How dropshipping on eBay works: a detailed manual

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Dropshipping can be a profitable venture when done right. And a lot depends on the platform you are using to sell your products. When talking about ecommerce retail platforms, usually the first ones that come to mind are Amazon, AliExpress, and eBay. These huge internet platforms are used not only by regular consumers but by many ecommerce entrepreneurs for the establishment of an online marketplace.

However, today, we are going to focus on eBay and answer some of the most intriguing questions. To begin with, what is eBay? How does it work? What dropshipping is and can you start a dropshipping venture on eBay?

What is eBay?

eBay is the world’s largest auction website for buying and selling various types of physical products. One of the reasons why it is so popular is its sometimes unimaginable discount offers. Occasionally, the discount can reach up to 90%. Millions of auctions with millions of buyers are running at any given time. In fact, as of April 2020, there are 174 million active users worldwide.

The sheer number of active buyers have caught the attention of numerous ecommerce entrepreneurs, looking to promote their products on this major platform.

How does eBay work?

As we mentioned before, it is an online auction website. Therefore, there are 2 ways for you to place an order: you’re able to either bid on a product or purchase it straight away. The product range is vast and diverse: from clothing to jewelry to cars, you can find almost anything there.

It all starts when the seller posts a product. The seller sets a starting bid and a specific amount of days the goods will remain available for purchase. Typically, the lower the starting price, the more customers are going to bid on it.

Nevertheless, there is a “Buy It Now” option. It is up to the seller to decide whether to add it or not. This will allow anyone to buy a product at a fixed price, without having to bid.

Now that we know what’s eBay and how it works, let’s dive into the definition of dropshipping.

What is dropshipping?

To keep it brief and to the point, dropshipping is a type of business where an entrepreneur resells products through a platform of his choice, without having to physically interact with the products. To be more precise, the warehousing and distribution of goods is the responsibility of the supplier.

Essentially, an entrepreneur needs to find a reliable supplier, who will ship the goods directly to the entrepreneur’s clients without any troubles.

Dropshipping has lots of benefits, and here are some of them:

  • An incredibly huge product range to choose from

There are many niches to choose from with hundreds of thousands of products to offer to potential buyers. You can look through various online marketplaces and retail stores to find new ideas and see what’s demanded.

  • Low-cost and time-saving business launch and management

Dropshipping is a business that can be created with minimal investments. Considering that the supplier is responsible for shipping and safekeeping the products, all that you need to focus on is a platform to sell these products on, the promotion of said products, administrative tasks, and customer service.

  • Low risk

Contemplating on the last point, there are minimal investments, and the only purchases you have to make are the ones originating from your customer. This means that you don’t need to order products in bulk in advance and there are no minimum order requirements. If your customer’s order contains only one product title, you only need to place an order to your supplier for that one item. Thus, you don’t need to purchase products in bulk and worry about them not selling.

Is dropshipping on eBay allowed?

First of all, if you’re also wondering whether dropshipping is even legal, don’t worry. The answer is yes, it’s completely legal. Now, let’s answer the most essential question: Is dropshipping allowed on eBay? Technically speaking, dropshipping is allowed on eBay given you follow the restrictions and acquire shipments directly from a wholesale supplier. Putting it simply, you can only list products on eBay that you bought in bulk from a wholesale supplier.

As it’s stated on the official eBay website – “purchasing the item from another retailer or marketplace that ships directly to your customer is not allowed on eBay.” You can’t buy something from, let’s say AliExpress, list it on eBay and ship it to your eBay customer.

What’s more, eBay strongly follows this policy, removing your postings or lowering them in the search results. They can even lower your rating and status on the platform.

How to dropship on eBay?

Many business enthusiasts have researched the possibilities and the boundaries of creating a dropshipping business using eBay as a platform. And many have come to the assumption that eBay is a great platform for regular items selling – but a highly inconvenient place to dropship.

Nonetheless, there are a few ways to set up a dropshipping-like type of business on eBay, although there are a couple of downsides.

The first way you can do it is by finding suppliers and selling their products through your account on eBay.

The second way is by finding the products on eBay and selling them through your online store or another marketplace.

Let’s look at the first strategy. Firstly, you need to find a reliable wholesale supplier, create an eBay seller account, and add listings. It is important to mention that eBay listings do not require you to declare that the item will be delivered from another supplier. However, you do have to specify the location of the item: to be more exact, your supplier’s country. Keep in mind that for everything to work this way you have to reach an agreement with your supplier that he is willing to ship the products himself.

Then everything runs just like a regular dropshipping business. You get a purchase request, forward it to your supplier, and he ships it to the buyer’s destination.

The benefits of this strategy are pretty obvious:

  • An opportunity to start a business rather quickly
  • Easy access to an enormous eBay audience

On the other hand, there are some drawbacks:

  • Intense competition. If your offer does not stand out, you’re going to have to resort to low product prices. That in turn will lead to low-profit margins or even huge losses of money, as sometimes the price of the product from your wholesale supplier can be even higher than your competitors’ prices on eBay.
  • The already mentioned listing fees. eBay allows you to list the first 50 products for free, then you are required to pay. Additionally, eBay can take up to 10% of your income.
  • Almost no options to create your personal brand and customize your online store

These are just a few negative points that we thought were important to mention.

Now, let’s analyze the second option. It exemplifies a more classical dropshipping model by finding a supplier and selling his products on the platform of your choice, whether that’s your own website or a social media platform.

Here are some benefits of doing a dropshipping business this way:

  • A broad range of products
  • Access to eBay analytics letting you see what products are in demand
  • An opportunity to create a loyal customer base and build a lasting relationship

Unfortunately, there are some downsides to it as well:

  • It takes time to find quality products at a reasonable price
  • There is a possibility of running into the low-profit predicament once again
  • You have to regularly check the supplier’s price and product stock availability, and change it on your platform manually

So, as we can see, dropshipping on eBay is hardly worth it. You are required to purchase products in bulk, you need to pay a listing fee to list a product on the eBay platform, and you don’t get to establish your own customer audience. In fact, all you are really doing is helping eBay improve their customer base and grow their business.

Unfortunately, this only slightly resembles the dropshipping business model and many dropshipping aspects are simply missing. So, if your ultimate goal is to create your own unique business, control your profit margins, and develop your online store, you should look elsewhere. For an authentic dropshipping experience, try turning to other platforms to find reliable suppliers and high-quality goods. One can be AliExpress: with a wide range of popular products at exceptionally low prices, it can serve as a great platform to find product offerings.

While the opportunity to create a source of income through eBay is there, you are severely limited in your actions. You are unlikely to create your own unique business brand, as you are merely one of eBay’s sellers. The downsides far outweigh the benefits: you have to pay additional fees, you won’t have your own customer base, and simply risk losing profit margins. Though it can be useful in a few different aspects, it is clear that eBay isn’t the best option for a dropshipping business.

Hopefully, this article was helpful to you and brought you the knowledge you need to start a successful dropshipping business. And although dropshipping on eBay isn’t the best option, there are plenty of alternative possibilities that will allow for the creation of your own business that will bring you a source of income and, maybe, a project you can lose yourself in and be passionate about. Best of luck to you in your ecommerce journey!

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