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eBay Drop Shipping: A Beginner’s Guide to Building a Highly Profitable & Successful Dropshipping Business on eBay

  15 min read

When it comes to starting a drop shipping business, eBay is the platform of choice for most newbie sellers. Having personally generated over 250k in sales drop shipping on eBay, I’m living proof that it works. I’m also a prime example of how literally anyone, even those with limited experience can harness the massive reach of eBay to build a highly profitable drop shipping business.

I’m not the only one either. Thousands of sellers across the globe including many large retailers drop ship on eBay, earning big bucks in the process. It’s by far the quickest and easiest way to get products in front of millions of keen buyers.

In this free guide, you’ll learn everything there is to know about building a successful eBay drop shipping business. From finding suppliers to choosing products and creating listings, I’ll take you through the entire process step-by-step. Towards the end of the guide, I’ll also reveal some real-life examples of profitable drop ship products.

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How Does Drop Shipping Work?

For those who don’t know, drop shipping is an order fulfilment technique in which retailers sell products, usually through online channels such as eBay or Amazon, and then source them directly from suppliers, typically wholesalers or manufacturers. Unlike the traditional way of running an e-commerce business, drop shipping doesn’t involve buying products upfront or storing inventory. Instead, products are only purchased (from the supplier) after they’ve been sold to a consumer, eliminating the risk for sellers.

List Products for Sale

You (the retailer) list drop ship products for sale on eBay, Amazon, Shopify or your own website.

Customer Places Order

When a customer places an order, they will pay the you (the retailer) the full amount directly.

Supplier Ships Product

You place or forward the order with your supplier, who then ships the product straight to your customer.

The days of having to invest thousands of dollars to start an e-commerce business are a thing of the past. With drop shipping, you can instantly start selling an entire range of products without spending a single cent. You can also expand your range at a rapid rate without needing constant cash flow. It’s the perfect business model for newbies to the world of e-commerce.

Learn more about drop shipping and its benefits here.

Is Drop Shipping Allowed on eBay?

As stated in the first paragraph of their policy, drop shipping is allowed on eBay. However, sellers who use a drop shipping model are still responsible for the safe delivery of products and overall satisfaction of customers, regardless of where the item originated from. It’s also the seller’s responsibility to effectively manage returns and ensure products are in stock at the time of purchase, something that will be covered more in this guide. You can read the full policy here.

eBay Drop Shipping Policy Update (Important)

Over the last few years, eBay drop shipping has become somewhat of a sensation. With the rapid growth in popularity and sudden influx of new drop shippers followed some major changes to their drop shipping policy. To understand the changes, you need to understand how it all started. Back when drop shipping was in its infancy, sourcing products from other retailers, a technique known as retail arbitrage was common practice. Thousands of sellers were drop shipping products from established retailers (mainly Amazon) to eBay. Many of these sellers were using automated software’s to blast out thousands of listing on eBay in a matter of hours.

At some point in early 2019, eBay took notice, concluding that retail arbitrage drop shipping adds no value to their platform. As a bargain marketplace, eBay didn’t want hundreds of listings for the same product all at above retail prices. Furthermore, they didn’t want customers buying products on eBay but receiving them in branded packages from major competitors like Amazon.

To combat this, eBay swiftly updated their drop shipping policy. As stated in paragraph 2 of the new policy ‘listing an item on eBay and then purchasing the item from another retailer or marketplace is not allowed on eBay, failure to follow the rules will result in strict penalties such as account suspension, restrictions or limitations.’

After the policy update, eBay began to heavily enforce it. Thousands of accounts suspected of participating in retail arbitrage, specifically on a drop ship basis were suspended or restricted. It wasn’t hard for eBay to detect such accounts by using increasing sophisticated methods. Eventually, most sellers came to the realisation that retail arbitrage drop shipping on eBay was no longer a viable business model. You can read the full policy here.

On the plus side, drop shipping on eBay is still allowed, but only when it’s done in the correct way. That means sourcing products from a genuine wholesaler or trade-only drop shipping supplier. It also means avoiding automated software’s that use eBay’s API, more of which will be discussed later in the guide.

Is eBay Drop Shipping Dead?

Absolutely not, eBay drop shipping is very much alive and kicking. In fact, thousands of people are earning full time income selling drop ship products on eBay. The business model will always be a big part of the platform as it generates millions in revenue for eBay and attracts thousands of established sellers, including some major retailers who use the model.

