Ebay dropshipping is an attractive business model for new sellers because…
- You don’t need any money to begin
- There is practically no upfront risk
- You don’t need to worry about inventory
This article will explain the details of how Ebay dropshipping works and the pros and cons of this ecommerce business model.
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What Is Ebay Dropshipping?
Ebay dropshipping is an ecommerce business model where you list goods for sale on Ebay and your supplier fulfills your orders and stores your inventory.
When an order is received on Ebay, you purchase the item from a wholesale supplier after the sale and the supplier ships the product to the end customer.
With Ebay dropshipping, you do not have any storage fees nor do you have to worry about products taking up space in your home or business.
Essentially, the supplier is responsible for shipping and fulfillment which allows you to spend more time marketing your ecommerce business and focusing on customer service.
Is Dropshipping On Ebay Allowed?
Ebay dropshipping is allowed and 100% legal but only if you fulfill your orders directly from a wholesale supplier or distributor. In other words, you have to buy your products wholesale from a distributor and NOT a retail shop or marketplace.
Below is an excerpt from Ebay’s terms of service.
Ebay’s official policy is that dropshipping is allowed. However, listing an item on Ebay and then purchasing the item from another retailer or marketplace that ships directly to your customer is not allowed.
For example, reselling products that you buy from marketplaces like Amazon, Walmart, or AliExpress are prohibited on Ebay. As a result, you can not technically list a product on Ebay, buy it from Amazon and then ship it to your Ebay auction winner.
If you violate this rule, Ebay can and will remove your listings altogether. They may also lower your feedback rating or status on the platform and reduce the visibility of your listings of other products.
How To Dropship On Ebay
Dropshipping on Ebay involves 4 basic steps.
- You must set up an Ebay seller account.
- You must find a wholesale supplier and decide what to sell.
- You must list your product on Ebay at a marked up price.
- When a sale is made, you must notify your supplier and provide your customer’s shipping information.
Step 1: Set Up An Ebay Seller Account
The first step is to sign up for a free Ebay seller account. You are allowed to sell on Ebay if you have a verified address in one of Ebay’s supported countries.
Once you’ve registered an Ebay account and completed a short verification process, you can create a listing for the products that you want to sell.
Note: You will be given an option to start an Ebay store but this is not necessary when you are first starting out.
Step 2: Find A Dropshipping Wholesale Supplier
Finding profitable products to sell and reliable dropshipping wholesale suppliers are the most important aspects of running a successful Ebay dropshipping business.
There are 3 main ways to find a dropshipping supplier depending on your budget and time constraints.
- Use A Dropship Supplier Directory – A dropship directory is a database of suppliers that are pre-screened by a 3rd party. The directory owner typically vets good suppliers and then charges a fee for access to the directory. Worldwide Brands is an example of a wholesale directory.
- Attend A Wholesale Tradeshow – You can form direct relationships with dropshipping vendors by meeting them face to face at a tradeshow.
- Use A Print On Demand Company – Print on demand companies allow you to sell and print your own designs on white label merchandise without any upfront cost.
Click here for a list of top dropshipping suppliers.
Step 3: Create An Ebay Listing
To create a high converting Ebay listing, you must take professional photos of your products. Often times, your dropshipping supplier will have stock photos that you can use for your listing.
However, it’s much more effective to take your own photos. Because you will be competing with other sellers using the same supplier, you’ll want your photos to stand out among the competition.
Pricing your products optimally is also important. You’ll want to price your products on par with other competing products while still generating a profit.
Step 4: Notify Your Wholesale Supplier When A Sale Is Made
Once you receive an order, you have to contact your supplier and provide them with your customer’s shipping information. Your supplier will then ship and fulfill your order on your behalf.
Your profit will be the difference between the selling price minus Ebay fees and the wholesale cost of your product.
Some dropshipping suppliers use systems such as EDI to process and transmit orders electronically. But most suppliers will require you to email or send in a spreadsheet of orders once an Ebay auction is completed.
How Much Does Ebay Dropshipping Cost?
Ebay dropshipping costs 35 cents to list a product in addition to a 10% final value fee.
Here’s a breakdown of the 2 main Ebay fees.
- Insertion Fee – This is a fee that you pay to create a listing. Even if your item does not sell, you still have to pay this fee. Ebay offers additional listing addons that enhance your listing for an additional cost, but the base listing fee is 35 cents. Your first 200 listings are free!
- Final Value Fee – This is a fee that you pay once your product sells and is a percentage of your final listing value. This fee includes the cost of shipping.
