How to dropship on eBay? Searching for a profitable, low-cost business idea you can run on just a few hours a week? Look no further than eBay dropshipping.
EBay is the preferred marketplace for online sellers—and for good reason. With 159 million active buyers making 1.7 billion monthly visits to the site each month, dropshipping on eBay allows business owners to tap into that ready-made customer base and sell products—even if they don’t have physical inventory to sell.
Want in? This guide shares everything you need to know about eBay dropshipping, from sourcing the right products to maintaining high profit margins.
How to dropship on eBay?
Is dropshipping allowed on eBay? Yes. But it is restricted.
This is to protect its images as a safe and no-risk marketplace. Considering it reached 185 million active users around the world, it has the right reasons to do so. If you haven’t known yet, eBay is a large online auction website from the USA. Sellers will post their products with a starting bid, and buyers can find, bid on, then purchase. Sellers can also add a “Buy It Now” option to control the price and let customers purchase without bidding.
When it comes to dropshipping on eBay, you need to purchase in bulk from a wholesaler and have a fulfillment service to store and ship products on your behalf.
Anyone with a seller account can start dropshipping on eBay. However, its obligations do make things a bit more complicated than traditional dropshipping. Let’s move to the next section to explore!
What is eBay dropshipping?
eBay Dropshipping is a fulfillment business method where sellers list products on eBay without holding inventory. When a sale is made, the seller purchases the product from a third-party supplier who ships it directly to the customer. In essence, dropshipping is the fulfillment model used in this process.
It’s a popular way to start a business with no money, since dropshipping has a low barrier to entry. There’s no need for you to physically touch the items you’re selling, or to store inventory in your own warehouse. Order details pass straight through to your dropshipping supplier, and it’s their job to pick, pack, and ship the order to your eBay customer.
- “Dropshipping allows us to carry a lot of brands and products we otherwise wouldn’t be able to carry, as either we don’t have the space in our warehouse or we don’t have the funds to buy all of the stock.” —John Frigo, ecommerce manager at Best Price Nutrition
That said, eBay dropshipping does have its downsides—namely low profit margins and high competition. The items you choose and the way you source them plays a large role in how to sell on eBay.
How much does it cost to dropship on eBay?
There are a few different costs when you dropship on eBay, including eBay’s own fees for using their marketplace and your suppliers’ fees. The main dropshipping fees on eBay are:
- Insertion fees (or listing fees). You’ll get 50 free per month, and beyond that the fee for listing an item in most categories is $0.35.
- Final value fees (or selling fees). These fees are a percentage of a product’s total sales price. For most sellers, it is 10% or even lower.
- Listing upgrades. With extra upgrades like larger photos, international site visibility, and more, you’ll get more power to attract customers.
- Fees in select categories. Fees can vary in certain categories, including real estate, business and industrial items, and motor vehicles.
The two critical fees to consider are the listing fees (the cost to post your item, no matter if it sells or not), and the final value fees (calculated on the item’s final sale price).
Pros and cons of dropshipping on eBay
Providing you follow its guidelines, eBay dropshipping does offer some great benefits, especially for start-ups and new sellers. Here are the advantages:
- No upfront investment. Perhaps the greatest benefit of eBay dropshipping is the fact that you don’t need to buy stock in large quantities upfront. You just need to find a wholesaler who is happy to dropship to your customers. And in case it is not right for you, there’s little to lose other than your time.
- Easy to get started. As you don’t need to invest in inventory, it’s quite easy to get started with almost no money at all. There is no need to face the hassle and costs of setting up your own online store or E-commerce blog. All you need to do is create an eBay seller account and find a wholesaler to dropship on your behalf.
- Take advantage of eBay’s audience. eBay is one of the largest and most well-known auction sites for buying goods online, meaning it already has a huge and loyal customer base. By starting your eBay dropshipping business, you will essentially gain access to a vast audience with zero work from your side.
- Save on marketing efforts. As well as capitalizing on a huge ready-made customer base, eBay dropshipping means that you don’t need to spend loads on marketing; millions of online customers will see your listings anyway.
On the face of it, dropshipping on eBay seems like a no-brainer, but there are a whole host of disadvantages to take into consideration before committing to it, especially since eBay introduced its strict dropshipping policy. Below are the disadvantages:
- Listing fees. eBay charges a fee per listing (the first 50 listings are free) as well as 10% of your total sale price. With the already-slim profit margins via dropshipping, these fees can add up quickly.
- Less customization. Dropshipping on eBay can be a great way to start an online business, but fewer customization options for your store and listings can make it difficult to stand apart from your competitors.
- You’re responsible when things go wrong. You’re entirely responsible for the safe delivery of the product within the time frame stated in your listing. However, you are reliant on the supplier to dropship for you. So, in case they run out of stock and wait a month to ship, there would still be no repercussions for them at all. Meanwhile, the negative feedback you would inevitably receive could result in account suspension, not to mention a severe drop in sales.
- High competition. Owing to its low barriers to entry, eBay dropshipping is an appealing pie to lots of online sellers just like you, meaning the competition is steep. Especially when many retailers will be selling the same products as you, you’ll need to focus your efforts on others that are easy to stand out, which can be highly time-consuming.
- Low profit margins. With such fierce competition, you may need to keep lowering your prices to remain a viable option to your customers. What’s more, eBay dropshipping fees can reduce your profit margins. So, to realistically make money from eBay dropshipping, you’ll have to maintain a huge sales volume every month.
Ultimately, it’s really up to you to determine where you want to place the bulk of your time and effort, but eBay dropshipping is still a simple and effective way to make money for many sellers.
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