Building a compliant, sustainable and long-term eBay drop shipping business is not only possible, but probable. It’s simply a case of learning the policies and implementing the correct way of doing things. It’s important to remember that drop shipping is a business, not a get rich quick scheme. It’s going to take time and effort to get it right.

While researching other guides, I was shocked by the many websites which claim eBay drop shipping is dead. It soon became apparent that such websites were attempting to deter readers from starting an eBay drop shipping business in favour of drop shipping on Shopify, WooCommerce or other similar platform.

Most of these sites had absolutely nothing to do with eBay drop shipping, they were simply piggybacking the Google search results to generate traffic and promote their own products, usually Shopify drop shipping software. It genuinely frustrated me to see such biased and misleading articles, particularly from websites which I previously believed to be reliable sources of information.

That’s why I spent many hours putting together this free guide. I want people to know that eBay drop shipping is not only alive, but still full of potential. With literally millions of buyers, eBay is by far the best platform for beginners to start drop shipping, particularly those who don’t have the funds needed to build a website and advertise products.

Quiet simply, if you’re not selling on eBay, you’re missing out on a ton of sales. Don’t be put off by biased articles claiming that Shopify is the better option. Shopify certainly has its own exclusive benefits, but it takes much more time, money and effort to build a successful drop shipping business on Shopify, or any other website building platform for that matter.

eBay is and always will be the better choice for newbies.

The Pros & Cons of Drop Shipping on eBay

While drop shipping on eBay can be extremely profitable, it does have a fair share of disadvantages which need to be considered before committing to the business. To help determine if it’s the right opportunity for you, here’s a side by side comparison of both the pros and the cons of drop shipping on eBay, for your consideration.

The Pros

Millions of Buyers

Having over 160 million active buyers across the globe is one of the biggest advantages to selling on eBay. No matter what you’re selling, somebody will be looking for it on eBay. With annual revenue exceeding 10 billion dollars, eBay is one of the biggest e-commerce platforms in the world. Not selling on it would mean missing out on a ton of potential sales.

Start Selling in Minutes

Literally anyone can start selling on eBay in minutes without having any special skills or sales experience. A user-friendly interface makes it easy list products, manage orders and communicate with customers. You don’t need your own website and you don’t need to invest in advertising. From payments to order tracking and returns, eBay manages the whole process.

Reasonable Fees

A lot of people feel eBay fees are overly high. However, considering the huge costs associated with building and advertising your own website, the fees are generally very reasonable. Aside from a small listing fee, the only other cost associated with selling on eBay is a final value fee, which is only charged after a product has been sold.

The Cons

Volatile Policy Changes

After several years selling on eBay, policy changes became my biggest frustration. It’s not uncommon for eBay to make sudden policy changes which can drastically affect your business. The recent change to the drop shipping policy is a prime example of this. It’s also worth mentioning that eBay, no matter what, will almost never make exceptions to their rules.

Tough Competition

As the popularity of eBay drop shipping began to sky-rocket, so did the competition. No matter what you decide to sell on eBay, you can be almost certain that someone else will already be selling it. Quite often, this can lead to a price lowering battle. However, there are a few effective ways to stand out from the competition, some of which will be revealed later in this guide.

Limited Payment Options

Although PayPal is a reliable payment provider, additional payment methods for buyers would be a welcomed change. Not only to maximise sales by giving customers other options, but to potentially cut costs and save on fees. Unfortunately, eBay owns PayPal so it’s unlikely to introduce new payment methods anytime soon.

How to Build a Successful eBay Drop Shipping Business

  Choose Products to Sell

Choosing the right products to sell is the first step towards building a drop shipping business on eBay. It’s always best to start with products you have a basic knowledge of. For example, if you’re a bit of fashion fanista, selling clothing may be your calling. If you have a passion for the outdoors, camping gear could be your niche.

Either way, sticking with products you have knowledge on is a massive advantage. You’ll be able to answer customer enquiries with ease, and have a better understanding when it comes to pricing and popularity.

Learn more about choosing products to sell here.

  Find a Supplier

Once you’ve decided on the type of products you want sell, the next step is to find a supplier. There are multiple ways to do this. From using supplier directories to attending trade shows, contacting wholesalers, studying online forums or hunting them down yourself on Google.

Directories are often the popular choice because they cut out the time consuming process of having to find and research suppliers manually. The directories put together a list of the best drop shipping suppliers, and make it easy for anyone to quickly find one that suits their needs.

