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Is Dropshipping on eBay Worth It? | What Amazon and Shopify don’t want you to know

January 23, 2023

With 185 million active customers, eBay is one of the leading Ecommerce platforms in the world and attracts many types of sellers to its marketplace. eBay sellers can choose from multiple business models. However, one of the most common selling methods on eBay is dropshipping. Before deciding if you should start a dropshipping business on eBay, you need to ask yourself, is dropshipping on eBay worth it when there are so many other online business models to choose from, like local lead gen or Amazon FBA?

For those with minimal resources and online business knowledge, dropshipping on eBay could be the best option and it even offers some advantages compared to dropshipping on Amazon or Shopify. In the following article, we break down the benefits and drawbacks of dropshipping on eBay, who it’s best for, some important things you should know before starting, and how to start dropshipping on eBay in just five steps. Plus, which product categories you should dropship on eBay for the best chance of success.

What is dropshipping and is it allowed on eBay?

How dropshipping on eBay works

Dropshipping on eBay is an Ecommerce strategy where you find products from third-party suppliers that are cheaper than the market price on eBay and list those products on eBay for sale. Once an eBay customer buys the product from you, you go to the supplier to actually buy the product and provide them with your customer's shipping information. Therefore, you never have to handle the product yourself or even risk your money until after you make the sale.

What is the eBay policy on dropshipping? 

Dropshipping is allowed on the platform according to the eBay dropshipping policy, but it comes with some limitations. You need to work with a legitimate wholesale supplier to source products and fulfill your order. You cannot buy from another online marketplace or retailer and have them directly ship products to eBay customers, or else eBay could:

  • Cancel the listing
  • Hide your listings from showing in search results
  • Demote your seller rating
  • Restrict your ability to buy or sell

  • Take away your seller protection

  • Suspend your eBay seller account

Benefits of dropshipping on eBay

Lowest risk Ecommerce model

Of all the Ecommerce business models out there, dropshipping on eBay has to be the lowest risk option. You don’t have to pay any money to eBay upfront for listing products on their marketplace, nor do you have to pay for products upfront before selling them like with other models. When dropshipping on eBay, you don’t even pay to advertise in a pay-per-click (PPC) model as most every other paid advertising model on the internet uses like Amazon PPC or Google ads. Instead, you choose a fixed percentage amount to pay eBay once you actually sell the product. The only thing you risk is your own time.

Established customer base

When dropshipping from your own online store, as with Shopify, it’s entirely your responsibility to generate traffic through your online store by putting resources into SEO and paid advertising. When you list your items on an established marketplace like eBay, you have access to the millions of customers that are loyal to the platform and have high intent to purchase when visiting it.

Location flexible

Dropershippers aren’t tied down to any one place. When using this business model, you have location freedom and can choose to live wherever or move around as much as you’d like.

Easy to set up eBay listings

Listing items on eBay is quick and easy. The required information for eBay listings includes the necessary identifiers to explain what you’re selling, like the product title, pictures, item condition, and price. After submitting your listing, it should show up on the eBay platform within 24 hours. 

Save time

The combination of easier access to customers through eBay’s marketplace and the simplicity of the dropshipping model leaves you more time to focus on scaling your business by expanding your product offerings.  

Ability to sell a broad range of products

Many Ecommerce business models require that you marry yourself to a few products that you put a lot of money into manufacturing in bulk. Because you already commit your money to the products, you have to focus on making sure those products sell so that you don’t take a loss. When dropshipping on eBay, you have the opportunity to try selling as many products as you like because there’s essentially no financial risk in putting a product on the platform. You can experiment with many different products and dropshipping niches and see what works best. 

Drawbacks of dropshipping on eBay

No quality control 

As an eBay dropshipper, your products go right from your supplier to your customer, with no ability for you to verify the quality of the product sent. According to eBay’s money back guarantee policy, you’re always responsible for refunding the customer if anything is wrong with the product. Because you can’t ensure what is being sent to your customer, you put the reputation and wellbeing of your business in the hands of your supplier. 

Limited customization ability

When comparing eBay dropshipping vs Shopify, Shopify dropshipping is far superior for those who want the ability to customize their online store. As an eBay drop shipper, you’re limited to product related customizations on your eBay listing like the product title and images. You’re not able to create a niche or branded storefront for your customers. Your product listing will look exactly the same and have the eBay feel like the 1.5 billion other active listings on Ebay’s marketplace.

