Dropshipping can be a great way to make money online, and for many online sellers, eBay is the perfect starting point. This eBay dropshipping guide discusses the challenges most drop shippers will face, how to combat them, and how to start a successful dropshipping business on eBay.

What Is Dropshipping?

Traditionally, retailers keep an inventory of the products they offer on hand, often purchasing these products in bulk at a wholesale price from a manufacturer. Dropshipping eliminates the step of keeping inventory, instead enabling the seller to purchase wholesale products individually and then sell these for a profit online.

Ecommerce websites such as eBay and Amazon allow sellers to place their listings in front of a large audience with minimal processing fees.

How Does Dropshipping on eBay Work?

There are millions of products on eBay, but did you know that many sellers who are on eBay never actually handle or keep stock of the items they sell online?

Instead, they source their products from a separate online seller, often at a wholesale price, and list the sourced items in their own eBay store. Many sellers will use the exact images, product titles, and descriptions provided by their dropship suppliers.

Once a sale has been made, the dropshipper will fulfill the order through their dropship company, which will supply and ship the item to the customer.

Because the goods are shipped directly to your customers, you as the dropshipper simply acts as a sort of middleman between the supplier and the consumer, sourcing products in bulk and selling them at a good retail price on eBay.

Dropshipping is allowed on eBay, provided the seller guarantees delivery within 30 days of the end of the listing. Although the shipping time and item quality are not directly in the seller's control, eBay places full responsibility in their hands.

Anyone with an eBay seller account can start dropshipping on eBay! You’ll want to begin by deciding on what products to sell, and then sourcing those products from a wholesaler or other supplier that can guarantee quick and reliable shipping.

You won’t see a huge return with just a few sales; the key to successful dropshipping is volume. Most dropshippers only net a few dollars per sale.

Factors such as pricing, marketing efforts, and timing can make or break a dropshipping strategy.

The biggest benefit of having a dropship store is that you don’t have to be in possession of the products you’re selling before you list them.

Once you’ve sourced a reliable supplier to use for order fulfillment, simply create your eBay listings and decide when to post, how to market, and what price point you think will get you a high volume of sales and earn a profit.

Once you’ve listed your products on eBay and the sales start coming in, your next priority is to build and maintain a fabulous reputation with your customers by fulfilling their orders and promptly dealing with any issues that may arise.

Dropshipping on eBay: Pros and Cons

There are pros and cons to dropshipping on eBay rather than creating an ecommerce store:

PROS

It’s Easy. Dropshipping on eBay is as easy as making an account and setting up your first listing. There’s no need to face the hassle and costs of setting up your own online store or ecommerce blog.

Less Need for Marketing. Your eBay listings will be placed in front of millions of online buyers, saving you time and money on marketing, SEO, and paid traffic.

More Traffic for Less Effort. The much larger audience ensures you make sales more easily and get the best prices for your products.

CONS

Listing Fees. eBay charges a small fee per listing (the first 50 listings are free) as well as up to 10 percent of your total sale price (known as a “final value fee”). With the already-slim profit margins through dropshipping, these fees can quickly add up. Keep in mind that the key to making money by dropshipping is volume.

Less Customization. Selling products on eBay is a great way to start an online business, but fewer customization options for your shop and listings can make it more difficult to stand apart from your competitors.

Frequent Monitoring Needed. You’ll need to stay on top of your listings if you want to maintain the volume needed to make money through eBay sales. There are online tools available that can help you streamline the re-listing process.

Ultimately, it’s up to you to decide where you want to place the bulk of your time and effort when selling wholesale products online, but for many sellers, dropshipping on eBay is a simple and effective way to make money.

Here are our top tips for how to set up a dropship business on ebay.

7 Tips on eBay Dropshipping

1. Minimize Your Workload

High volume is the key to gaining a competitive advantage and making money with eBay dropshipping, as profit margins tend to be very small, often only a few dollars per sale. Online sellers try to sell as much as they can in a short amount of time. High volume means more work, as you must process and fulfill every listing individually.

To streamline this process and reduce your workload, find products that can be posted as multiple-item listings. This way, you’ll only have to make the listing once, leaving you free to take care of fulfillment and handle returns when necessary. Be sure to set a longer duration for these eBay listings to avoid the need to re-list.

2. Keep Control of Pricing

The reason millions of online buyers flock to eBay on a daily basis is the promise of getting the best price for the items they buy. This can be a challenge for dropshippers, because while the final sale price may fluctuate, the supplier charges a fixed cost no matter what.

Additionally, eBay listings require a listing fee plus a percentage of the final sale price (as much as 10 percent), which can cut into your meager profit margins.

Thankfully, there are several ways to maintain your profits. When dropshipping for eBay, you have the option to set a Buy It Now listing, which offers your item at a fixed price, meaning you can ensure you pull in your desired profit.

Another advantage to using the Buy It Now option is the insertion fees are fixed, often for a lower price, no matter if you create an individual- or multiple-item eBay listing.

If you still want to allow your eBay buyers to bid for your products, carrying the potential for a higher profit, you can try setting a reserve price. This is a minimum price that the seller is willing to accept for an auction item.