For example, if you sell a product that closes at $10, you have to pay 35 cents for the listing fee and $1 for the final value fee.
Note: The exact insertion and final value fee will depend on the category of product that you are selling.
Is Ebay Dropshipping Worth It?
Ebay dropshipping is worth it if you want to start an ecommerce business with low upfront costs.
Because you don’t have to worry about inventory and fulfillment costs, Ebay dropshipping is one of the easiest ecommerce business models to try with very low risk.
However, Ebay dropshipping is not conducive to creating a long term brand. Because you are selling other people’s products on a platform that you do not own, it will be difficult to establish a solid customer base.
The Different Types Of Ebay Dropshipping
There are 3 main flavors of dropshipping on Ebay that are popular among sellers and they each have their pros and cons.
- Ebay Dropshipping From Amazon
- Ebay Dropshipping From AliExpress
- Ebay Dropshipping From Wholesale Suppliers
Here’s how each model works.
Ebay Dropshipping From Amazon
Ebay dropshipping from Amazon is when you find inexpensive products on the Amazon marketplace and sell them on Ebay at a profit.
For example, right now someone is selling our exact same products on Ebay at a substantial markup from Amazon.
Here’s the Ebay listing
Meanwhile, the exact same product is listed on Amazon at a significantly cheaper price.
Now why would someone spend $24.83 for a set of linen cocktail napkins on Ebay when they can buy it from Amazon for only $17.95?
The reason is because some people like to shop on Ebay and some people like to shop on Amazon and the marketplaces don’t necessarily overlap.
In fact, similar pricing inefficiencies exist across all marketplaces.
In any case, an Ebay seller will find a cheap product on Amazon and list it on Ebay. Then, when an order comes in, the seller will buy the product on Amazon and have it shipped directly to the buyer and pocket the difference.
After fees, this particular Ebay seller of my products will make roughly $5 for doing practically nothing.
Pros Of Ebay Dropshipping From Amazon
The primary advantage of dropshipping from Amazon is the lightning fast fulfillment. Because of Amazon Prime, your Ebay customers will often receive their goods within 2 business days.
In addition, if the customer has any issues with the product, you can simply have the customer send the item back to you and you can request a return authorization to Amazon. Because Amazon’s return policy is so lenient, you’ll almost always get your money back.
Cons Of Ebay Dropshipping From Amazon
All items dropshipped from Amazon will arrive in an Amazon branded box. As a result, this can cause some major confusion with your customers.
In addition, there is no guarantee that an item sold on Ebay will be in stock on Amazon. Product listings on Amazon change all of the time and you have to make sure that the item you sold matches the one you are buying.
But perhaps the most important con is that Ebay dropshipping from Amazon is expressly prohibited.
With a single email to Ebay, I could have all of the above Ebay listings shut down in an instant. However, I have chosen to leave them up for now because these listings aren’t harming my overall business.
Ebay Dropshipping From AliExpress
Aliexpress dropshipping on Ebay is a business model where you buy inexpensive products from AliExpress and sell them on Ebay at a profit.
AliExpress is known as the Ebay of China and is a popular online destination for buying products at much cheaper prices from Chinese sellers.
AliExpress is owned by Alibaba which is the largest ecommerce business in China. It also has a reputation for selling lots of cheap, Chinese junk that you see in gift stores all over the world.
The way dropshipping works from AliExpress is the same as with Amazon.
A seller will find a cheap product on AliExpress that he/she can profit from on Ebay. When an order comes in, the seller will buy the identical product from AliExpress and have it shipped directly to the buyer from China.
Pros Of Ebay Dropshipping From AliExpress
The main pro of dropshipping from AliExpress are the profit margins. If you’ve never visited AliExpress.com before, I would suggest taking a quick look because you’ll be shocked at how much you pay for goods in the United States.
For example, it’s not unheard of to have an 8X markup on your products versus the retail price.
Cons Of Ebay Dropshipping From AliExpress
While your margins will be higher on AliExpress, there are a slew of disadvantages that make this model unappealing.
First off, most AliExpress suppliers reside in China which means that AliExpress shipping will take a LONG time. In fact, shipping can often take 3-4 weeks or longer.
Second of all, the quality of the product you are selling will be poor. In fact, there is ZERO quality control with the products you find on AliExpress and most of it is junk.
The combination of these two factors will cause you endless customer support headaches with your customers. To me, it’s not worth it.
