Dropshipping Will not Make you Money on Ebay

If you are considering using dropshipping to supply yourBut even if you could find a good product with a high
eBay auctions with products then this article mightprofit margin, you cannot use dropshipping's main
change your mind and send you in the right direction...advantage. You can no longer sell the item on eBay
Dropshipping is terrible for eBay businesses!and then use that money to buy the item from the
What is dropshipping? Dropshipping is a method ofdropshipper.
buying-and-selling that requires very little money upfrontYou see, dropshipping is about getting paid first and
and very little effort. In theory.then using that money to buy the product and have it
Here is how dropshipping works on eBay.shipped directly to your eBay buyer. So, you list an
You look through a dropshipper's catalog to finditem on eBay then someone buys it. Then you use the
products you want to sell on eBay. Then, you post themoney they paid you (though PayPal) to buy the item,
products as auctions or buy it now listings on eBay. Ifwhich the drop shipper then ships directly to the buyer.
the product sells, you collect the payment from theYOU LIST THE ITEM
buyer and forward the order on to the dropshipper,YOU SELL THE ITEM
using your eBay customer's payment to fund theBUYER PAYS YOU FOR THE ITEM
transaction. The dropshipper then send the productYOU USE BUYER'S PAYMENT TO BUY THE ITEM
directly to your eBay customer.FROM THE DROP SHIPPER
The money you have left is your profit.THE DROP SHIPPER SENDS THE ITEM DIRECTLY
The profit is the difference in price between what youTO YOUR EBAY CUSTOMEReBay's recent policy
pay the dropshipper and what you sell the product forchanges will make it nearly impossible to start with
on eBay. So if your dropshipper sells the Nintendo Wiidropshipping. One of the major benefits of dropshipping
for $230 and you sell it on eBay for $250 have $20 inhas been obliterated by eBay. You can no longer use
profit. However, to determine your actual profit youthe buyer's money to pay for the product you are
need to include and deduct your eBay fees, PayPalselling on eBay.eBay has an new policy in place where
fees, etc. So your final profit is under $20 using thethey will start HOLDING FUNDS FOR 21 DAYS or
example given.UNTIL POSITIVE FEEDBACK IS LEFT! This applies to
Why is dropshipping bad for my eBay business? Letsmall sellers, new sellers, and sellers with less than
me start by saying "bad" is an understatement.stellar feedback.
Dropshipping is not bad, it is deadly. DropshippingHere are the details direct from eBay's website...
makes no sense in the eBay marketplace... Just thinkFROM EBAY'S POLICY CHANGE
about it!ANNOUNCEMENT:
Dropshipping is based on the concept that you can getOccasional holds on payment
just one of an item and pay near wholesale price. But27. Which sellers will have their payments held?
if you just think about it, that doesn't make any sense.In a small percentage of cases where it has been
If we look at how the wholesale industry works it willdetermined the risk of dissatisfied buyers is higher,
be obvious.PayPal may delay release of the payment funds to
The wholesale industry works on quantity. Wholesalethe seller until the buyer has left a positive feedback or
is all about bulk. When a huge company, such as21 days have passed without a dispute, claim,
Wal*Mart, places an order it is in huge quantity (to fill allchargeback or reversal filed on that transaction.
of their stores). I'll make you an example using dvdTo determine if a transaction may have a higher risk
players...of dissatisfied buyers, eBay reports to PayPal a
Wal*Mart wants to order 5000 ZIP-ZAM DVDnumber of factors, including but not limited to:
PLAYERS which retail for $105 each. Wal*Mart plansSeller's % Positive Feedback in the last 30 days
to sell them for a little under retail at $98 each. So, theySeller's Detailed Seller Ratings in the last 30 days
contact their wholesale distributor who offers them aFinal price for the item
price of $86 each. Wal*Mart places the order andShipping & handling fee
everyone is happy. But...Seller's eBay tenure as an eBay member
Using dropshipping you cannot expect to get that DVDSeller's total number of Feedback
player for anywhere near $86. The distributor offered29. When will PayPal release the eBay item hold?
Wal*Mart the $86 price because of the quantity theyPayPal will release the hold when the earliest of the
were agreeing to purchase. At the $86 price thefollowing occurs:the buyer leaves positive feedback,
distributor is only profiting $5 per DVD player. But that3 days after confirmed item delivery* or
is ok. One sale of 5000 units to Wal*Mart is $25,000 in21 days without a dispute, claim, chargeback, or
profit. But you want just one, and a $5 profit sale is notreversal filed on that transaction.
going to do.* This applies to US domestic transactions that are
You have to look at it from the dropshipper'sshipped by USPS or FedEx and either (i) use PayPal
perspective. If a dropshipper had a really hot product --shipping labels to ship items or (ii) upload tracking
why would they sell it to some small businesses forinformation to PayPal via the transaction details page.
very little profit? Anyone using dropshipping is not goingSo, now assuming you are a newer eBay seller (and if
to sell huge quantities (or they would use wholesale)...you're established why on earth would you be
So what is in it for the dropship company? Theconsidering dropshipping) you can not use the money
dropshipper could even sell direct to the public and dothey pay you to complete the transaction as it will be
much better. They could charge a higher price andheld.
probably sell more units. Wholesalers could do this too,You must use your own money to complete the drop
but remember, they do not sell one item at a time.ship order as the funds will not be released for 21
They have a completely different business model.days. Seeing as this "pay only after you sell" feature
So, when you think about it even a little bit - WHYwas one of the best things about the dropshipping
would any company sell you just one of an item formethod of product sourcing there is really no reason
very little profit? WHAT would be the advantage?whatsoever to use dropshipping any more.
The answer is simple. They do not. The exception toWhile this might have you upset. I think it is a blessing in
this would be companies that sell large items that mostdisguise. This will undoubtedly put a dent in the business
stores do not keep in stock but will special order orof the handful of dropship sourcing companies that
very unique specialty items. But in the real world; in thehave made a fortune preying on eBay business
EBAY world, dropshipping will cost you much morehopefuls.
than wholesale price. Since eBay is a low-priceDropshipping doesn't work on eBay. It didn't before and
marketplace, this means that often the dropshippingit definitely will not now!
price is MORE than the eBay price.eBay is a veryIf you are interested in buying products in a method
competitive marketplace and the profit margins withsimilar to dropshipping (but that actually can help you
dropshipping are just too thin to allow anyone toprofit) please visit my anti-dropshipping website at
actually make a good living with this method of productGood luck and no matter what you try remember... If it
sourcing.sounds too good to be true, it is!