However, not all directories are a useful as they many appear, some also charge yearly or monthly fees. It’s important to do your research before joining any directory that charges a membership fee.

Here at Wholesale Frog however, our free to use directory is overflowing with reputable drop shipping suppliers. Simply browse through the categories or search to instantly uncover a ton of drop shippers.

Browse Directory

  Create Unique Listings

Once you’ve found a supplier and products to source, it’s time to start listing them. However, it’s not as simple as copying titles and descriptions. In order to stand out from the competition, you need to create unique listings with keyword optimised titles.

Titles are the most important aspect when it comes to creating eBay listings. Titles are the first thing buyers see when browsing eBay, they’re also used to determine where and when your listing will appear within search results. Good titles mean more views, clicks and sales. Make sure you include as many relevant keywords in your title as possible, and always use the full allocated space.

Think about the keywords potential customers might use when searching for your product. Include these in your title. If they’re not included, the chances of you appearing in the results are slim.

  • Bad Title: Ultrasonic Pest Repellent
  • Good Title: Ultrasonic Plug In Mice Rat Rodent Pest Repeller Detterent

Descriptions are also important. Take the necessary time to perfect your listings. Use a professional template and make sure your description are clear and well structured. Add as many specifics as possible and refrain from using the same main image as your supplier. You can even go that once step further by tweaking the descriptions to make them unique.

  Price Items for Maximum Sales

It’s no surprise that price is a major buying factor. Keeping your prices as low as possible is essential. After taking eBay and PayPal fees into consideration, you should aim for a healthy but moderate profit margin.

Don’t make the mistake of overpricing. It’s better to sell an item 10 times with a £2 profit rather than just once with a £5 profit. Keeping your prices low will attract more customers and ultimately generate more sales.

Learn more about pricing products maximise sales here.

  Process Orders Quickly

When a customer buys an item, you need to forward or place that order with your supplier. Therefore, it’s vital to process orders quickly to ensure the items arrive on time. As a general rule, you should aim to process orders the very same day.

Remember, your supplier will prep and dispatch the items. If a customer places an order on Monday but you don’t process it until Tuesday, it could result in the item being delayed. Also, don’t make the mistake of matching your suppliers shipping policy, if they deliver within 3-5 days, set your shipping policy to 5-7 days.

  Manage Stock & Prices Effectively

One of the biggest challenges with drop shipping is managing stock and prices. Selling a product that has ran out of stock or raised in price means having to cancel the order, this could result in negative feedback or defects.

Therefore, it’s important to have an effective stock and price management system. Your plan should involve manual stock checks and having a close relationship with your supplier. Your supplier may be able to provide you with data feeds or frequent stock/price updates. Learning how to deal with customers effectively is also a good way to tackle this issue.

Manually checking stock and prices is easy when you have a small number of listings. However, as you began to scale and grow your  business, using automation software is by far the better solution. With multiple drop shipping software’s available, many of which are fully compatible with eBay, finding one shouldn’t be a difficult task. For more information, please see our comprehensive guide on the best drop shipping software and how they work.

  Promote Your Listings

A sure fire way to instantly boost traffic to your listings is by promoting them. eBay has an extremely simple system which allows you to promote some or all of your listings in a few clicks. You only pay an additional percentage on the items total selling price if it actually sells.

Lean more about promoted listings here.

  Provide Great Customer Support

Customers are the life of any business. Treat them well and they’ll come back for more. Go that extra mile by informing your customers when the items have been dispatched, and follow up with them after delivery to ensure they’re satisfied. If they’re happy with the product, kindly request feedback. If they’re not, make the effort to resolve the issue quickly.

Never forget, the customer is always right, even when they’re wrong. Go above and beyond to resolve any issues or complaints. You’ll quickly discover that good customer service can turn even the most frustrated customer into a repeat buyer.

Case Study: Finding Profitable Drop Ship Products on eBay

In this over the shoulder case study, we’re going to find profitable drop ship products on eBay. Let’s imagine I’ve decided to start selling giftware on eBay UK. I’ve found a suitable UK based drop shipping supplier using Wholesale Frog (wink, wink).

That supplier is Puckator Dropship, one of the UK’s leading drop shippers of giftware.

After spending some time cross-checking a bunch of their products on eBay, it didn’t take long to discover a profitable item. It’s a Gothic skull dragon figurine.