Also, don’t forget that dropshipping from AliExpress is illegal on Ebay. For more information, read these AliExpress reviews.
Ebay Dropshipping From Wholesale Suppliers
Dropshipping from a real distributor or wholesaler is technically the only legal way to dropship on Ebay and here’s how it works.
You first have to make an arrangement with your supplier to receive wholesale pricing for the products you want to sell.
For example, if an Ebay seller wants us (Bumblebee Linens) to dropship for them, we would provide them with special pricing if they can move a certain volume of product every month.
Then, once they make a sale on Ebay, we would fulfill the order on their behalf and charge them a per order dropshipping fee.
Editor’s Note: Please don’t contact me for dropshipping requests as we do not do dropshipping:)
Pros Of Ebay Dropshipping From Wholesale Suppliers
The primary advantage of dropshipping from a wholesale supplier is that it’s legit. It is well within Ebay’s guidelines and you can not get shut down for this business practice.
In addition, you will receive wholesale pricing from your distributor which means higher profits for you.
Cons Of Ebay Dropshipping From Wholesale Suppliers
The main disadvantage is that it’s not easy to establish wholesale relationships with your suppliers. No company will offer to dropship on your behalf unless you can prove to them that you can move product.
As a result, establishing dropship relationships will take time and often involves you buying wholesale inventory upfront to establish your sales record.
In addition, there will be many other retailers selling the exact same product so it will be difficult to differentiate yourself from the competition.
Furthermore, you may have to follow specific selling rules set by the manufacturer such as MAP pricing, advertising copy etc…
Overall Advantages Of Ebay Dropshipping
Overall, dropshipping can be an attractive ecommerce business model when you are first starting out because of the low upfront costs.
And the advantages of dropshipping can be summed up in the table below.
- Automation – When you use dropship software, everything is automated for your convenience. With one click, you can add or order any product. This frees your time up to concentrate on marketing the products you’re selling.
- Minimal Risk – By using the dropshipping method, you only order what your customers purchase. This eliminates the risk you may run into if you were to order and store your own inventory. You will never have more product than what is purchased.
- Cost Effective – Most sellers who practice dropshipping only pay wholesale prices instead of retail prices for their products. This allows you to offer the product for a lower price to your customers and achieve higher margins.
- Product Choice – By dropshipping, you can sell just about anything. You are not limited by storage or a product you create. Instead, you can sell a wide variety of products from toothbrushes to car parts.
But the main downside of dropshipping is that you don’t have control and your profit margins will be less.
Frequently Asked Questions About Ebay Dropshipping
Is dropshipping allowed on Ebay?
Dropshipping is allowed on Ebay. However, you must fulfill your orders directly from a legit wholesale supplier. Dropshipping from Amazon or any other marketplace like AliExpress is prohibited.
Can I dropship on Amazon?
Similar to Ebay, you are allowed to dropship from a wholesale supplier. However, Amazon prohibits you from dropshipping from any other marketplace or you'll risk getting banned or suspended.
Can I dropship from Ebay to Amazon and vice versa?
Amazon to Ebay dropshipping was a popular business model a few years ago, but now both Amazon and Ebay prohibit dropshipping from any marketplace
Is dropshipping worth it?
The answer depends. Because your margins are significantly lower with dropshipping, your paid advertising options are limited. However, dropshipping is a great way to get started selling online with very little monetary risk. If you want to go with dropshipping today, selling higher ticket items is your best bet
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Steve Chou is a highly recognized influencer in the ecommerce space and has taught thousands of students how to effectively sell physical products online over at ProfitableOnlineStore.com.
His blog, MyWifeQuitHerJob.com, has been featured in Forbes, Inc, The New York Times, Entrepreneur and MSNBC.
He's also a contributing author for BigCommerce, Klaviyo, ManyChat, Printful, Privy, CXL, Ecommerce Fuel, GlockApps, Privy, Social Media Examiner, Web Designer Depot, Sumo and other leading business publications.
In addition, he runs a popular ecommerce podcast, My Wife Quit Her Job, which is a top 25 marketing show on all of Apple Podcasts.
To stay up to date with all of the latest ecommerce trends, Steve runs a 7 figure ecommerce store, BumblebeeLinens.com, with his wife and puts on an annual ecommerce conference called The Sellers Summit.
Steve carries both a bachelors and a masters degree in electrical engineering from Stanford University. Despite majoring in electrical engineering, he spent a good portion of his graduate education studying entrepreneurship and the mechanics of running small businesses.