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Dropshipping on eBay sounds like a passive income dream. You don’t touch the products, it requires minimal investment, and you just take your cut off the top when something sells. At least in theory.
Ten years ago dropshipping on eBay was as easy as copy-pasting a description and uploading some pictures. People made millions dropshipping. I hate to say it up front in this article, but those days are past.
Now, that’s not to say that dropshipping on eBay is dead in 2021. But the game has changed.
The massive influx of people looking to “get rich on the internet” has results in two things that have wrecked the dropshipping game:
- Competition has driven profit margins into the ground
- The number of sellers has results in the creation of dozens of eBay dropshipping tools, lowering the barrier of entry into the business
Between those two things, long-time dropshippers have seen their sales and profit margins dwindle month by month.
eBay Dropshipping in a Nutshell:
Dropshipping is a simple concept in general and dropshipping on eBay is no different.
Here’s the idea:
- You find an item from a supplier and list on eBay using their pictures and details. You typically mark the price up 20-40%. In theory, this should be a wholesale supplier but many people dropship from Amazon, Walmart, Lowes, etc.
- When a customer purchases the item you buy it from your supplier
- Your supplier ships it to your customer
- You profit without ever touching the item
However, just like anything else that sounds too good to be true, it is.
The Current Challenges of Dropshipping on eBay
While dropshipping, in general, has some serious drawbacks, dropshipping on eBay has all of those and a couple more that are specific to the platform:
Most Dropshippers Violate eBay Policy
If you are new to eBay, violating their policies (especially when it comes to dropshipping) will get your account suspended before you have a chance to make any more at all.
Dropshipping is allowed on eBay but only if you are shipping to buys from your wholesaler supplier. Shipping to a buyer directly from another marketplace or retailer (such as Amazon or Walmart) is against eBay policy and can result in your selling account being removed.
Most people who drop ship on eBay are simply listing items from other marketplaces. Because this is the easiest route, thousands of people do it and there is very little money to be made. If you want to be successful dropshipping on eBay you’ll need a unique twist to your business model.
eBay’s Managed Payments System
It used to be that (once your accounts were verified) you could sell something on eBay and have instant access to the money (via PayPal) to buy the item and have it shipped to your customer. This all ended when eBay took their payments system in-house. (See how eBay’s managed payments system works here)
With managed payments, it is typically 3-4 business days before you get access to your funds. This means that you either have to wait to have the item shipped (risking cancelation) or you have to have the funds available to ship the item. This may not be a big deal if you’re selling an item or two per day but if you’re are dropshipping at volume you could end up shelling out thousands of dollars before seeing the sales-money hit your account.
The main problem with having competition dropshipping is that the profit margins are already razor-thin. If you are just starting out in the dropshipping game you’re competing against people who are already selling dozens (or hundreds) of items per day and have calculated their prices to get them as low as possible (after eBay fees) to still provide them a profit.
To put it in perspective, let’s take a look at a recent dropshipping sale and see how the profit worked out for the seller:
Sourced from Walmart:
Walmart to eBay Dropshipping Cost Breakdown
|eBay Fees (11.5% + $.30)||$16.98|
|Final Profit (Before Taxes)||$0.43|
While the above is not a sale that anyone experienced with dropshipping would ever shoot for, it is illustrative of most people’s first sales before they figure out how to price things. If you’re just getting into dropshipping on eBay, use an eBay Profit Calculator to make sure you’re not going to end up upside down.
Another issue with selling items on eBay is that eBay has a system of “Promoted Listings” where you agree to pay a certain percentage of a sale (in addition to fees) when an item sells. In return, they place your listing near the top of search results where, in theory, it gets more traffic and is more likely to sell. You’ll have to compete with drop shippers who are large enough to promote their listings and survive on the lower profit margins.
Higher Rates of Returns
Dealing with returns as a drop shipper is a nightmare. The customer will return the items directly to you and you have no choice but to refund them. A single refund can wipe out a month’s profits (or more). With eBay’s current policies, people can return items for just about any reason (including ones they make up). Which not only sticks you with a refund but also leaves you wondering what to do with the item. Should you resell it? Should you try and return it yourself?
