The eBay Drop Shipping Cheat Sheet!

Some days ago we gave you the basics of drop shipping on eBay. Now you might be wondering:

Is it possible to operate a viable eBay drop shipping business?

Yes, but you need to research thoroughly in order to spot ultra niche markets. In other words, look for items not too many sellers can or care to provide. Remember that with drop shipping, your margins are smaller, so you have to spend the time and make the effort to uncover markets avoided by other sellers looking for an easier road.

Secondly, bear in mind that drop shipping rarely works as a sole sourcing method for an eBay business. More often that not it's one of several different sourcing strategies. As we pointed out in last week’s post, companies such as ToolKing have been able to realize immense success on eBay by harnessing the benefits of drop shipping, using it when possible to expand their product offerings while minimizing their operational overhead.

What products can be drop shipped on eBay?

We're not going to pull any punches: these days there are lots of items that simply can't be profitably drop shipped on eBay. When you drop ship, you are buying items one at a time, so you can't hope to compete with sellers buying in bulk or buying liquidation.

That said, there are still some areas where drop shipping has an advantage:

• Expensive high-end items allow you to charge enough of a mark-up to offset the drop ship costs imposed by drop shippers, which tends to eat into the profit potential of lower-priced, lower-mark-up goods.
• Heavy or oversized products are difficult to buy in bulk and store, so are better drop shipped directly from the manufacturer or wholesaler.

These two ideas are by no means it, but hopefully they give you an idea of how you need approach your product search.

Selecting the best drop shipper for eBay

• Talk directly to manufacturers or wholesalers. The best way to find a reliable drop shipper who isn't also stocking 2,000 other eBay sellers is to contact manufacturers and wholesalers directly.   This may take some time. If you are a newbie, 9 out of 10 manufacturers will say no. But keep persisting - brokering your own drop shipping deal is the Holy Grail of sourcing.  Going directly to the source (or at least as close to it as possible) also gives you the best margins, as you eliminate costly middlemen.
• Some Chinese drop shippers are very cost-effective for small items and accessories.
• Local/national or international? Local shippers are often a phone call or a short drive away, require less volume, and are more flexible in accommodating your specific needs. However, they may fall short when your needs escalate. International shippers, on the other hand, will be able to provide you with the reach and resources, but move at a much slower pace, and may not be as accommodating as local drop shippers.

When you think you've found a good 'un...

• TEST your drop shipper before committing to a business arrangement. This is very important! When you think you've found 'the one', get one or two things drop shipped to your own address and test the shipping time and service quality. If they fail your standards and requirements, move on.
• Study the drop shipper’s terms and policies very carefully before you begin doing business with them. Get to know their shipping schedules, costs, and customer service. Find out whether they provide tracking and what delivery service they use. Remember, eBay has a 30-day shipping policy so you will want a provider that can ship within this time limit. Also check the return policy, as each drop shipper will have a different one.

Build trust and communication

No matter what drop shipper you choose, you'll need to work hard to establish a good relationship.

• Get a contact name. When you've got an urgent problem the last thing you want is to be dealing with Suzy at customer support who only started last week. You want the name of someone who is experienced and can get things done. Someone who knows you and your business and values your relationship as much as you do. 
• Constantly communicate with your drop shipper. As with any type of relationship, communication forms the bedrock of successful drop shipping. Make sure you stay in touch with weekly emails or phone calls to discuss inventory status, upcoming promotions and any other concerns.
• Make sure your drop shipper has all your business and contact information and don't forget to add their email address to your whitelist!
• Make sure you keep regular hours. If you only work when you feel like it, then you are definitely going to have communication problems with your drop shipper.
• Learn how your dropshipper works. If you understand your drop shipper's job thoroughly, then you'll know the strengths, the weaknesses and whether there is anything you can do to speed up turnaround. If you're not sure - ask questions. If they don't bother to answer, find someone else!

How do you avoid shipping delays?

Shipping delays and backorders are perhaps the two biggest issues with drop shipping on eBay. Keeping in touch with your drop shipper will help a lot. We recommend calling every Monday to check on stock levels for the week. Make sure you alert them to anticipated sales spikes.

However, the only way you can truly maintain control and avert crises is to keep some inventory on-hand. That's right - don't leave it all up to the drop shipper! He will never care about your business as much as you do. Buy 3 or 4 items and keep them in your spare room. You can count on them coming in handy. Basically, you can either spend a bit more money now on reducing risk, or potentially face enormous losses down the track when you get a couple of negative feedbacks. Got that?