Low profit margins

Dropshipping typically has the lowest profit margins of any Ecommerce model because you buy one product at a time and can’t drive unit costs down like sellers that purchase bulk inventory. According to BeProfit, the average profit margin dropshippers can expect is 15% to 20%. When selling on eBay, they also take 12.9% to 15% plus $0.30 as their cut off every product you sell on their marketplace. If you want to use their on-platform advertising, Promoted Listings Standard, you’ll have to give up even more of your profit margin. 

High competition in a saturated market

According to eDesk, there are over 19 million sellers on eBay. EBay is accessible for anyone to sell, so it’s extremely saturated with products and there is high competition between sellers. You’ll complete against other dropshippers like yourself who have limited resources, and you’ll also be up against major companies like Acer, Microsoft, and Dyson who have deep pockets, established supply chains, and the power to influence the market price. 

Dependence on eBay to run your business

An eBay seller depends on the platform to run their business. If the ability to sell on eBay were to be taken away, as could happen from several things like eBay suspending your seller account, your dropshipping business could not operate and generate you an income.

Longer transit times in general 

To get products that are cheap enough to allow a decent profit margin, dropshippers usually source products internationally from suppliers in markets with low production costs like China, Vietnam, or India. Because suppliers are on the other side of the planet in many cases, dropshipping shipping times are notoriously long. You can expedite shipping times by paying more for air shipping instead of ocean freight, but that’s likely to wipe away the majority of your margins and make it not worth it.

Lack of product details for customer support

When doing eBay drop shipping, you’re responsible for customer service of your products. However, dropshipping suppliers often leave you with limited information about the product to reference, so you may have trouble providing your customers with the precise answers they are looking for. 

When does dropshipping on eBay make sense? 

Dropshipping is far from the best online business model, but it can make sense for some people. If you have extremely limited or no startup capital for your business, getting started with dropshipping may be your only choice to start making money by selling products online. It’s also a suitable option for the many people who don’t enjoy risking money. People who have no experience in Ecommerce can also benefit from dropshipping because it allows you to develop digital skills you can build from, like working with suppliers, product research, and customer service for your dropshipping store. The profit potential isn’t great, but dropshipping enables many people to start their online business journey.

Local lead generation, an alternative online business model that may make more sense for you

For those who have $500 to $1,000 to invest in an online business, local lead generation could be a life-changing opportunity. With local lead generation, you provide a valuable service to small businesses by finding clients for them in exchange for hundreds to thousands of dollars each month. Some benefits of the local lead generation business model include:

  • Passive income
  • Minimal overhead costs
  • Work from anywhere

  • High profit margins

  • Low competition

According to Oberlo, there are over 32.5 million small businesses in the United States alone. That’s a lot of potential customers to sell your service to! With just a handful of clients in your local lead generation business, you could earn a 6 figure annual income. Learn more about local lead generation here.

What to know before dropshipping on eBay

Best categories for eBay dropshipping sellers

Customers turn to eBay to buy pretty much anything. Some of the best categories for eBay dropshippers are:
  • Clothing and accessories

  • Health and beauty products
  • Automotive parts
  • Video games

  • Mobile phones and accessories

  • Home and garden

In these categories, you can find many smaller items that allow for affordable shipping. However, eBay dropshipping expert Paul J Lipsky also recommends selling items from the furniture category because products within this category allow for very large profit margins. Even though shipping won’t be cheap, the furniture category is worth exploring if you can find a reliable supplier with an affordable fulfillment cost.

eBay fees

If you want to make money online by using the eBay platform for dropshipping, you’ll be responsible for paying the associated eBay selling fees. These are the most common eBay fees that dropshippers pay.

  • Final value fee - eBay charges you a percentage on your sale total, typically between 12.9% to 15%, plus $0.30 per order. Because eBay charges this fee, you don’t have to worry about third-party payment processing fees. 

  • Insertion fee - Also known as a listing fee, the eBay insertion fee is a fee charged to list on the platform. However, eBay gives you a quota of insertion fee-free listings before charging you. For example, an eBay seller without a monthly store subscription gets 50 free listings each month, while someone paying for the Starter store subscription gets 250. 

  • EBay store subscription (optional) - eBay offers additional benefits for those who purchase one of their monthly store subscriptions like more free listings and lower fees. eBay store subscriptions range from $4.95 for the Starter up to nearly $3,000/month for the Enterprise solution.

