Let me come right out and say it in the most concise manner possible, and then I’ll explain myself in greater depth: Dropshipping just doesn’t work well for making money from eBay. Well… unless… (But, I’ll get to the ‘unless’ just a little bit later.) First, I need to explain why I believe that in practically all cases dropshipping on eBay doesn’t work.
I think it’s important, in order to avoid confusion, that I explain exactly what I mean by the term ‘dropshipping on eBay’ for the purposes of this article. Some people have slightly different definitions in mind when they think of dropshipping on eBay. So, I should make clear exactly what I’m referring to.
The type of dropshipping on eBay I’m talking about here works, in a nutshell, like this: You locate a company that will dropship goods that you’re interested in trying to sell on eBay. You decide on the specific products you want and you put those items up for auction, or sale, on eBay. When, and if, someone purchases the item you’re offering, you collect the sale price from your customer, you send an order for that item to your dropshipper, along with your customer’s shipping information, you pay your dropshipper with the money your customer sent you, and your dropshipper ships the item to your customer. If you’ve done it correctly, you charged your customer more for the item they purchased than what your dropshipper charges you to ship out that item. So, you’ve made a profit.
Simple enough, right? Let’s say your dropshipper charges you, say, $100.00 to ship one electronic widget to a customer. You post an auction to eBay selling an electronic widget. Hopefully, you find a buyer who purchases your electronic widget for a price higher than $100.00. Let’s say you did find a buyer that purchased your widget for, say, $150.00. You send $100.00, along with your buyer’s shipping information to your dropshipper, your dropshipper ships one electronic widget to your buyer, your buyer gets his electronic widget, and you keep $50.00 for yourself as profit.
But, hold on a second. $50.00 isn’t really your actual profit — keep in mind that you’ll need to deduct the fees that eBay charges for you to conduct the auction or sale, plus any associated PayPal fees you may have incurred in moving that money around. So, your actual profit is going to be something less than $50.00 on that sale you made where you were paid $150.00 for an item that you essential paid $100.00 for wholesale.
So, what’s so bad about that? It sounds like a workable system, no? Indeed, it sounds so much like a workable system that people currently seem to be flocking to get in on it. After all, that’s why you’re here, is it not? You heard about dropshipping on eBay, it got you at least somewhat excited at the prospect of making good money by doing something so simple, and you’re curious as to whether or not the process is all you’ve heard it’s cracked up to be. Yes?
Well, unfortunately, in practically all cases, it sounds workable, but it just isn’t. And, if you’ll really think about it for just a moment, I’m sure you’ll be able to see why, in almost all cases, dropshipping on eBay just doesn’t work. (But, don’t be discouraged because, in just a little bit, I’m going to let you in on something that’ll blow your doors off!) So, let us think about this for a moment, shall we? …
Dropshipping on eBay, does it work? No? Well, why not? If you’re selling on eBay, like any place, in order to make a profit, you’re playing the wholesale/retail game. That’s what you’re doing in order to try and make money. It’s buy low, sell high. Right? But, the whole idea behind eBay is that it’s a low-price market – an online discount superstore of sorts. That’s why it was born — that’s why it continues to exist. A very large percentage of eBay vistitors go there looking to get stuff cheap –practically all of the ones who aren’t are looking for collectibles, or one-offs, or rarities of some sort — all things that dropshippers don’t sell. What bulk of people using eBay are really looking for is to purchase items at wholesale, or close to wholesale, prices. They’re looking for deals and bargains. So, if you want to sell to those people and turn a profit, your cost for the items that you’re selling better be at well below wholesale or you’re just not going to make any money.
