Drop Shipping 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.
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 allowing the seller to purchase wholesale products individually and then sell them for a profit online. Sites such as eBay allow sellers to place their listings in front of a large audience with minimal processing fees.
Sellers who want to dropship on eBay never actually handle or keep stock of the items they sell, but will instead source their products from a separate online seller, often at a wholesale price, and list the sourced items in their own eBay store. Many dropshippers will use the exact images, product titles, and descriptions provided by the supplier. Once a sale has been made, the dropshipper will fulfill the order through their supplier, who will supply and ship the item to the customer. The dropshipper acts as a sort of middleman between the supplier and the consumer, sourcing products in bulk and providing them at a good price to their customers via eBay listings.
Dropshipping is allowed on eBay, provided the seller guarantees delivery within 30 days of the end of the listing. Although the shipping and item quality is not directly handled by the seller, 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 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 dropshipping 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 while still maintaining a profit.
Once you’ve listed your products 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.
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 website.
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.
Higher 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% of your total sale price (known as a “final value fee”). With the already-slim profit margins through drop shipping, these fees can quickly add up. Keep in mind that the key to making money by dropshipping is volume.
Less Customization. Selling 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 dropshipping business on eBay:
High volume is the key to making money with 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 every listing must be processed and fulfilled individually by you.
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. Be sure to set a longer duration for these eBay listings to avoid the need to re-list.
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%), which can cut into your already-low profit margins.
Thankfully, there are several ways to maintain your profits. When you sell on 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 online 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.
You can calculate potential fees for your eBay listing by checking their fee calculator.
Thousands are making money through eBay with dropshipping because it eliminates the need to keep an inventory, but this can lead to some setbacks. One of the biggest mistakes dropshippers can make is not ensuring that the items they list on eBay are still available. This mistake becomes frustrating for online buyers, driving away potential repeat customers and creating financial hardships for you.
Avoid the pitfalls of selling discontinued or out-of-stock items by checking your suppliers’ inventories frequently to see what’s in stock and what will be leaving their stores soon due to low quantities.
Collecting daily reports from your suppliers will help you maintain a reputation of quick and reliable fulfillment with your customers. Remember, your business needs its reputation to stand out from the competition, and dissatisfied customers can quickly put your shop at risk of being permanently shut down by eBay.
You’ve made sure your listed items are available; now it’s time to keep your customers happy by fulfilling all orders quickly and efficiently. Reputation is everything on eBay, where millions of online sellers are competing for sales every day, so be sure to stay on track with fulfillment.
The biggest challenge with fulfillment is that ultimately, it’s out of your hands. You can send your customers’ orders to your supplier, but it’s up to them to follow through. If your supplier is unreliable, it’s time to move on and find another product source.
A reliable supplier will not only stay on top of shipping the items quickly, they will also keep you up to date on the status of your orders, letting you know of potential delays or issues so you can relay the information to your customers. Issues will inevitably arise now and then, but keeping in contact with both your suppliers and your customers will keep any potential negative feedback to a minimum.
There are countless suppliers to be found online, but many dropshippers fail to properly screen or evaluate the ones they choose before attempting to make sales on eBay. This mistake can quickly backfire in the form of late deliveries and poor-quality items.
Remember, the customer isn’t going to your supplier for their product—they’re looking to you to provide them with the items they paid for in a timely manner and in the quality they expect. Even if the supplier is at fault with an order, the customer only sees you and will react accordingly with negative reviews or complaints to eBay. Services such as online directories can save you time by offering lists of suppliers that are pre-screened for quality and reliability.
Gaining repeat customers is a great way to ensure high profit margins for dropshipping. The key to getting your online buyers to return to you for future purchases is to build and maintain great relationships with your customers.
Building a strong reputation begins with steps already mentioned: ensuring the availability of the items you list, working only with reliable, honest suppliers and staying on top of fulfillment.