Start dropshipping on eBay in 5 steps

1. Create an eBay account

To start dropshipping on eBay, you need to go through eBay’s registration process to create a seller account. For many people, the individual eBay account will work just fine. If you have your own legal business entity and intend to drop ship a large volume of products from eBay, go with the business account.

2. Use product research to find profitable products

Once you have created an eBay account, it’s time to track down some products that you can dropship on the platform to earn a profit. The eBay best seller page is a great place to start your product research journey. You’ll also want to have your eBay dropshipping supplier marketplace of choice like AliExpress or Alibaba opened so that you can easily reference whether you can make a profit if you were to purchase that product and sell it on eBay. If you pay for a monthly eBay store subscription, you can take advantage of eBay’s on-platform product research tool, Terapeak. With a bit of startup capital, you can improve your chances by paying for one of the many dropshipping product research tools available, like Zik Analytics

Pro Tip: It's easier to be successful dropshipping on eBay by choosing products that are small and lightweight for easy and affordable shipping, and also have a low return rate. 

3. Compare suppliers and verify product quality

After you settle on a dropshipping product idea, you’ll want to browse through different supplier marketplaces and compare the information available like product price, seller ratings, delivery times, fees, and previous customer reviews. Once you choose the supplier that seems to provide the best opportunity, you can take the additional step of actually ordering the product yourself to verify the quality. However, this is an optional step that dropshippers rarely take because it’s an extra expense. 

4. List your first item and register your seller account

Now that you have chosen a dropshipping product, you need to register your eBay account as a seller account. Find My eBay and select “Selling” from the dropdown menu.

This brings you to the My eBay Selling Overview page, where you will choose “List an item”. This takes you to the page to create your listing on eBay for your dropshipping product.

After completing your first listing, it saves as a draft, and eBay redirects you to the seller account registration page. Here, you will set up your selling account by providing eBay with some information necessary to sell on their platform, like your checking account to receive funds, a credit card for eBay to charge fees, and your phone number. Once you submit your seller account details, eBay needs to verify your account details and will notify you from My eBay messages if there is any additional information they need to approve your seller account. 

Important Note: Sellers in some countries are required to use Payoneer to receive payments as opposed to payments going directly to their checking account. This is the case if you’re signing up for your seller account from outside the USA, UK, Canada, Australia, or the European Economic Area.

5. Forward customer shipping details to your supplier

With your seller account approved by eBay, switch your product listing from “draft” to “active” status so eBay customers can see your listing. Once you make a sale, you receive payment and shipping information from the customer. You’ll want to purchase the product from your supplier and send them your customer’s shipping details ASAP. According to Reselling Revealed, eBay sellers typically ship their orders within two business days for customers to receive in about a week. EBay automatically shows an estimated shipping time on your product listing, so if you’re competing with other sellers of the same product and your shipping time is longer than theirs, eBay customers are likely to purchase from the seller that provides the product faster if price is similar.

Why choose eBay for dropshipping over Amazon or Shopify?

EBay is the best choice for your dropshipping business if you want to avoid losing money at all costs. You can start listing products on eBay for free and don’t even need a monthly store subscription, while Shopify requires a subscription to use their services. In terms of advertising to get your product seen, eBay Promoted Listings Standard just take a percentage of your sale without costing you a penny if there is no sale, while advertising with Amazon and Shopify require somewhat hefty advertising budgets that charge you on each click of the advertisement. Therefore, you could end up paying a lot in advertising without ever actually making a sale, which is impossible on eBay. 

Conclusion

So is eBay dropshipping worth it? The answer is a definite yes for those out there who can really benefit from the ability to start learning and making money online, even if they don’t have money to risk. There are even a few affordable eBay dropshipping courses that can help new dropshippers get on track with the eBay platform. Whether eBay dropshipping is the right opportunity for you or decide to go with another online business model, the key to finding success is to be consistent in your efforts and stay true to your goals.

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  1. Finding a reliable dropshipper for ebay is tough due to the high costs of so-called "wholesale" prices. I understand the dropshipping fee could be potentially high due to the fact that it's being dropshipped. The most challenging part of dropshipping on Ebay for me is the tight profit margins, the competition, and the fact that a product that i'm listing on ebay may also be sold by other people trying to dropship merchandise. And the refund process is a bit complex. However, the fact that I don't have to house any inventory is a huge benefits that supersedes these challenges.

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