Dropshipping Will not Make you Money on Ebay
If you are considering using dropshipping to supply your eBay auctions with products then this article might change your mind and send you in the right direction…
dropshipping is terrible for eBay businesses!
What is dropshipping? Dropshipping is a method of buying-and-selling that requires very little money upfront and very little effort. In theory.
Here is how dropshipping works on eBay.
You look through a dropshipper’s catalog to find products you want to sell on eBay. Then, you post the products as auctions or buy it now listings on eBay. If the product sells, you collect the payment from the buyer and forward the order on to the dropshipper, using your eBay customer’s payment to fund the transaction. The dropshipper then send the product directly to your eBay customer.
The money you have left is your profit.
The profit is the difference in price between what you pay the dropshipper and what you sell the product for on eBay. So if your dropshipper sells the Nintendo Wii for $230 and you sell it on eBay for $250 have $20 in profit. However, to determine your actual profit you need to include and deduct your eBay fees, PayPal fees, etc. So your final profit is under $20 using the example given.
Why is dropshipping bad for my eBay business? Let me start by saying “bad” is an understatement. Dropshipping is not bad, it is deadly. Dropshipping makes no sense in the eBay marketplace… Just think about it!
Dropshipping is based on the concept that you can get just one of an item and pay near wholesale price. But if you just think about it, that doesn’t make any sense. If we look at how the wholesale industry works it will be obvious.
The wholesale industry works on quantity. Wholesale is all about bulk. When a huge company, such as Wal*Mart, places an order it is in huge quantity (to fill all of their stores). I’ll make you an example using dvd players…
Wal*Mart wants to order 5000 ZIP-ZAM DVD PLAYERS which retail for $105 each. Wal*Mart plans to sell them for a little under retail at $98 each. So, they contact their wholesale distributor who offers them a price of $86 each. Wal*Mart places the order and everyone is happy. But…
Using dropshipping you cannot expect to get that DVD player for anywhere near $86. The distributor offered Wal*Mart the $86 price because of the quantity they were agreeing to purchase. At the $86 price the distributor is only profiting $5 per DVD player. But that is ok. One sale of 5000 units to Wal*Mart is $25,000 in profit. But you want just one, and a $5 profit sale is not going to do.