If issues come up, respond to your customers promptly and professionally. Avoid harsh or emotional responses, even if an angry customer is lashing out. Bad feelings will fade, but those scathing reviews will stick around. Strive to give each of your customers the most positive experience possible and you’ll quickly build a loyal base of repeat customers.
As with all else in life, timing is everything. When setting up an auction, the day of the week and time of day can have a significant impact on your sales.
Timing your eBay listing around peak traffic hours seems to be the most obvious solution. High traffic means more potential viewers, which can lead to making a sale more quickly and with a better profit margin.
However, listing during peak times also means more competition, as well as the chance that your potential buyers might not have a chance to bid on your listing at all due to slow site speeds. This is particularly detrimental when an auction is about to close. It’s hard to make money when your customers can’t even get to your listing in time!
Balance is the key to timing your eBay auctions. Consider the optimal times both to list your products and for the auctions to end.
One key factor to consider is your target demographic: Who would be most interested in your product? When do these customers typically do their online shopping? For example, Saturdays and Sundays between 4pm and 7pm PST typically see the highest periods of traffic on eBay, but more tech savvy customers may choose to avoid those times to ensure a more successful auction bid. Think about who might purchase your product and what their schedules are like.
Pay attention to the history of each eBay listing to determine the best timing for future products. Look at when your items experience a peak in traffic and identify the patterns.
A successful dropshipping business comes down to quality customer service and the right supplier. You might choose to source local suppliers, or to find wholesale suppliers online.
When choosing a supplier, consider these key factors:
Once you’ve selected your suppliers, contact them. Let them know you’d like to become a retailer for their products and ask about their policies on dropshipping.
This step may come before or after step 1, depending on what you want your store to be. You might already have a specific product niche in mind, or you might need to conduct some research to determine what’s selling right now.
Setting up your account takes just a few minutes, but there are some important steps that many online sellers overlook.
Using the information provided by your supplier, create your eBay listings for each product. Factors such as pricing, timing and auction vs. Buy It Now can all be determined through a bit of product research on websites such as eBay, Amazon and other major online retailers. Check out our free guide for optimizing your eBay listings.
Now that you’ve got your eBay listings, it’s time to make money! Start building a positive reputation by fulfilling your orders as quickly as possible, and check in with your supplier on a weekly or even daily basis to make sure everything is running the way it should. Remove listings for discontinued or out-of-stock items and replace them with new products on a regular basis. Respond to customer complaints and inquiries promptly and professionally, and do your best to create a positive experience that will build loyalty and encourage repeat customers.
Lyndon is just one of SaleHoo’s many success stories. Lyndon first tried using eBay to make money on his own, but he had a hard time finding success and originally gave it up to pursue full time employment. He later discovered SaleHoo, and saw how others were successfully using SaleHoo to achieve success through their lists of reputable suppliers and essential tools and tips to grow a dropshipping business. He decided to give it a go.
Just three days later, Lyndon had made his first sale on eBay. Through SaleHoo he was able to find the suppliers he needed to get his business of the ground, and SaleHoo’s tools allow him to identify and monitor sales trends that keep him ahead of the game. He loves SaleHoo’s impeccable customer service, and using the friendly members’ forum whenever he has questions. Lyndon has since branched out from eBay, but SaleHoo remains the core of his online business and his success.
Chris approached SaleHoo a little differently. Like some, Chris was skeptical of SaleHoo and their ability to help him successfully make money online. He started out selling old items on eBay for extra cash, but he needed a reliable resource to help him take his business to the next level. After a bit of research, Chris decided to give SaleHoo a try.
Because he already works full time, Chris needed a tool that would streamline his process as a part time online retailer and supplement his income substantially. Now, says Chris, “I have a whole new perspective of eBay.” Chris uses SaleHoo’s online wholesaler directory to find vendors that have enabled him to triple his investments selling on eBay in his free time.
Ready to create your own success story? SaleHoo offers an unmatched online directory of wholesale suppliers that will kickstart your dropshipping business. You’ll also get access to our exclusive Market Research Labs that will help you discover the most profitable trending products out there. Get started today and start making money with SaleHoo!
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