Do you have products that you want to sell? Check out our partner site 

Ebay Drop Shipping - Useless Hype Or A Real Strategy?

I will come right to the point. EBay drop shipping and eBay wholesale products suppliers are hot topics right now. Whether or not you succeed using a business model that relies on eBay drop ship products sourcing may depend on your understanding of a few key points.

Key issues to consider include, (1) eBay terms of service with regard to drop shipping, (2) what drop shipping really is, (3) the profit margin of your products, (4) how selling on eBay is different from selling on an ecommerce site, (5) how drop ship companies are different from wholesale businesses, (6) the sort of selling environment eBay is, (7) product research, (8) the costs of eBay.

Before selling anything on eBay it is important to study the additional eBay costs so that you'll know how much you need to make to make a profit. Some of the extra costs include: (1) listing fees, (2) final value fees, (3) image hosting fees (can be optional),(4) fees for extras such as bold type, extra space for your listing, larger picture size (optional), (5) "Buy it Now" fees (optional), (6) fixed price fees (optional), (7) PayPal or other payment processor fees.

I think it almost goes without saying that it is important to add these expenses into the cost of your items. When you are selling items that are extremely competitive, which means almost any mass market electronic gadget such as a cell phone, television, or audio equipment, your margin for profit and error become even narrower.

What does this have to do with eBay drop ship product sourcing? This is where we begin to answer that question. First, we need to understand a little about drop shipping. Basically, as it is generally understood, a drop shipper is a product distributor from whom you buy products that the dropshipper then ships to your customers under your business name. The drop ship service stocks and warehouses the inventory, so that when your buyer purchase from you, you inform and pay the dropshipper, who handles the rest. Your profit is the difference between what you charge your customer and what you pay the drop shipper. You can see that this is an appealing business model as you do not have to deal directly with stocking items or bother with shipping. Would this arrangement work for selling on eBay?

Some eBay sellers clearly use dropshippers. However, we need to look at the difference between a dropshipper and a wholesale supplier. The two are not necessarily the same thing. Though some wholesalers may also drop ship goods, drop ship companies are not true wholesale businesses. A legitimate wholesaler is a business licensed to purchase products directly from a manufacturer and sell them back to retailers without charging sales tax. The drop shipper in its simplest form handles warehousing, sales to you, and shipping to your buyer.

A true wholesale company might also offer drop shipping as an extra service. Sometimes you can negotiate drop shipping with a wholesale distributor. Some drop shippers are also true wholesalers. Many drop shippers, however, such as Doba or Shopster, are essentially discount retail businesses. They have already purchased or negotiate the purchase of goods from wholesalers and then sell to you at a discount. The result of this is that the costs of using the big warehouse drop shipper are usually higher than the cost of goods purchased from a true wholesaler.

Can drop shipping products work in the eBay environment? Absolutely! But you have to research your products as well as the eBay market place to determine if drop shipping will work for the particular line of products you want to sell. You can see that it is essential to really study the costs involved and understand the demand for your product. Basically, if the price and profit margin are right, then drop shipping will work and if not, it won't. If your eBay research finds that there is a growing demand for your product but relatively few auctions, then you might have a winner for drop shipping.

Should you give drop shipping a try? By all means but please give due consideration to what I have said above about research and understanding costs and competition. Basically, you want to base your selling decisions on data you gather about your product, not on sentiment and personal feelings about your products. You may have the coolest product in the world, but if everyone else is selling it then it may be difficult for you to muscle your way in to the market. None of this really hard, by the way, but you do want to take the time to get the feel of eBay market place.

Read more:
Under Creative Commons License: Attribution No Derivatives

Disclosure: As is the case with many other industry/topic specific magazines, websites and trade publications, we do not always but occasionally we may receive compensation from some of the companies whose products we review within and outside of the E-Commerce industry, including, but is not limited to, paid advertising placements, referral fees, contextual advertising links and sponsorship packages.