Dropshippers: Be Wary of eBay's New BPP

eBay has several amendments going into its Buyer Protection Policy, some of which could really screw sellers who are using dropshippers. In the recent notice of the upcoming changes, eBay states:

A provision has been added stipulating that in some cases we may refund part of the cost of an item to the buyer, and receive reimbursement from the seller, to cover differences between the item described and the item actually received, such as items received with small parts missing or minor repairs needed. Buyers may be asked to provide written proof from an authorized third party detailing the cost of such repairs. In these cases, we will not require the buyer to return the item to the seller.

In other words, if a buyer finds an item he ordered to be missing a piece or needing a repair, he can open a complain with eBay, get a payment from eBay to cover that part or repair, and then eBay simply bill the seller for the money. There is no "working with the buyer," or peace offerings in the event of an odd stuff-up in shipping or whatever, as it is all handled through eBay, and eBay just goes ahead and refunds the buyer, then bills the seller.

This could pose a particularly serious problem for people who are dropshipping, since they have no direct control over their inventory. In electronics, computers, phones and similar markets, it could end up being a nightmare, since suppliers in these markets are generally flaky as hell, and the consumers clueless and fickle to boot.


Frank

This will indeed make thing more complicated than it already is! Thanks for the heads up Frank :)

Best to steer clear of dropshipping on eBay then!

They seem to keep making it more challenging to sell stuff now, definitely need to look elsewhere to sell my items - no point in putting your eggs in one basket especially in the current climate.

eBay have been looking for ways to strangle the life out of drop shipping on their platform for ages, this is just another chapter that get's them a little closer to the ultimate goal.

I could understand early on why eBay saw drop shipping as a problem area, and I can see why they still do today. However, the problem they have now is that so much revenue is being generated through drop ship listings that I'm not sure they can afford to lance the practice from their behind altogether.

I would be most interested in seeing some reliable stats on what makes up eBay's revenue base, but I'm willing to bet that drop shipping would make up a large slice of the pie, if not most of pie!

Tread carefully eBay, if you start chewing on the hand that has the chocolate in it, the hand may well just give you a decent old slap in the kisser!

I would be most interested in seeing some reliable stats on what makes up eBay's revenue base, but I'm willing to bet that drop shipping would make up a large slice of the pie, if not most of pie!

Of course, I know no better than you, but I'd kind of doubt that. A huge portion of "dropshipping revenue" on eBay almost certainly comes from newbies generating listing fees in the halcyon days before they give up. Their STR is miserable (because all STRs on eBay are miserable, it is reasonable to assume that this is particularly true of newbies trying to dropship their way to millions) and, according to eBay's own data, customer complaints on those few who sell anything are disproportionate, which means it costs eBay more money relative to revenue to police. Even if it ends up a net plus on the balance sheet, not all profits are worth chasing after.

eBay's bias against small sellers -- the people who made eBay into a global billion-dollar business, so it could attract the huge sellers like Buy.com -- has been obvious for years, and has wafted out from under the skirt of nearly every "consumer protection" measure eBay has instituted going back at least as far as the "Safe Payment Policy" and its amendments in 2002-04.) So it's no real suprise that they're still doing it now. But I just don't feel that it represents a meaningful cross-section of eBay's profits, to single out the dropshipping crowd in particular from the larger overall group of small sellers.


Frank

Also, a minor point I guess, but surely the bulk of dropshipping rev on eBay has to be optimistic newbies for another reason -- business sense. Why keep dropshipping -- the highest-variable and lowest-margin way to sell -- if you've found a winner? A few exceptions surely exist (I know one, so I'm sure there are twenty or fifty or some other number that sounds big) but for the most part, nobody keeps dropshipping once they get established. So even those who rack up listing fees, get the STR and closing fees to boot, and end up staying on eBay, tend to move away from the dropshipping model.


F.

I think the number of new drop shipping accounts being established on eBay per week would be massive on a worldwide basis, and suspect they are trending upwards. While I agree with most moving to a more stock based model long term, I doubt they would all move away from a drop ship model completely, more using it to increase their stock profile and reduce their cashflow to maximise their market on the products and the suppliers they had forged a good working relationship with.

