What is eBay Dropshipping and is it worth it?

Please check our latest article on dropshipping.

With dropshipping on eBay, an e-commerce retailer sells products on their eBay store without first owning them. The contracted dropshipping supplier is responsible for storage, packaging, and shipping. Due to the lower investment risk, dropshipping on eBay is particularly suitable for beginners with little start-up capital. IN this article we explain how eBay dropshipping works, what you should consider, and what advantages and disadvantages there are.

Contents:

1. What is eBay Dropshipping?
2. Is eBay Dropshipping legal?
3. How does Dropshipping work on eBay?
4. What are the advantages and disadvantages of Dropshipping on eBay?
5. Building a successful eBay Dropshipping – 10 tips
6. Conclusion: Is Dropshipping on eBay worth it?

What is eBay Dropshipping?

Dropshipping – also known as drop shipping, direct selling or fulfillment – is a concept in E-commerce. The special feature: You can sell products without owning or storing them yourself. A dropshipping provider takes care of the fulfillment.

As a seller, you only acquire goods once you have sold them to a customer via your online shop. The products remain with the supplier until they are sold. The supplier is also responsible for the subsequent shipping – either in a neutral form or even in such a way that your customer gets the impression that the goods are being shipped directly by you as a seller.

Dropshipping is therefore a good opportunity to offer your own products without having to bear the risk of high investment costs yourself. As a retailer, you can not only avoid the risk of bad or unsaleable products but also minimize the costs for storage, packaging, and shipping of the goods – because your dropshipping supplier takes care of this fulfillment.

If you want to use the concept of dropshipping, you can choose from various options. Typical is dropshipping via your own online shop. However, there is also the option of using existing e-commerce platforms. Two online marketplaces, in particular, stand out here: Both eBay and Amazon enable sellers to offer their products via dropshipping. Both have an enormous range compared to your own shop, which you first have to make known through search engine marketing or other advertising.

Compared to Amazon dropshipping, sellers on eBay can list their products with an initial offer. The lower this starting bid is, the more likely it is that interested customers will bid on the product. The seller, in turn, sets a fixed number of days after which the highest bid is finally accepted. Alternatively, as a seller, you also have the option on eBay to offer your products at a fixed price under a “Buy It Now” option.

Whether eBay, Amazon, or your own online shop: The concept of dropshipping is basically the same. Since the goods offered are not in your own warehouse, but with your dropshipping supplier, who also takes care of the packaging and shipping of the orders, you as the seller take on a kind of mediator role. As a seller, you are responsible for ensuring that customers find your products on eBay, click on them and buy them through your eBay shop.

Is eBay Dropshipping legal?

eBay allows dropshipping on its platform. However, there are obstacles for sellers if they want to offer and sell products on the platform via dropshipping. Nevertheless, if you know these points and stick to them, eBay can be a great way for you to successfully sell products online.

If you want to use dropshipping on eBay, you should consider the following:

• As a seller, you must guarantee delivery of the goods within 30 days of the end of the listing.
• You may only purchase your products from one manufacturer or wholesaler.
• Orders must be processed directly by a wholesale supplier.

What you are not allowed to do is resell products from another retailer or a platform like Amazon or AliExpress in your eBay store. As long as you follow eBay’s direct shipping guidelines, dropshipping on the platform is not a problem and is completely legal. Furthermore, you must of course comply with the applicable VAT regulations. hellotax will help you with this!

How does dropshipping work on eBay?

Have you decided on the dropshipping model on eBay? Then let’s go! The good thing is that anyone with a seller account can start dropshipping on eBay. You can find out exactly how eBay dropshipping works in the following step-by-step instructions.

Step 1: Set up a seller account on eBay

In order to sell on eBay, you first need a commercial seller account. You get this by registering as a seller on eBay. It usually only takes a few minutes to set up a seller account on eBay. To make things even easier, we have summarized a few tips for you:

• Choose a unique and memorable account name for greater recognition by your customers.
• Check whether you have already registered a business with the tax office – this is required to legally sell products via dropshipping on eBay.
• In this context, eBay usually requires a tax ID for the sales account – you can also get this from your tax office. Company type and address, legal form and telephone number must also be specified.
• Choose your payment methods wisely – the more options you can offer, the better for your customers and therefore for you as a seller.
• Formulate your profile page with seller details and terms and conditions – the guidelines for shipping and returns also belong there.
• In order to receive payouts, you still need to link your bank account to your eBay account.

It is important that you create a commercial eBay account if you wish to sell products on the platform. If you already have a personal account on eBay, you can also upgrade it to a commercial seller account. This has the advantage that positive reviews of past private sales are retained. Once you have entered all the required information, you can have your account verified.

Step 2: Choose the right products

Maybe you already know which items you want to sell. If not, now is the right time to decide on a suitable product. Our tip: Research a product niche with high demand and low competition. You should also make sure that the purchase price of the items allows you a sufficiently high profit margin.