With reserve pricing, insertion and final value fees will vary, so be sure to adjust your reserve price accordingly. This feature ensures better profits, but can be frustrating to online buyers, as the reserve price will not be visible to the customer.

The best way to control your profit margins is to set a high starting bid that ensures you will cover your fixed costs. Be sure to factor in costs from your supplier (including shipping, taxes, etc.) as well as eBay’s listing and final value fees.

You can calculate potential fees for your eBay listing by checking its fee calculator.

3. Ensure Availability

Thousands are making money through dropshipping on eBay because it eliminates the need to keep an inventory, but this can lead to some setbacks. One of the biggest mistakes dropshippers can make is not ensuring that the items they list on eBay are still available.

This mistake becomes frustrating for online buyers, driving away potential repeat customers and creating financial hardships for you.

Avoid the pitfalls of selling discontinued or out-of-stock items by checking your suppliers’ inventories frequently to see what’s in stock and what will be leaving their stores soon because of low quantities.

Collecting daily reports from your suppliers will help you maintain a reputation of quick and reliable fulfillment with your customers.

Remember, your business needs its reputation to stand out from the competition, and dissatisfied customers can quickly put your shop at risk of being permanently shut down by eBay.

4. Ensure Fulfillment

You’ve made sure your listed items are available; now it’s time to keep your customers happy by fulfilling all orders quickly and efficiently. Reputation is everything on eBay, where millions of online sellers are competing for sales every day, so be sure to stay on track with fulfillment.

The biggest challenge with fulfillment is that ultimately, it’s out of your hands. You can send your customers’ orders to your supplier, but it’s up to them to follow through.

If your supplier is unreliable, it’s time to move on and find another product source.

A reliable supplier will not only stay on top of shipping the items quickly, they will also keep you up to date on the status of your orders, letting you know of potential delays or issues so you can relay the information to your customers.

Issues will inevitably arise now and then, but keeping in contact with both your suppliers and your customers will keep any potential negative feedback to a minimum.

5. Watch Out for Unreliable Suppliers

There are countless suppliers to be found online, but many dropshippers fail to properly screen or evaluate the ones they choose before attempting to make sales on eBay. This mistake can quickly backfire in the form of late deliveries and poor-quality drop shipped items.

Remember, the customer isn’t going to your supplier for what they want—they’re looking to you to provide them with the items they paid for in a timely manner and in the quality they expect.

Even if the supplier is at fault with an order, the customer only sees you and will react accordingly with negative reviews or complaints to eBay. Services such as online directories can save you time by offering lists of suppliers that are pre-screened for quality and reliability.

6. Build Good Relationships

Gaining repeat customers is a great way to ensure high profit margins for dropshipping. The key to getting your online buyers to return to you for future purchases is to build and maintain great relationships with your customers.

Building a strong reputation begins with steps already mentioned: ensuring the availability of the items you list, working only with reliable, honest suppliers, and staying on top of fulfillment.

If issues come up, respond to your customers promptly and professionally. Avoid harsh or emotional responses, even if an angry customer is lashing out.

Bad feelings will fade, but those scathing reviews will stick around. Strive to give each of your customers the most positive experience possible and you’ll quickly build a loyal base of repeat customers.

7. Time Your Listings

As with all else in life, timing is everything. When setting up an auction, the day of the week and time of day can have a significant impact on your sales.

Timing your eBay listing around peak traffic hours seems to be the most obvious solution. High traffic means more potential viewers, which can lead to making a sale more quickly and with a better profit margin.

However, listing during peak times also means more competition, as well as the chance that your potential buyers might not have a chance to bid on your listing at all because of slow site speeds.

This is particularly detrimental when an auction is about to close. It’s hard to make money when your customers can’t even get to your listing in time!

Balance is the key to timing your eBay auctions. Consider the optimal times to list your products and for the auctions to end.

One key factor to consider is your target demographic: Who would be most interested in your product? When do these customers typically do their online shopping?

For example, Saturdays and Sundays between 4 p.m. and 7 p.m. PST typically see the highest periods of traffic on eBay, but more tech-savvy customers may choose to avoid those times to ensure a more successful auction bid.

Think about who might purchase your product and what their schedules are like.

Pay attention to the history of each eBay listing to determine the best timing for future products. Look at when your items experience a peak in traffic and identify the patterns.

8. Ensure Trackability

Most of the time, making sure your eBay customers can track the package is easy. Just share your UPS, FedEx, or USPS tracking numbers with them. Where this gets more difficult is when you ship an Amazon order to a customer and that order is being delivered with Amazon Logistics.

Amazon Logistics shipments are those that are actually fulfilled by Amazon instead of UPS, FedEx, etc., and usually have a tracking number that starts with TBA that is followed by 12 numbers.

The problem with these deliveries is that, because you need to log in to your Amazon account to track them, your eBay customers can’t track their shipment.

Not only that, but eBay doesn’t consider Amazon’s TBA tracking numbers valid. If you need to prove that an item was delivered during an eBay buyer dispute, you won’t be able to because there is no way for eBay or the buyer to track the Amazon Logistics shipment.

