5 REASONS FOR NOT USE eBAY DROPSHIPPING
by John freech
#1 - Drop Shipping Does Not Work on eBay
#2 - Profit Margin is Below $0
#3 - Direct from the Source Competition
#4 - PayPal Will Hold Your Funds
#5 - Out of Stock Equals Bad Feedback
Actually I see some people asking me why drop shipping is not good for eBay and every day I give them the same list of five reasons. So, I thought I would post it as an article so everyone can learn. Here are the 5 reasons eBay sellers should avoid drop shipping (in reverse order).
#5 - Out of Stock Equals Bad Feedback
Drop shippers often run out-of-stock on popular items. This means that after you sell the item on eBay and then go to your supplier to have the item drop shipped you learn that the item is not in stock. You then have to tell your buyer the bad news and will usually get some bad feedback in return. The eBay forums are filled with sellers who have been destroyed by the bad feedback they received by trying drop shipping. They are also filled with complaints from buyers who did not receive the item they ordered because the seller was using a drop shipper -- and after the sale informed the buyer that the item was not available.
#4 - PayPal Will Hold Your Funds
About a year ago, in January of 2008, eBay and PayPal issued some new policies. One of which is to put a HOLD on funds. Here is the quote from eBay's policy:
"In a small percentage of cases where it has been determined the risk of dissatisfied buyers is higher, PayPal may delay release of the payment funds to the seller until the buyer has left a positive feedback or 21 days have passed without a dispute, claim, chargeback or reversal filed on that transaction."
Any new eBay seller who tries using drop shipping as a method for sourcing their products will find that they cannot access their funds until after the product has arrived at their customer's door. This eliminates one of the most appealing aspects of drop shipping - the ability to sell a product and THEN use the buyer's payment to fund the purchase. With PayPal holding your money for 21 days this will not be possible.
#3 - Direct from the Source Competition
This is a relatively new phenomenon that has come about by the recent explosion of "direct from China" drop shippers. Simply put, this means that many of these drop shipping companies are actually selling the items on eBay directly themselves. They are "double dipping". While they provide a website that will drop ship products to your eBay customers direct from China, they are also selling the same products on eBay themselves. To witness this one only needs to look in the electronics category on eBay. Many of the listings have the item location show Hong Kong or some other location in China. Yes, the drop shippers themselves are competing with their customers.
#2 - Profit Margin is Below $0
That is not an error. The profit margin you will face when using drop shipping to sell on eBay is most often zero. Nothing. Nada. In fact, most people who first try using a drop shipper to supply their eBay products end up getting frustrated and crying "the price my drop shipper is selling the product for is MORE than the price the product is selling for on eBay." And they are correct. You see wholesale is all about buying in quantity. When you use drop shipping you are buying just one of an item and cannot expect a wholesale price.
Now why paying a bit more for an item may not be a big deal if you're selling it for top dollar at your local store, it is a HUGE deal when trying to sell on eBay. eBay is a place people go to get a deal. They do not want to pay full retail price, and chances are they can find the item at a rock bottom price if they just look around eBay for a bit. Because even if you cannot sell an item for the lowest possible price (because you are using drop shipping), there are thousands of other eBay sellers who can. So it is true. The price you get from your drop ship supplier will often be more than the product sells for on eBay.
#1 - Drop Shipping Does Not Work on eBay
Considering the other four reasons not to use drop shipping when selling on eBay this might seem obvious. And it should be! The bottom line is that drop shipping and eBay are a toxic combination. While eBay is the place to sell products to people who want a deal, drop shipping is the way to buy products at the highest possible "wholesale" price. And, while your drop shipper may offer thousands of products -- they probably have thousands of clients like yourself who are also listing the items on eBay. It simply doesn't work.
OK... Before you get all mad, let me add that drop shipping can (CAN, not DOES) work on eBay if you have spent a long time establishing a rapport with a wholesaler who is then willing to give you a true wholesale price on items that they agree to drop ship. This however will take time and also you will need to make some larger purchases from that wholesaler first to show that you can sell in the volume required to make it worth the wholesaler's while to drop ship for you.
Well, I hope I have convinced you to stay away from drop shipping when it comes to selling on eBay. For more information on why drop shipping on eBay is a bad business decision you can visit www.DropShippingSucks.com (yes, Drop Shipping Sucks) and read the page.
That's all for now and remember the age-old wisdom. If it sounds too good to be true, it usually is. This is definitely the case when it comes to eBay and drop shipping. .
No comments:
Post a Comment