So, if you’re dropshipping on eBay, can you get items that will sell at significantly below wholesale cost from dropshippers? The answer is: Almost never. Why? Because if dropshippers could offer their items at significantly below wholesale prices, they wouldn’t be dropshipping! Why would they? If they could offer in-demand products to retailers at prices that were significantly below wholesale, they’d be selling their items in huge lots to big retail chains and making a fortune. But, they’re not doing that. They’re dropshipping their items one item at a time, here and there, for you, and some shlub out in Iowa, and some other Mom down in Florida, and so on. Why are they doing that? Because either their items aren’t big sellers, or they don’t have the means to offer them at prices that would attract the interest of big retailers who could moves tonnes of their merchandise quickly, or both. Either way, it spells bad business for your eBay enterprise. If their products don’t have a big market, you’re not going to be able to move them easily. If their selling price is high, you wont find buyers on eBay. Dropshipping on eBay, does it work? No. In practically every case it does not work.
So, learn this, live this, become this: Wholesalers live and die by the amount of goods they can move. Wholesale is all about volume. And, the less a wholesaler can move, the more they have to charge their retailers for their goods– this means that, in general, profit margins become more narrow for the retailer the less volume their wholesaler is doing on a product. Now, let’s take our electronic widgets as an example: Megaultramega-Mart comes along and says to a wholesaler: “I’m interest in carrying electronic widgets in our chain. We want to buy 1 million units. What’s the best per-unity price you can give us?” The wholesaler looks at his numbers, realizes he spent $99.00 per unit buying his electronic widgets from the manufacturer, and quotes a price of $100.00 per unit to Megaultramega-Mart. Megaultramega-Mart then puts these up for sale for $150.00 each in their stores. They make a profit from each unit of $50.00. Then, you come along and say to the wholesaler “I want to buy one electronic widget to put up on eBay.” The wholesaler tells you that he’ll sell you an electronic widget for $149.50.
Why? Why does Megaultramega-Mart get such a great deal? Because they bought a million of them and the wholesaler got to cash a check that week for $100k in pure profit! You bought one and the wholesaler walked away with a lousy fifty-six bucks. Now, if you go and put your electronic widget up on eBay, you’re going to have to charge $151.00 dollars for it in order to make any sort of a profit at all, and any eBay customer interested in purchasing electronic widgets can just buy one from Megaultramega-Mart for a dollar less than what you’re charging.
When you’re dropshipping on eBay you’re playing the wholesale/retail game. And, in that game, if you’re small potatoes, you’re not going to get the best prices. That’s how the game works. If a dropshipper could be selling a million units of what they’re offering to dropship for you to a major retailer, they would be. If they’re not, it’s because they can’t. It’s because their product doesn’t move enough to be desirable to sellers, or because they don’t have the means to offer a good enough price on a large order. So, the chances are they’re in the dropship business as a way to increase their distributorship because they can’t do it any other way. They’re saying: “Well, we can’t move a lot of units to a few big retailers. But, maybe we can get a lot of really small retailers to move one or two items here and there, and all together, with so many of them selling one or two here and there, we’ll turn a decent business.”
The bottom line is: If their product had a reasonable demand and they could offer it at a price where it could be marked-up significantly enough that a retailer could turn a respectable profit, the big retailers would be interested in it and they’d be buying their stuff up in bulk, and the wholesaler wouldn’t be wasting their time dropshipping one order here and one order there.
Now, getting back to what I promised to share with you earlier: Dropshipping on eBay might not work, as I’ve said, in the vast majority of cases. But, that doesn’t mean that dropshipping doesn’t work anywhere. As with all things, there are ways to take advantage of its strengths while avoiding it’s weakness… or, even using it’s weaknesses to your advantage. It might not be on eBay — but, many people are realizing incredible profits, from taking advantage of the opportunities that dropshipping suppliers provide, in ways that are just as easy, if not more easy, to implement and put to work for you than eBay is. I highly, highly recommend that you visit the web page located at this link and spend ample time reading over all of the information contained therein. But, before you do, be prepared to have your doors blown off upon learning the information you’ll find there! If you want to get into earning money on the internet through working with dropshippers, you MUST visit that site and fully familiarize yourself all the information located there. You can come back here and thank me later.