I think some of those that actually start out as a stock based business models will also move into drop shipping on at least some level over time for the same reason.

I also think that drop shipping as we know it is changing, slight variations of the standard drop shipping model are now developing as well. For example, Tania is listing items from an art gallery in her suburb, no actual drop shipping agreement in place with the supplier. Rather, if one of the listed items sells, she simply goes down to the gallery, purchases it and then does her own shipping.

OK, just an example, but one where the drop shipping model is evolving. As more and more new eBay sellers come into the market, looking for ways to get a foot hold with products that aren't over represented on eBay, I think this is the type of evolution drop shipping will go through.

I know some will say that is more risky than your usual drop shipping method, as what happens if something you have listed gets sold before you sell it, but anyone who has been let down by a drop shipper by selling an item listed as available, only to find out it isn't after the order has been taken may well have a different view lol.

Of course I am speaking to the smaller sellers, not the large sellers that eBay do climb into bed with, but my best guess is that drop shipping has been so tightly woven into eBay's fabric at this point, that they would take a fair chunk of their own hair if they tried to cut it out altogether.

What sized chunk of hair, that's the Million dollar question for me. I wouldn't mind being a fly on the wall at corporate, just to get a good insight into their combined head!

I think the number of new drop shipping accounts being established on eBay per week would be massive on a worldwide basis, and suspect they are trending upwards.

Honestly, I just find that hard to believe -- it's harder than ever to get a foot in the door on eBay, and the economy in eBay's primary market has been so bad for so long that people on the whole are more risk-averse than they were a few years ago. But again, that's just pure gut speculation on my own part -- hard data is too difficult to compile for it to be worth spending the time on. Bottom line RE: the original post is simply, watch out for the latest sniper-targeted shot at dropshippers and small sellers on eBay.


Frank

As you say, getting any firm data on the issue is near on impossible, however to support my case I would suggest someone needs to look no further than SaleHoo itself to see the popularity with drop shipping as a business model on eBay.

To counter an argument that someone would use as to the stats here being slanted due to the fact we are a drop ship directory, so it's only natural we attract drop ship inquiries, I would say that we are both a drop ship, and wholesale directory, yet drop shipping dominates overwhelmingly.

I doubt we have any stats on this ourselves, but I would be stunned if it wasn't at least 9 out of 10 new members wanting to drop ship on eBay, and then extrapolating that across the board, I can't see it being any other way lol

Sure, it's getting harder than ever to get a drop shipping account well established on eBay, but that fact in itself doesn't stop new drop shipping accounts being opened across the planet on eBay every day.

That said, despite our different opinions on eBay's membership break down, the original point was to make members aware of the new policy as you highlight, so that point shouldn't be lost in commentary.

"9 out of 10 want to dropship" ≠ "anybody ever actually tries."

Just sayin'


Frank

Holy shit, eBay is not playing around with the new reimbursement requirements. Last night I listed something out of my personal eBay account, and was suprised to find that I was required to designate a payment method for buyer reimbursement, and authorise eBay to charge up to $2,000 to that payment method without having to talk to me any further on the matter.

Hilariously, they wouldn't let me use my PayPal account, despite the fact that my personal eBay account has 100% positive feedback on hundreds of sales and possibly over 1,000 purchases going, back to 1998.


Frank

Since I'm always complaining about eBay, I will add that I really like the new(-ish?) policy with DSRs -- I went to leave feedback for someone, and eBay wouldn't let me leave info about the shipping time. I had planned on leaving five stars, but my curioisity was raised -- looking into it, it turns out that if a seller designates a specific carrier and firm shipment/receipt date, then he gets perfect rating for that particular aspect of DSR. I thought that was a nice touch, and an improvement inasmuch as it helps minimise the effects of pernicious or stupid buyers. Of course, I mean "nice touch" in the context of my broader opinion, which is that the DSR system is such a bunch of subjective crap over which someone at eBay should be horsewhipped daily in lieu of lunch for having come up with such a thing in the first place. But still, any improvement is an improvement, and I appreciate that little improvement.


F.