Some of the top-selling products on eBay in 2022 include:

• Jigsaw puzzles
• Lego toys
• Painting equipment and accessories
• Webcams
• Laptop docking stations and power adapters
• Wireless routers and mobile hotspots

Housewares, home and garden products, and sports and outdoor gear can also be suitable for dropshipping on eBay.

Step 3: Find your supplier

Once you have decided on a product or a product category, you can start looking for a supplier who offers these products. It is important for the success of your e-commerce business that you choose your supplier carefully. Since delivery times, packaging and shipping are not your responsibility, you cannot influence these points. It is, therefore, all the more important that you can really rely on your supplier.

When choosing a suitable supplier, the following considerations can help you:

• Check the shipping options – is there an option for express shipping?
• What guaranteed delivery times can the supplier offer you?
• Do you ship worldwide or only to certain countries?
• Are the goods checked for quality before shipment?
• Is it possible to use (professional) photos and product descriptions from the supplier for your own listings on eBay?

A reliable supplier not only ensures that your products are shipped quickly but also informs you about the status of your orders and possible delivery problems so that you can inform your customers in good time in the event of delays.

Once you have found a dropshipping supplier, you should compare both their prices and the products themselves with those of the competition. On the one hand, you can find out whether your profit margin is sufficient – and on the other hand, you can check the promised delivery times and the quality of the goods by means of test orders.

Attention: Many sellers use suppliers and manufacturers from East Asia for dropshipping. The products are particularly cheap, which maximizes your profit margin. However, you should also take into account the long delivery times of three to four weeks. Remember: On eBay you have to be able to guarantee that your products will reach the customer within 30 days.

4th step: Create an offer

Once you have found a suitable supplier for your desired products, you can create an offer for the item on eBay. Think carefully about the sales options under which you want to offer your products.

If you want to be sure that you make your desired profit, it makes sense to list goods with the Buy It Now option or at a minimum price. This allows you to benefit from fixed listing fees, which eBay often charges at a lower rate than a single or multi-item listing would cost you. Your profit margin not only deducts the costs for your supplier, but also the fees estimated by eBay.

In addition, you should definitely check the availability of your offered items – nothing is worse for your business than delivery bottlenecks. If your customers cannot order the goods they want, this can quickly lead to frustrating reviews. You can prevent this by regularly checking your supplier’s stock levels. This allows you to remove items that are only available in small quantities from your eBay shop in good time.

Step 5: Sell your product

Once you have created and published your offer, you can start selling. As soon as a customer buys the item on eBay and the order is completed, you contact your supplier, pay the product price and forward the order data including the buyer’s address to them.

To ensure that everything is done to your satisfaction and that of your customers, you should contact your supplier regularly – this way you will also find out in good time when stocks are running low or new top-selling items arrive.

Step 6: Supplier ships the product

After the purchase, your supplier ships the item to your customer. Thanks to dropshipping, you don’t have to worry about storage, packaging, or shipping.

What are the advantages and disadvantages of Dropshipping on eBay?

Dropshipping through a platform like eBay is a good option, especially for e-commerce beginners, to offer and sell products online. In addition to many advantages, eBay dropshipping also has some disadvantages that you should know about.

Pros – eBay Dropshipping

Dropshipping with eBay offers you a promising and almost risk-free opportunity to set up your own online shop and sell products online. Here are five key benefits:

Get started with little seed capital

One of the biggest advantages of an eBay dropshipping shop is that you can start your business without large seed capital. You offer your products very easily in your eBay shop. Only when you sell a product do you order the item from your dropshipping supplier and pay the price of the goods. Your supplier then takes care of packaging and shipping.

Since you don’t have your own stock, the investment costs are low. Without the cost of your own warehouse or staff for shipping, your main expenses are made up of purchasing the goods, advertising, and sales fees.

Start selling quickly and easily

Dropshipping with eBay allows you to start selling quickly and easily – all you need is a seller account on eBay and a reliable supplier to package and ship your products on your behalf.

Since eBay provides you with all the functions of the platform, you don’t have to set up your own shop and then take care of its maintenance. eBay Dropshipping, therefore, has the decisive advantage that you can concentrate on what makes your business special: Selling good products at good prices and offering your customers an excellent shopping experience.

Large potential audience

eBay is one of the big players in e-commerce. The auction platform has 16.5 million active buyers in Germany alone and has consistently secured second place in the ranking of the most popular mail-order companies and mail order providers in recent years.

For you as a seller, this means that you can benefit from an enormously large potential target group – without first having to invest in marketing measures to make your shop visible and generate reach. A target audience of millions is already waiting for you on eBay.

Low Marketing Spend

If you opt for dropshipping via eBay instead of your own online shop, you can save significantly on your marketing expenses. You have to make your own shop known first. SEO and SEA measures cost money and time.

Countless potential customers are already waiting on eBay. Thanks to the enormous reach and presence of the platform, you as a seller can usually look forward to the first sales after a short time.

Flexible growth with low risk

Dropshipping via eBay allows you to start your own business with a comparatively low financial risk. Since you don’t have your own stocks and don’t have to worry about packaging and shipping your products, you can simply try out the dropshipping model without any obligations and at your own pace.