After searching on eBay, I’ve discovered a seller who has sold the very same item over 30 times for the price of £8.87:

As per my calculations, the total price to purchase this item from my supplier (Puckator) including shipping costs is £6.42

By undercutting the competition and selling this product for £8.85, I’d pocket a profit of £1.10 on every sale.

If I can achieve a similar volume as my competition, I’d earn over £30.00 profit from this one single item. Keeping in mind, I have full control over pricing and the option to aim for a higher profit per sale.

As I continued to browse Puckator, eBay and other sellers’ listings, I found many more profitable items, including the following:

Crystal Geode Metallic Rainbow Dragon Figurine

Cost to Buy: £10.44
eBay Selling Price: £14.34
Profit: £1.85
Sales Volume: 10
Total Profit: £18.50

Gothic Skull in Medieval Helmet Ornament

Cost to Buy: £5.81
eBay Selling Price: £7.91
Profit: £0.88
Sales Volume: 22
Total Profit: £19.36

Fantasy LED Backflow Incense Burner

Cost to Buy: £16.50
eBay Selling Price: £22.27
Profit: £3.05
Sales Volume: 9
Total Profit: £27.45

These are just a few examples of drop ship products which people are already selling on eBay and earning profit from. Keep in mind, there’s literally millions of products and thousands of drop shipping suppliers to choose from. Take the time to find those fast-moving, hot selling products that generate consistent sales and you’ll be on you’re way to becoming an eBay power seller in no time.

eBay Drop Shipping FAQ’s

Is eBay against Drop Shipping?

Absolutely not. The problem lies with retail arbitrage only. The process of sourcing products from other retailers, particularly Amazon is flawed. At first, it wasn’t much of an issue for eBay. However, as the popularity of retail arbitrage drop shipping grew, problems became apparent. eBay became overloaded with thousands of duplicate, overpriced and poor-quality listings, most of which were being sourced directly from their biggest competitor – Amazon. It caused much confusion for eBay buyers, who would purchase products on eBay but receive them in Amazon packages, often with receipts disclosing a much lower price. Naturally, this led to many customers complaining to eBay, leaving negative feedbacks or opening disputes.

Let me make it clear, eBay has nothing against drop shippers who do things the right way. Sourcing products from a genuine wholesaler or trade-only drop shipping supplier means you can offer competitive, true retail prices. You also won’t need to worry about complaints. Reputable drop shippers will use unbranded packaging without including paperwork, a process known as blind drop shipping. Your customers will never know where the item was sent from. As far as the customer is concerned, the item came directly from you. Some drop shippers can even include your own branding or logo on the packaging.

Can anyone drop ship on eBay?

They certainly can. That’s the beauty of drop shipping. It doesn’t matter where you’re physically located, you can sell to customers in any part of the world. For example, if you want to sell on eBay UK, simply find a UK based supplier. If you’d rather sell in the US, find a US based supplier. You could be in the north pole and still sell products on eBay, your supplier handles the entire post order process from packaging to shipping and delivery, rendering your physical location irrelevant.

How much does it cost to start drop shipping on eBay?

It depends on which eBay site you wish to sell on. The cost to list a product for sale on eBay varies depending on which country you sell in, however it’s generally very low. You also have the option to open an eBay store for a fixed monthly fee which comes with special benefits including a set number of free listings. Aside from that, the only other fee you pay is a final value fee after a product has sold, currently around 10% plus PayPal fees.

Is drop shipping on eBay legal?

Absolutely. Drop shipping is a completely legal and legitimate business model which is allowed on eBay as per their policy. Reputable companies have been using the drop ship model for decades, long before it became a common practice. Now considered an established and proven business model, drop shipping will only increase in popularity.

Will eBay ever ban drop shipping?

It’s highly unlikely that eBay would ever outright ban drop shipping. I’d say impossible, but I’m a big believer in that nothing is impossible. It would make no logical sense for eBay to ban drop shipping, particularly when they generate tens of millions of dollars in revenue from it.

Is it better to drop ship on my own website?

Building your own ecommerce website takes a lot of time, money and effort. eBay on the other hand gives you a platform to instantly start accepting orders. It also has millions of eager buyers. Cutting yourself off from this massive pool of buyers would not make sense. While having your own e-commerce website is certainly something to consider for the future, eBay is by far the best starting point for newbie sellers.

Final Thought

Building a successful drop shipping business on eBay is more than possible, it just takes time, focus and effort. Choose the right products to sell, find a reliable supplier, create unique listings and manage the business efficiently, you won’t go far wrong.

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