We will come right to the point. EBay dropshipping and eBay wholesale products suppliers are hot topics right now. Whether or not you succeed using a business model that relies on eBay dropship products sourcing may depend on your understanding of a few key points.
It is important to understand:
- the costs of eBay
- what dropshipping is
- drop ship companies versus true wholesale companies
- product research
- how selling on eBay is different from selling on a website or offline
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:
- listing fees
- final value fees
- image hosting fees (can be optional)
- fees for extras such as bold type, extra space for your listing, larger picture size (optional)
- “Buy it Now” fees (optional)
- fixed price fees (optional)
- PayPal or other payment processor fees
If you are selling in a highly competitive market, such as cell phones and iPods, it will be particularly important to factor these expenses into the cost of your item.
We also need to be clear on just what dropshipping is. Dropshipping is an agreement between you and a product distributor that allows you to sell a product without having to either stock the item or ship the item. The dropshipper stores all inventory. When you sell an item, you pay the dropshipper the discounted price, and the dropshipper ships the item to your customer under your business name. The profit you make is the difference between what you charge your customer and what you pay the dropshipper. Can this kind of business model work on eBay?
A drop shipping company is not necessarily the same thing as a true wholesale company. Remember, the dropshipper is merely the distributor who stores and ships products under your business name. A true wholesaler is a company with a special license to purchase products directly from a manufacturer and sell to retailers without charging sales tax. Retailers, or resellers (that’s you) then mark the cost up and sell to the public. A true wholesale company might also offer dropshipping as an extra service. Sometimes you can negotiate dropshipping with a wholesale distributor. Some dropshippers are also true wholesalers. Many dropshippers, 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 dropshipper is usually higher than the cost of goods purchased from a true wholesaler.
What this means for eBay dropshipping, is that you have to do the product research to find hard to find items that are in high demand. If you plan to sell on eBay, it’s important to make sure that the eBay selling environment isn’t too competitive. If everyone else is selling the same item, you may not be able to make a profit, and you might even lose money if your auction doesn’t sell.
You can succeed with eBay dropshipping, but please take the time to research your products, assess demand and eBay competition, and figure out the cost of selling and your expectation of profit.