.
According to eBay, even if your supplier will package and send the item directly to your buyer, it is still your responsibility to ensure that it arrives safely and within the time range you specified in your listing.
Alternatively, you might buy in bulk from the supplier and transfer the inventory to a fulfillment provider if you have trouble finding a wholesaler willing to dropship to your eBay clients.
Then, on your behalf, that service would keep an eye on the inventory and package and dispatch your purchases.
You may automate this process and find the most affordable delivery couriers by investing in shipment management software.
Of course, the major drawback to this would be the larger business risk compared to regular dropshipping because you would need to purchase a large quantity of stock up front with no assurance that it would all sell.
eBay dropshipping policies and requirements.
You must first comprehend what is and isn’t permitted in order to dropship on eBay.
You cannot buy products from another merchant or marketplace that ships straight to your consumer, in accordance with eBay’s dropshipping rules.
What does this actually mean?
This implies that you cannot dropship from websites like Amazon or AliExpress, and if you do, eBay may reduce the visibility of, conceal, or even remove your listings entirely.
But that’s not all.
Failure to abide by eBay’s rules may also result in your seller rating being lowered, restrictions on what you can buy or sell, a loss of buyer or seller protections, and even account suspension.
Before the rule, eBay merchants had complete freedom to dropship items from wherever, which naturally resulted in dissatisfied customers who eventually tarnished the eBay brand.
Customers who made purchases on eBay and then received an Amazon package with an Amazon receipt inside for less than they paid felt as though they had been misled, as described in an eBay thread.
It goes without saying that this led eBay to introduce a dropshipping policy that prevented merchants from doing this in the future.
Therefore, fulfilling orders directly from a wholesale source is the only option to dropship on eBay.
Additionally, you must guarantee delivery within 30 days and pay listing costs for each of your products, even if they don’t sell.
Advantages of dropshipping on eBay.
Given the relatively minimal entrance requirements, eBay dropshipping does offer some very advantageous aspects, especially for new merchants and start-ups.
The benefits are as follows:
No upfront investment.
The fact that you don’t have to buy goods in bulk up front is probably the biggest benefit of eBay dropshipping (just as long as you can find a wholesaler who is happy to dropship to your eBay customers)
Easy to get started.
Furthermore, it’s really simple to get started with absolutely no money at all because you don’t need to invest in inventory. Simply open an eBay Seller account and look for a wholesaler willing to dropship on your behalf.
Take advantage of eBay’s audience.
eBay is the world’s largest and most well-known auction site for buying goods online, and that means it already has a huge, loyal customer base.
By starting your dropshipping business on eBay, you’ll essentially gain access to a vast audience with zero work from your side.
Save on marketing efforts.
As well as capitalizing on a ready-made customer base, dropshipping on eBay means that you don’t need to spend loads on marketing like you would do normally; millions of online buyers will see your listings anyway.
Dropshipping is flexible.
A lot of sellers want to start an online business as an experiment alongside their day job, as a way to make more money and test the water.
Dropshipping on eBay is something that anyone can try from anywhere in the world – all you need is access to the internet – so it can be entirely flexible around your life.
Grow with minimal risk.
Scaling your dropshipping business on eBay is easier than a traditional online store, providing you have good connections with your supplier.
Why? Because as you sell more, the work simply falls to them, meaning you can grow your business without the risks and costs involved in typical expansion, such as office space, overheads, additional staff wages, warehouse rent and so on.
Disadvantages of dropshipping on eBay.
On the face of it, eBay dropshipping seems like a no-brainer, but there are a whole host of disadvantages to take into consideration before going ahead with it, especially since eBay introduced its strict dropshipping policy.
Here are the disadvantages:
Not easy to find a dropship supplier.
Perhaps the biggest disadvantage of dropshipping on eBay, is how difficult it is to establish wholesale relationships with suppliers, as very few will offer dropshipping services unless you can prove you can move product.
Often have to buy inventory in bulk.
As building dropship relationships with wholesalers often takes time, you’ll likely find that you have to buy wholesale inventory upfront in order to prove your sales record to them.
Of course, this totally defeats the point of dropshipping and means you risk investing in stock that might not ever sell.
eBay restrictions.
There’s only one legal way to dropship on eBay, and that relies on you finding a wholesaler that is willing to run your dropshipping business.
eBay sets plenty of other restrictions for sellers too, such as how you should communicate with your clients and present your brand. And failure to comply with these restrictions could lead to serious consequences for your eBay business.
You’re responsible when things go wrong.
According to eBay, you are entirely responsible for the safe delivery of the item within the time frame stated in your listing.
However, you’re reliant on the supplier to dropship for you, who is under no obligations to deliver within this time frame. This mean they could run out of stock and wait a month to ship if they like, and they’d still be no repercussions for them at all.
Yet the negative feedback you would inevitably receive on your listings could result in account suspension, not to mention a severe drop in sales.
What’s more, any refunds to the buyer are the responsibility of the eBay seller only.
Don’t own your customers.
Dropshipping via eBay means you don’t own your customers, instead you’re helping eBay build their brand every time you make a sale.
Think about it, if a friend asks where you got something from, you’ll say “eBay” and not the eBay seller’s business.
Not only that, but you can’t create an email list to remarket to – it’s just not possible.
High competition.
Due to its low barriers to entry, dropshipping on eBay is an appealing business model to lots of online sellers just like you, meaning the competition is fierce.
Especially seeing as many retailers will be selling the exact same product as you, you’ll have to focus your efforts on other ways to stand out, which can be highly time consuming.
Low profit margins.
With such steep competition, you may need to keep lowering your prices to remain a viable option to customers.
What’s more, eBay charges listings fees (after the initial 50 free) and the platform will take up to 10% of your total sale price, further reducing your profit margins.
Therefore, in order to realistically make money dropshipping on eBay, you’ll have to maintain a huge sales volume every month.
So, is dropshipping via eBay worth it?
The answer to this question really depends on what you’re wanting to achieve through eBay dropshipping.
If you’re just trying to make a little extra money on the side, then dropshipping on eBay could be a great option, with no upfront investment and very limited risk involved.
However, if you want to build a long term, memorable brand, with healthy profit margins and be completely responsible for the development of your online business, then eBay dropshipping is not for you.
Instead, we recommend you focus your efforts on finding a platform that allows for far greater customization.
We hope this guide has provided you with clarity over eBay drop-shipping, and helped you to come to a conclusion as to whether it’s worthwhile or not for your business goals.