eBay is one of the best places for dropshipping due to its vast popularity and customer base. The marketplace is a giant sales channel for both entrepreneurs and business owners. But only recently, eBay pulled the trigger on dropship sellers; or so it seems. However, the actual scenario is far different than that!
Is dropshipping legal on eBay? Is it even worth it? In this article, we will break down eBay’s dropshipping policy along with how you can successfully start your business journey.
What Is A Dropshipping Business?
Dropshipping or “product sourcing” is a type of business model where an online business owner resells products or services bought from third-party suppliers. The main feature of this model is that the shop owners do not own any warehouse to store the inventory. Instead, drop-ship vendors work as ‘middlemen’ between the supplier and an actual buyer.
The dropship merchant lists different products on an online store and waits for customers to place orders. And when the orders arrive, the seller buys the same products from third-party suppliers and provides them with the order details. At the same time, the suppliers manufacture, store, and then ship the products to the designated location on the merchant’s behalf.
Is Dropshipping Legal On eBay?
Dropshipping is legal on eBay as it allows shop owners to take orders from buyers and fulfill the orders directly from wholesale suppliers. But sellers get all confused with the recent dropshipping policy eBay released a couple of years ago. According to the policy-
Wholesale Dropshipping is Allowed
Dropshipping involves online sellers dealing with wholesale suppliers to produce and store the products until orders arrive. Then, the supplier sends the product to the customers within a time frame, and the seller doesn’t even get to see them. It is the basic and genuine idea of dropshipping, and eBay says a big YES to this model.
Directly Reselling Items from Other Sources is NOT allowed
Here, other sources refer to retailers and competitor marketplaces such as Amazon, Walmart. Imagine ordering something from eBay, and the next thing you know, Amazon delivered the items you ordered! Directly shipping items from sources other than eBay creates a negative customer experience. Besides, there’s no assurance of safe delivery or delivery times. And that is why eBay prohibited this traditional dropshipping business.
Now, what happens if you do not follow eBay dropshipping policy?
Any violation of eBay’s current drop shipping policy could result in:
- cancellation of product listings,
- degraded seller’s rating,
- restrictions against buying or selling on eBay,
- loss of eBay seller protections,
- and account suspension.
Keep in mind that dropshipping and arbitrage are not the same. But is retail arbitrage legal on eBay? Well, eBay does not restrict you to source products at a discount, buy them, and resell with a profit. But the items should not be delivered directly from a retailer or marketplace with a business logo on it.
How to Start Dropshipping on eBay?
Joining eBay dropshipping is quite simple. Here are the steps you need to follow-
Step-1: Set up your seller account following this eBay dropshipping guide.
Step-2: Choose the products you want to sell through research and market analysis.
Step-3: Find eBay dropshipping suppliers who allow shipping a small number of products at a time.
Step-4: List the products you want to sell.
Step-5: Send order details to your suppliers and fulfill the orders ASAP.
Apart from local manufacturers, sellers can order products from a certified dropshipping supplier such as CJ Dropshipping, Chinabrands, Costway, etc. These sites offer private labeling, custom packaging, and branding and have warehouses all over the U.S. So, you don’t have to worry about violating eBay regulations.
Is eBay Dropshipping Worth It?
It depends. Success in any business determines the profit margin, and eBay dropshipping may not be as worthy in this case. Although drop shipping is a low-risk business model, some regulations can make it challenging to grow your business on eBay.
These are the factors you need to keep in mind before starting an eBay dropshipping business:
- eBay restricts sellers only to list products in bulk. This means you need to buy the inventory from suppliers before taking orders from eBay customers.
- Customization and automation are still minimal on eBay. You need to go through every repetitive task by yourself.
- eBay has more experienced competitors such as Amazon, Shopify, Walmart, etc. These marketplaces have already established their position in dropshipping.
- Longer distances take more delivery time than usual as third-party suppliers ship the products. Besides, eBay will hold you responsible if things go wrong.
So, how can you make eBay dropshipping profitable?
eBay dropshipping is not as bad as it seems. For instance, it’s a great place with low competition to start an online store for beginners. After all, the dropshipping model is a fast-growing business strategy. The profit margin may remain low at the beginning depending on your investment. Still, it is a cost-effective choice due to low eBay dropshipping fees. Registration and the first 250 product listings per month are completely free. Besides, eBay only takes up to 12.55% from each sale you make, which is lower than many eCommerce platforms.
You can also partner with a third-party agency to outsource supply chain management and automate repetitive tasks. Besides, eBay automation is an excellent passive income source. Automation services offer a range of benefits, including store setup, product research, product listing, managing inventory, customer service, and much more. All you need to do is follow up with your agency and invest money to grow your business.
While eBay gives the green light for wholesale dropshipping, it also adds up some restrictions as well. You also need to maintain a time frame and safe delivery to make your customers happy. These limitations may seem demanding for any beginner entrepreneur. But it’s not difficult to profit from eBay dropshipping. You just need to understand the risk factors and design a proper business plan accordingly.