Every week, I get at least 2 or 3 requests to write more online tutorials about Ebay dropshipping. And I can certainly understand why. On the surface, the Ebay dropshipping model is attractive because…
- You don’t need any money to begin
- There is practically no upfront risk
- You don’t need to worry about inventory
But if you peel back the onion, you’ll quickly realize that dropshipping on Ebay might make you a few bucks here and there but it is definitely not a good, sustainable long term business model.
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 Dropshipping?
Dropshipping is when you are a seller online (you have a store on Ebay), but you are not the supplier of your own products. This method allows you to list goods online without being responsible for order fulfillment.
Instead, you purchase the item from the supplier only when someone buys it from you. With this method, 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 most of the heavy lifting thus allowing you to spend more time marketing your ecommerce business and focusing on customer service.
What is Ebay?
Ebay is an auction-style platform that allows you to sell items either as an individual (items you no longer want but would like to make some money from or items you make yourself), or as a store that supplies new or refurbished items.
Similar to Amazon, Ebay has quite a large audience of buyers who browse the platform every day. Right now, Ebay has about 180 million active users who are just waiting to buy your products online.
Because Ebay is an auction based platform, buyers can find, bid on, and buy almost anything from cars to jewelry.
Sellers post their products with a starting bid. The lower the starting bid, the more likely that a customer will bid on the product.
Customers bid on the product for the specified number of days set by the seller until the highest bid finally lands the sale.
Sellers can also add a “Buy It Now” option on their product page to control the product price and to allow customers to purchase, without bidding, at a fixed price.
Is Dropshipping On Ebay Allowed?
Technically, dropshipping is allowed on Ebay but highly discouraged and it is only permitted under certain circumstances.
Right now, Ebay only allows dropshipping if you fulfill your orders directly from a wholesale supplier. In other words, you have to source your products from distributor and NOT a retail shop or marketplace.
Here’s an excerpt taken directly from Ebay’s website
The language on Ebay’s website regarding dropshipping is very clear.
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.
Why Ebay Banned Dropshipping From Amazon And AliExpress
For a long time, swarms of “get rich quick without doing any real work” Ebay sellers were putting up listings and fulfilling their auctions directly from Amazon and AliExpress.
But problems started arising when buyers received products from Amazon with receipts in the package mentioning free Prime delivery but the buyer was charged for shipping when purchasing the item via Ebay.
Products were also delivered in Amazon branded boxes which added to the confusion (and anger).
Dropshipping via AliExpress has also been problematic. Because AliExpress items are usually shipped from China, shipping times can be often take 3-4 weeks for delivery.
The combination of long delivery times and cheaply made products have caused huge headaches for Ebay involving AliExpress purchases which have tarnished their reputation.
However despite these marketplace rules, a lot of sellers still continue to use dropshipping from Amazon and AliExpress without much consequence.
In other words, Ebay doesn’t seem to be policing this rule too tightly probably because they are under pressure from their investors to increase sales.
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 exactly as it sounds. As a seller, you scour the Amazon marketplace for products that are selling at prices lower than an equivalent item on Ebay.
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 the heck 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
Another popular dropshipping method on Ebay requires the use of AliExpress.
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 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 all over the map. 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.
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…
How To Get Started Dropshipping On Ebay
It may be tempting to dropship on Ebay from Amazon or AliExpress but I would avoid this business model altogether.
Because dropshipping from Amazon or AliExpress is against Ebay’s terms of service, you could get shut down at any time and this is no way to start a long term ecommerce business.
Instead, if you want to dropship on Ebay, I would suggest that you do so by reaching out to legit distributors and wholesalers.
In the beginning, most wholesalers and distributors will outright reject your dropshipping request so you will have to prove yourself first.
As a result, the best way to get started is to buy a small amount of inventory of the product you want to sell. And by small, most wholesalers will accept minimum buys of as little as $100.
If you don’t want to carry inventory or ship product, you can also use a fulfillment center but doing your own fulfillment in the beginning is pretty easy because of the low volumes.
Then, once you’ve established a track record of sales, you can negotiate with your wholesaler to dropship on your behalf.
Getting started with dropshipping using this method is slightly more risky in that you have to a buy a small amount of inventory and there’s no guarantee that your products will sell.
But once you’ve established a relationship with your supplier, you will no longer have to worry about inventory ever again.
Overall Advantages Of 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. For more information on dropshipping, please check out the following post.
Is Dropshipping On Ebay Worth It?
In case you couldn’t tell from the tone of this post, I’m not a big fan of dropshipping on Ebay. In fact, I would avoid it at all costs.
First off, the most attractive dropshipping methods (from Amazon and AliExpress) are prohibited. Don’t even try it because you’ll eventually get banned.
Second of all, dropshipping on Ebay does not allow you to own your own customer base. Why do all of this work if you’re going to give away your customer to Ebay?
The final disadvantage of Ebay dropshipping are the egregious fees. The margins for dropshipping are already small to begin with. But when you factor in listing fees and final value fees, you won’t end up with much.
Sure, Ebay has a free listing option available but you must list your product for between 0.01-0.99 cents to be eligible. As a result, you risk paying Ebay to list a product that might not even sell.
Though dropshipping is “restricted” on eBay, there are ways around it that could be viable in eBay’s eyes.
But use your own judgement when dropshipping on Ebay and be aware of the risks. Also keep in mind that there are much better ecommerce business models out there than Ebay dropshipping.
To learn more, read my post on Private Label vs Retail Arbitrage vs Dropshipping vs Wholesale – 8 Ecommerce Business Models Compared
- AliExpress Dropshipping & Oberlo Are Officially Dead – Here’s Why
- Dropshipping – Does It Really Work And Can You Make Money?
- Private Label vs Retail Arbitrage vs Dropshipping vs Wholesale – 8 Ecommerce Business Models Compared
- 4 Ways To Find USA Wholesale Suppliers And Avoid Paying Tariffs
- Amazon Scams And Dirty Tactics To Expect When You Sell On Amazon
Have you read these?
- AliExpress Dropshipping & Oberlo Are Officially Dead – Here’s Why
- FBA Calculator – Hidden Fees All Amazon Sellers Should Know About
- Dropshipping Vs Carrying Inventory – An Inside Look At The Financials Of Two Live Online Shops
- Where To Buy Wholesale Clothing In The USA And My Trip To The LA Fashion District
- Why You Don’t Have To Follow Your Passion When Starting An Online Store