If you look for information regarding how to make money with EBAY, then one topic you will see discussed everywhere. And that is drop shipping. Now lets first understand what is the meaning of that term
Drop Shipping is a special system of supply chain where the wholesaler directly ships the product to the customer without first going through the retailer. The role of the retailer here is only to provide the wholesaler with all the details of the customer. So in this case the retailer is having much less overhead than buying from the wholesaler and then selling in turn to the customer. But still the profit margin for the retailer is same i.e he gets the difference between the retail price and the wholesale price. But he does not have to maintain any inventory of the product and neither have to take care of shipping the goods to customer.
Well this same system can be applied in the internet also. To specifically speak of EBAY what any drop shipper will do is, he will buy a specific product from the wholesaler and then sell it in EBAY to the potential customer. But here the buying will not be physical and the wholesaler will only ship the product to customer. In return the drop shipper will get the difference of the price paid by the customer and the wholesale price. The customer will know that the drop shipper is selling the product and will not necessarily know about whats going on in the back end.
Now that you know what drop shipping and how it is done in EBAY, the natural question that comes to mind is: is it an effective way to make money with EBAY. Well people have different perceptions but the reality is 95% of drop shipper will fail. This is because the wholesaler will never sell one or two products in wholesale price. If some drop shipper can buy a whole lot of products at the same time then only he will provide them in wholesale price. It will only work if quantity is large! But most of the ordinary drop shippers selling in EBAY are not capable of doing this in such a large scale. And in an auction site like EBAY where people are looking for one or two pieces of a particular product, this idea is not feasible at all, at least it will not make you a millionaire. Drop Shipping is a business model which just does not go along well with online auction sites like EBAY.