eBay is indisputably one of the best sites for dropshipping because it makes no distinction between dropshippers and regular retailers. There are no monthly fees; you simply pay a proportionate cost for each item. The issue of shipping, however, is always problematic for those who sell on eBay — even regular retailers — because there are no fulfillment perks like you find on Amazon.
For dropshippers, this is both a boon and a bust. It is a boon because it puts you on a more level playing field with regular retailers; a bust because it gives you little option to save on shipping costs. Most dropshipping arrangements have fixed shipping and handling fees per item.
You can, of course, pass the costs on to buyers, and in many cases the new eBay shipping calculator can give pretty reasonable results depending on the type and speed of delivery. This is an important consideration if you are selling large items.
If you do this for small to medium-sized items, however, you could be losing more money than you're saving because you'll have fewer sales. There are ways to get the best of both worlds if you think just outside the confines of your usual box. Here's how to maximize profit by using eBay shipping.
If you just did a double-take, we don't blame you. On the surface, anyone would think that this was the fastest way to slash your profits. But there are three ways that free shipping can increase a dropshipper's profit.
As we've shown in prior research, 73 percent of buyers are more likely to click on an item that offers free shipping. Dropshippers typically prefer a lot of sales coming in because they don't have to bother with fulfillment; all they have to do is make the sale and the supplier does everything else, including shipping and handling. The more you sell, the more money you make.
Even if you don't make money off the shipping, sheer sales volume will ensure you a healthier return. Note: to truly find your maximum profit with eBay free shipping, you'll have a better chance with a fixed price listing rather than an auction. Listing your items this way will also lower your cost per item.
eBay tends to favor sellers who offer free shipping because they attract more visitors to the site. Based on the typical person's love of a freebie, searches for items tend to include the key phrase “free shipping,” and the more items offered on eBay with free shipping, the higher the ranking it gets in search engines.
And of course, if you head the pack in the search, you get more clicks. If you get more clicks, your chances of making more sales rise. Elementary, my dear Watson.
Lower purchase costs
Typical dropshipping suppliers, like any seller, offer better deals for clients who buy in bulk. Regular sellers who consistently move a large volume of items make wholesalers more money in the long term, even with fulfillment costs. This is because they pay less in warehousing expenses, and have more of an opportunity to get new stock.
Whenever the opportunity presents itself, offer free shipping for items that your supplier is offering at a huge discount (such as in a clearance sale) and you make even more money. It's a snowball effect.
Mix and match
Okay, if you really don't want to offer free shipping, you can do the next best thing: discounted shipping. You may not get the same sales volume, but you should still be able to make it up by passing on some or all of the shipping costs, especially for large items. It's a pretty delicate balancing act though.
There are two major methods to offer discounted shipping:
Buyers love the idea of a bargain. If you offer them the same shipping cost for two or more items as you would with one, they are more likely to buy more than one item—even if they have to pay the same retail cost for additional items that they don't actually need.
They think it would make a great gift for someone, and it's coming out cheaper, etc. Add to that a discount for the third item…you see where we're going with this, right?
Oh, and most dropshipping companies will offer shipping discounts if they can deliver several items to one address, sometimes even for standard international shipping. That will cut your costs as well; or alternatively, increase your profit per item.
If you're having trouble finding reputable and reliable dropshipping wholesalers that are apt to sell you bulk inventory at bargain prices, sign up and peruse the SaleHoo directory listings.
Most buyers want it now, so the faster your shipping method the better. However, some buyers don't mind waiting if it means they'll pay significantly less in shipping costs. Offer your buyers several shipping options so that they feel they are in control of their item's destiny, and save a bit of money at the same time.
Technically, that's not really a shipping discount, but it will feel like it. If you want, you can still offer batch shipping to spur them on to buy more, or maybe a freebie item to clinch the deal and engender some good will.
It's a big deal
Shipping is not always on top of the lists of concerns for retailers in general, but for online retailers it is invariably a big issue. Dropshippers are especially vulnerable for making the mistake of underestimating the costs of shipping because they don't actually deal with the shipping and handling themselves. Most of the time, they just have the supplier use easy delivery options such as ePacket shipping and delivery services.
The fact is, you can make or break your business simply on how well you manage your shipping costs. In order to maximize your profits when you sell on eBay, you need to take the time to carefully work out your thresholds in terms of sales volumes and shipping costs before you ever make a listing.
What kinds of shipping strategies have you used in your eCommerce ventures? Let us and your fellow dropshippers know! Your comments are always welcome!