With a constant stream of loyal customers and great business growth potential, eBay is a highly attractive marketplace for many first-time sellers and small businesses.
What’s more, dropshipping on eBay has opened the door to this huge audience without the need for upfront capital.
Requiring far less financial input than a regular store, eBay dropshipping could provide an excellent gateway to online retail for sellers just starting out or looking to test the water.
So, how do you dropship on eBay? What are the pros and cons of dropshipping on eBay? And ultimately, is it worth it?
Below we have outlined our complete guide to dropshipping on eBay to help you determine whether it’s the right model for your online business or not.
What is a dropshipping business?
Dropshipping is an order fulfillment method where a business is not required to keep their products in stock.
Instead, every time a customer makes a purchase, the sales order is then passed onto a third-party supplier who prepares and ships the products directly to the customer.
Therefore, the seller never handles the products directly nor do they stock or own inventory.
A dropshipping business model means that sellers only purchase inventory from a dropshipping company, typically a wholesaler or manufacturer, as and when needed to fulfill customer orders.
How to dropship on eBay
Dropshipping on eBay has become highly restricted in recent years.
This doesn’t mean it’s not possible, but it does mean sellers need to be extra careful that they don’t break eBay’s dropshipping policy if they want to avoid damaging consequences.
So, here’s what the process looks like…
1. Set up an eBay Seller account
All you need to get started with dropshipping is an eBay Seller account. You could invest more by creating an eBay store, but this isn’t essential. Be prepared to pay listing fees, however.
Remember, there are different eBay sites for different countries all over the world, so make sure you sign up to the right one depending on where your target audience lives.
2. Choose your products and dropshipping supplier
Complete some research and decide what you want to sell on eBay first.
Then, you’ll need to create an account as a retailer with the suppliers of your chosen products. Reach out to them and ask if they would dropship to your customers.
It’s important to also ensure the supplier is willing to attach a custom return label (that includes your business name and address) to the package, so that your customers know you sent it.
3. List your items on eBay at a marked-up price
It's important to take your time over this. Upload professional images of the products, either from the supplier’s website or even better, take your own if you have samples. Write detailed product descriptions and optimize your listings for maximum search visibility.
Remember, you will likely be competing with other sellers using the same supplier, so you'll need to find ways of distinguishing yourself and standing out to your competitors.
Choosing the right price point is also key. It needs to be low enough to compete against similar listings, but high enough to still generate a profit.
3. Pass on your customers' details when you make a sale
Contact your supplier each time you make a sale and give them your customers’ shipping information.
Even though your supplier is in charge of packing and shipping the product directly to your customer, according to eBay, you're still responsible for the safe delivery of the item within the time frame you stated in your listing.
If you struggle to find a wholesale supplier who is happy to dropship to your eBay customers, then alternatively you could buy in bulk from the supplier and send the inventory off to a fulfillment service.
That service would then monitor the inventory, package and ship products on your behalf.
Investing in shipping management software would help you to automate this process and source the cheapest prices on shipping couriers too.
Of course, the biggest downside to this would be that you’d have to buy a load of stock upfront, and there’s no guarantee it will all sell, meaning the business risk is considerably higher than traditional dropshipping.
eBay dropshipping policies and requirements
In order to dropship on eBay, you first need to understand what is and isn’t allowed.
According to eBay’s dropshipping policy, you can’t purchase items from another retailer or marketplace that ships directly to your customer.
What does this mean exactly?
It means you can’t dropship from places like Amazon or AliExpress, and if you do, eBay could lower, hide or remove your listings altogether.
That’s not all though.
Failure to comply with eBay’s policy could also result in lowering your seller rating, buying or selling restrictions, loss of buyer or seller protections and even account suspension.
Prior to the policy, eBay sellers were able to dropship products from pretty much anywhere, which of course led to unhappy customers who eventually damaged the eBay brand.
You can read in an eBay thread how customers felt like they’d been lied to, after making a purchase on eBay only to receive an Amazon parcel and Amazon receipt inside for less than they paid.
Naturally, this caused eBay to bring in a dropshipping policy that restricted sellers from continuing to do this.
So, the only way to dropship on eBay is to fulfill orders directly from a wholesale supplier.
It is also a requirement to pay listing fees for each of your products, even if they don’t sell, and guarantee delivery within 30 days.
Advantages of dropshipping on eBay
Providing you follow the guidelines, eBay dropshipping does have some great benefits, especially for new sellers and start-ups, as barriers to entry are extremely low.