Most Marketplaces Sell on eBay As Well
We used to dropship from Steep&Cheap and made a ton of money doing so. However, it no longer works. Steep&Cheap now uses software to list all of the items from their site onto eBay as well. Because they list items as the same, or nearly the same, price no drop shipper could even compete.
You might be surprised at how common it is for very large companies to also sell on eBay. They do so to cut out people like you and I who want to make money on the system.
As an eBay drop shipper you will always get the short end of the stick. Where you choose to dropship from China (via Alibaba) or from a local shop, it’s your job to make sure everything happens the way it’s supposed to. It’s your job to ensure that items are shipped on time, arrive undamaged, etc. And if something is wrong? It’s you that has to take the blame…and it will usually cost you money.
So you still want to try it? Here’s how to make money dropshipping on eBay:
If none of that put you off, you just might have what it takes to be successful as an eBay drop shipper. Namely, you aren’t afraid of doing hard things.
Now, I’m not going to advise you to use some of the methods here. If you use them and get your account removed from eBay, it’s your fault. Go read the rules for yourself before implementing any of the following methods:
While I don’t have all the answers, here’s are some basic tips that still work if you want to make money dropshipping on eBay:
- It’s all about the supplier. If you want to make the most money, find a unique supplier. Make people drop ship from Alibaba or similar Chinese supplies but this comes with its own host of problems. You need to find a supplier that can provide high-quality service consistently while giving you the option of unique products.
- If you can’t be unique, be ubiquitous. If you’re not willing to put in the work to find unique products you’ll have to put in a lot of leg work to make up for it. Anyone who is competitive in the eBay dropshipping world uses dropshipping software to scrape listings from a marketplace and automatically list them on eBay. These services typically also update stock numbers, prices, shipping dates, etc.
- Care for your eBay account. Not caring about your eBay metrics is a great way to kill your dropshipping business. You are 100% responsible for the item until it is in the customer’s hands which makes tracking information, shipping time, packaging, etc. very important. If your feedback or metrics start slipping you’ll see a drastic slowdown in sales.
If I were to start dropshipping on eBay again (I wouldn’t) I would concentrate on making my business as legitimate as possible and be in it for the long haul. Trying to make a quick buck and burning through eBay accounts just drags the entire industry down and will make you very little money.
3 Tricks to Maximize Your Dropshipping Profits
- If you run any sort of business you should be using a travel credit card or a card that gives you cashback on expenses. If you don’t you’re leaving money on the table. With 1-2% may not seem like much, it can make a significant difference to your profit margin. In the example we looked at above, using a cashback card would have more than quadrupled the seller’s profits. Some points-guys even use dropshipping as a method of running expenses through a travel credit card and generating millions of “free” airline miles per year.
- If you simply don’t feel that anyone would buy an item for the price necessary for you to make a profit, try charging shipping. Most of the places you dropship from are willing to ship for free so if you charge even $14.99 for shipping you can add that amount straight into your profits.
- The best way to increase your profit margin when dropshipping on eBay is to decrease the purchase price of the product you’re sending. Be on the lookout for manufacturer’s coupons, discount codes, etc. Here’s a trick that may or may not be ResellingRevealed approved: you can buy discount codes to Lowe’s (and other stores) off of eBay so some savvy drop shippers but coupons that give them “$15 off $100+” before buying their products. Saved money is earned money.
Verdict: Dropship at your own risk.
While I won’t go as far as to say that dropshipping is dead, I will say that it is currently a low-return investment that isn’t going anywhere but down. Even though I’ve done it successfully in the past, I would not recommend dropshipping on eBay.
What would I do Instead?
I would build a real business. Or at least a business that I had more control over. For example:
- Start a blog. This small site makes 3x as much money per month as my best month dropshipping. What’s more, I own everything to do with the site so there’s no chance of me “losing my account.”
- Sell in-hand goods on eBay, Poshmark, or Mercari. We still sell around $10k/month on eBay but only sell goods that we actually source locally. Finding items to resell at thrift stores is a great way to get into the eBay game without spending much money.
- Get paid for your talents. If you have a talent you can easily monetize it on sites like Etsy or Fiverr. You can create digital printables, provide graphic design services, write articles, etc.
At the end of the day, dropshipping is a viable business model. In fact, it is really not much different than what millions of businesses already do. However, it is not a basket that I would choose to put my eggs into long-term.