If your eBay shop is doing well, you benefit directly from it – without suddenly being up to your neck in time-consuming and cost-intensive additional work. Your supplier does the work. For example, if you want to set up your own mainstay in the form of an online shop alongside your main job, eBay dropshipping is a good option.

Cons – eBay Dropshipping

After all this good news, now the bad news: eBay dropshipping not only has advantages but also some weaknesses. Before you start dropshipping on eBay, you should be aware of the following disadvantages.

High dependence on eBay

If you opt for dropshipping via eBay, you should be aware that not only will you benefit from the platform, but the platform will benefit from you as well. In plain language, this means: After the first 50 free products, eBay charges fees for listing items. If you have sold one of your items, you must pay 10% of the sales price to the company.

You should also make sure that you comply with applicable eBay policies. Too much negative feedback on your sales, for example, means that the platform ranks your shop worse than your competition. In extreme cases, it can even happen that eBay blocks your seller account. It doesn’t matter whether the negative feedback was justified at all. Dissatisfied customers can quickly jeopardize the success of your shop. Of course, this can also happen to you with your own online shop.

No long-term customer loyalty

In contrast to your own online shop, you will not achieve long-term customer loyalty with an eBay shop. In fact, when you dropship on eBay, you don’t actually have any customers of your own, but rather help eBay to grow its own brand more and more. The opportunities to market your own shop are limited.

Excellent customer service is therefore essential in order to increase your recognition value and encourage customers to make repeat purchases. This is still in your hands even with dropshipping via eBay. Process your customers’ orders immediately and respond to inquiries and complaints promptly and professionally. It is immensely important to offer your customers a positive shopping experience – because only with a good reputation can you succeed in distinguishing yourself.

High competition

Do you want to get off to a flying start with dropshipping on eBay? Before you get started, you should be aware of your competition. Since eBay has comparatively low requirements for its dropshipping sellers, there is high competition on the platform. Not only do you compete for customers with other dropshipping sellers, but also with private individuals and traditional retailers with their own inventory.

If you want to assert yourself with your shop against competitors, you can often only stand out through the price – unless you sell a really unique product. This can mean that you have to keep lowering your prices to attract potential buyers. Whether dropshipping on eBay is still worthwhile for you depends on your profit margin. Therefore, take enough time in advance to carefully calculate your prices.

Building a successful eBay dropshipping shop – 10 tips

Do you want to be permanently successful with dropshipping on eBay? We’ll show you 10 tips to help you get off to a good start with your online shop.

1. Strive for excellent customer service because most customers buy on eBay from retailers with a high number of positive reviews.
2. Find the right product through thorough research, for example in consumer forums and based on customer opinions.
3. Don’t just focus on one product, offer multiple items in your eBay store right from the start.
4. Streamline your work processes by finding products to sell as a bundle of multiple items and setting a longer duration for listings.
5. Find a trustworthy supplier – and change your supplier if they don’t meet delivery times or quality standards.
6. Check your purchasing and trading structures regularly, e.g. by checking whether your supplier still has the most favorable offers for you.
7. Buy your products at the source and avoid buying from resellers and middlemen to save costs.
8. Ensure the consistent quality of the products you offer and check them by placing test orders with your suppliers.
9. Use tools like Google Trends, baywotch, or terapeak to track down product trends and evaluate sales developments and figures on eBay.
10. Check your prices regularly and calculate carefully in order to still make high profits with the low margins on eBay.

Conclusion: Is dropshipping on eBay worth it?

If you decide to use dropshipping as a sales form, you can save yourself a lot of problems that conventional retailers have to deal with. Whether dropshipping on eBay is also worthwhile for you as a seller cannot be answered across the board – that depends on what you want to achieve with your shop.

If you would like to earn a little extra on the side, dropshipping on eBay can be a suitable option with its comparatively low requirements and investment costs. You do not have to worry about setting up and maintaining your own online shop, nor are you responsible for the subsequent shipping after the sale of your products. You don’t have to store the goods in your own warehouse and you also save on marketing and advertising costs because you can already fall back on a large potential customer base.

On the other hand, if you want to build your own brand with high profit margins in the long term, dropshipping via eBay is not the right choice. To be successful on eBay, you need to generate high sales volume each month to make up for the low profit margins. Selling fees aside, you’re also less likely to develop a real, long-term relationship with your customers and brand a brand. In this case, your own dropshipping shop can be more worthwhile for you.

Whether you want your own dropshipping shop or dropshipping with eBay – hellotax has the perfect solution for you. With our self-developed VAT automation software, we support you in your e-commerce business and ensure that issues such as VAT compliance, delivery thresholds and correct VAT returns do not cause you any headaches.

Our VAT software gives you a comprehensive overview of your business. After you have integrated your sales channels, the software takes over the verification of your data, records and sorts all your transactions, documents shipments, and monitors limits and goods movements. All relevant information is summarized on your dashboard, so you always have full control over your sales, goods movements, and registrations.

With us, tax and VAT registrations and VAT returns are all done by themselves. And best of all: using the hellotax VAT automation software is completely free.