Here are the advantages:
No upfront investment
Perhaps the greatest advantage of eBay dropshipping, is the fact that you don’t need to purchase stock in large quantities upfront (just as long as you can find a wholesaler who is happy to dropship to your eBay customers)
Easy to get started
What’s more, because you don’t need to invest in inventory, it’s really easy to get started with almost no money at all. All you need to do is set up an eBay Seller account and find a wholesaler to dropship on your behalf.
Take advantage of eBay’s audience
eBay is the world’s largest and most well-known auction site for buying goods online, and that means it already has a huge, loyal customer base.
By starting your dropshipping business on eBay, you’ll essentially gain access to a vast audience with zero work from your side.
Save on marketing efforts
As well as capitalizing on a ready-made customer base, dropshipping on eBay means that you don’t need to spend loads on marketing like you would do normally; millions of online buyers will see your listings anyway.
Dropshipping is flexible
A lot of sellers want to start an online business as an experiment alongside their day job, as a way to make more money and test the water.
Dropshipping on eBay is something that anyone can try from anywhere in the world – all you need is access to the internet – so it can be entirely flexible around your life.
Grow with minimal risk
Scaling your dropshipping business on eBay is easier than a traditional online store, providing you have good connections with your supplier.
Why? Because as you sell more, the work simply falls to them, meaning you can grow your business without the risks and costs involved in typical expansion, such as office space, overheads, additional staff wages, warehouse rent and so on.
Disadvantages of dropshipping on eBay
On the face of it, eBay dropshipping seems like a no-brainer, but there are a whole host of disadvantages to take into consideration before going ahead with it, especially since eBay introduced its strict dropshipping policy.
Here are the disadvantages:
Not easy to find a dropship supplier
Perhaps the biggest disadvantage of dropshipping on eBay, is how difficult it is to establish wholesale relationships with suppliers, as very few will offer dropshipping services unless you can prove you can move product.
Often have to buy inventory in bulk
As building dropship relationships with wholesalers often takes time, you’ll likely find that you have to buy wholesale inventory upfront in order to prove your sales record to them.
Of course, this totally defeats the point of dropshipping and means you risk investing in stock that might not ever sell.
There’s only one legal way to dropship on eBay, and that relies on you finding a wholesaler that is willing to run your dropshipping business.
eBay sets plenty of other restrictions for sellers too, such as how you should communicate with your clients and present your brand. And failure to comply with these restrictions could lead to serious consequences for your eBay business.
You’re responsible when things go wrong
According to eBay, you are entirely responsible for the safe delivery of the item within the time frame stated in your listing.
However, you’re reliant on the supplier to dropship for you, who is under no obligations to deliver within this time frame. This mean they could run out of stock and wait a month to ship if they like, and they’d still be no repercussions for them at all.
Yet the negative feedback you would inevitably receive on your listings could result in account suspension, not to mention a severe drop in sales.
What’s more, any refunds to the buyer are the responsibility of the eBay seller only.
Don’t own your customers
Dropshipping via eBay means you don’t own your customers, instead you’re helping eBay build their brand every time you make a sale.
Think about it, if a friend asks where you got something from, you’ll say “eBay” and not the eBay seller’s business.
Not only that, but you can’t create an email list to remarket to – it’s just not possible.
Due to its low barriers to entry, dropshipping on eBay is an appealing business model to lots of online sellers just like you, meaning the competition is fierce.
Especially seeing as many retailers will be selling the exact same product as you, you’ll have to focus your efforts on other ways to stand out, which can be highly time consuming.
Low profit margins
With such steep competition, you may need to keep lowering your prices to remain a viable option to customers.
What’s more, eBay charges listings fees (after the initial 50 free) and the platform will take up to 10% of your total sale price, further reducing your profit margins.
Therefore, in order to realistically make money dropshipping on eBay, you’ll have to maintain a huge sales volume every month.
So, is dropshipping via eBay worth it?
The answer to this question really depends on what you’re wanting to achieve through eBay dropshipping.
If you’re just trying to make a little extra money on the side, then dropshipping on eBay could be a great option, with no upfront investment and very limited risk involved.
However, if you want to build a long term, memorable brand, with healthy profit margins and be completely responsible for the development of your online business, then eBay dropshipping is not for you.
Instead, we recommend you focus your efforts on finding a platform that allows for far greater customization.
We hope this guide has provided you with clarity over eBay dropshipping, and helped you to come to a conclusion as to whether it’s worthwhile or not for your business goals.