The best way to ensure that your shipments are trackable is to work directly with suppliers rather than sourcing your products from places like Amazon that have these kinds of complications. Online directories like SaleHoo can help with this by providing you with lists of reliable suppliers.

However, if you do wish to use Amazon as a source for your eBay dropshipping, make sure you convert the Amazon Logistics TBA tracking numbers into ones that eBay considers valid.

For a detailed how-to, read on for our dropshipping guide so you can start selling online!

How to Dropship on eBay: A Step-by-Step Guide

Step 1: Find a Supplier

A successful eBay dropshipping business comes down to quality customer service and the right supplier. You might choose to source local suppliers, or to find wholesale suppliers online.

When choosing a supplier, consider these key factors:

What shipping methods does the supplier offer? Are there options for expedited shipping?
How long does an order typically take to ship? Suppliers that can’t guarantee their delivery times put you at risk of having dissatisfied customers.
Will they ship worldwide, or only to specific countries? You could be limiting your customer base without expanded shipping options.
How do they conduct quality control? Poor quality can lead to poor reviews.
Can you use their source material (photos, specs, product descriptions) in your listings? Professional-style images and descriptions can give a boost to your sales.

Once you’ve selected your suppliers, contact them. Let them know you’d like to become a retailer for their products and ask about their policies on dropshipping.

Step 2: Choose Your Products

This step may come before or after Step 1, depending on what you want your store to be. You might already have a specific product niche in mind, or you might need to conduct some research to determine what’s selling right now..

Here are some examples of the best items to dropship on eBay:

Printed Socks
Bluetooth Headphones
Organic Tea
Vaporizers and E-Cigarettes
Waterproof Bag
Sports Bra
Resistance Bands
Baby Carrier

For a full list of the best products to dropship on eBay, check out these dropshipping ideas we've researched for you.

Step 3: Set Up Your eBay Seller Account

Setting up your account takes just a few minutes, but there are some important steps that many online sellers overlook.

Pay attention to eBay’s seller information center, which contains useful links and guidelines for setting up your store.
Choose your account name wisely. Crude or offensive usernames might drive customers away (and violate eBay username policy), while clever or catchy names might lead to better sales.
eBay may require a tax ID for seller accounts. A quick Google search will tell you how to apply for a tax ID in your state, or you can see our article on how to get a tax ID.
Set up your payment method. These methods vary by country, but all U.S. sellers are required to have either a PayPal account or a merchant credit card account.
Set up your profile page with details about your shop and its policies, including shipping and return policies. Detailing your background and credentials can be useful for certain niche markets (electronics, makeup, etc.).

Step 4: Create Your Listings

Using the information provided by your supplier, create your eBay listings for each product. Factors such as pricing, timing and auction vs. Buy It Now can all be determined through a bit of product research on websites such as eBay, Amazon and other major online retailers.

Check out our free guide for optimizing your eBay listings.

Step 5: Manage and Maintain

Now that you’ve got your eBay listings, it’s time to make money!

Start building a positive reputation by fulfilling your orders as quickly as possible, and check in with your supplier on a weekly or even daily basis to make sure everything is running the way it should.

Remove listings for discontinued or out-of-stock items and replace them with new products regularly.

Respond to customer complaints and inquiries promptly and professionally, and do your best to create a positive experience that will build loyalty and encourage repeat customers.

Case Study: Using SaleHoo to Make Money on eBay with Dropshipping

Lyndon is just one of SaleHoo’s many success stories. Lyndon first tried using eBay to make money on his own, but he had a hard time finding success and originally gave it up to pursue full-time employment.

He later discovered SaleHoo and saw how others were successfully growing dropshipping businesses with the help of the company's lists of reputable suppliers and essential tools and dropshipping tips.

He decided to give the dropship model a go. Just three days later, he had made his first sale on eBay.

SaleHoo’s directory enabled Lyndon to find the suppliers he needed to get his business off the ground, and its dropshipping tools allowed him to identify and monitor sales trends that kept him ahead of the game.

He loves SaleHoo’s impeccable customer service and using the friendly members’ forum whenever he has questions. Lyndon has since branched out from eBay, but SaleHoo remains the core of his online business and his success.

Chris approached SaleHoo a little differently. Like some, Chris was skeptical of SaleHoo at first and its ability to help him successfully make money online. He started out selling old items on eBay for extra cash, but he needed a reliable resource to help him take his business to the next level.

After a bit of research, Chris decided to give SaleHoo a try.

Because he already worked full-time, Chris needed a tool that would streamline his process as a part-time online retailer and supplement his income substantially.

Now, says Chris, “I have a whole new perspective of eBay.” Chris uses SaleHoo’s online wholesale directory to find vendors that enable him to triple his investments selling on eBay in his free time.

Ready to create your own success story? SaleHoo offers an unmatched online directory of wholesale suppliers that will kick-start your home business.

You’ll also get access to our exclusive Market Research Labs that will help you discover the most profitable trending dropshipped products out there. Get started today and start making money with SaleHoo!

Read more: salehoo.com