eBay dropshipping: Why it may not be worth it

If you’re looking to start earning an income online, the chances are you’ve heard of dropshipping. Because dropshipping involves a relatively low upfront investment it’s a popular ecommerce model - although this also makes it a competitive one.

Making dropshipping work for you means finding the right online space to connect with your customers. You can start your own ecommerce store, or choose to work through an existing platform or marketplace.

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This guide covers all you need to know about dropshipping on eBay, including the pros and cons, and a few alternatives to consider to find the right model for you. We’ll also touch on Wise as a smart way to protect your profits when working with international platforms, customers and suppliers.

A quick note: While this article is written for our Singapore blog, all of the advice and basics are true for wherever you are in the world. Read on.

Table of contents:
What is eBay? Dropshipping on eBay: step by step eBay dropshipping policy Dropshipping on eBay from Aliexpress Dropshipping from Amazon to eBay How to save money and cut currency conversion fees Withdrawing money from overseas payment platforms Dropshipping with eBay: Pros and Cons eBay dropshipping alternatives

What is eBay?

eBay was founded in the US in 1995, and these days is one of the world’s largest online auction sites. You can buy or sell more or less anything on eBay, with regular retail sales, business to business transactions and wholesalers all operating across an astounding range of product categories.

Both new and old can be found on eBay, with vintage goods lined up against shiny new electronics, and preloved fashion next to the latest homewares. However, 80% of the items sold on eBay are new¹ - pointing to the importance of this as a commercial sales platform, as well as a place to sell unwanted goods after a closet clearout.

One of the great things about eBay as a customer - and as a prospective dropshipper - is the sheer size of the platform. eBay has 182 million users - and a staggering 1.3 billion product listings. This makes it a great place to find even the quirkiest of items - and an obvious place for dropshippers to try to connect with customers.

Unfortunately dropshipping on eBay is not easy. After receiving customer complaints about poor experiences with dropship firms, eBay has tightened the rules about dropshipping significantly. These days there are only a limited number of ways you can operate through the platform - although it can still be a viable route for some entrepreneurs.

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Dropshipping on eBay: step by step

Dropshipping is a model of ecommerce in which the seller does not need to invest in advance in inventory, or worry about storing and shipping stock. Instead, they work with suppliers and wholesalers to have items shipped directly to customers once a sale is made. The seller gets paid retail price by the customer, and pays the wholesaler the pre agreed wholesale cost - keeping the difference as profit.

When done well, dropshipping can be a great way for entrepreneurs to build an online business. Instead of trying to manage every element of the ecommerce journey, they can remain focused on the customer experience, and leave the administration to the wholesale supplier they work with.

Let’s take a look at how eBay dropshipping would work:

• Open an eBay seller account or set up an eBay store if you’d prefer
• List your products online, including high quality images and descriptions to make sure they really stand out of the crowd
• When a customer buys, you pass the order to your wholesaler, who ships the item directly

However, as we’ll cover in a moment, dropshipping on eBay isn’t quite so simple, thanks to a set of restrictive policies. These can mean it’s hard to find a supplier who can work within the rules - and there are strict penalties if you don’t comply. We’ll take a look at these in a moment - and also cover some alternative ways to get started in dropshipping if you decide eBay is not the platform for you.

💼 Case Study: Learn how online marketplace Novelship saves around $20,000 and 20 hours a month by using Wise Business to pay overseas suppliers

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eBay dropshipping policy

eBay has very strict rules in relation to dropshipping. These exist to make sure that customers get a good experience, after complaints and issues with poor dropshipping companies.

The main limitation is that dropshipping through another retailer or marketplace is not allowed on eBay². That means you can’t work on eBay in the same way you might on other platforms or through your own online store.

Dropshipping directly from a wholesale supplier is possible on eBay. However, you’re still fully responsible for the safe delivery of the product, and for making sure your customer is happy with it. That means, for example, that you’ll need to find a supplier who can pack and ship your items and include a return label in your name, so you can handle customer returns and issues.

If you are found to be breaking the rules you may find your listings are ended, demoted or your account cancelled. You’ll still have to pay any fees you owe for listing items.

Dropshipping on eBay from Aliexpress

Aliexpress is a marketplace - and as such you can not dropship directly from Aliexpress on eBay. If you’re found to be dropshipping on eBay from Aliexpress you’re likely to have your listings demoted or removed, or even have your eBay seller account closed entirely.

Dropshipping from Amazon to eBay

Dropshipping from Amazon is against eBay rules.

In fact, one example cited to show why eBay had brought in their own policies talks about customers buying on eBay through a dropship company, and receiving products directly from Amazon, complete with Amazon packaging. This is understandably disappointing and confusing for the customer - and compounded by the fact that the parcels also contained the pricing information which shows exactly how much the supplier was paid for the goods in the first place.

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Protect your profits when selling overseas with Wise

Dropshipping is a competitive business. If you’re selling on eBay you’re likely to be competing with other dropship firms which work with the exact same suppliers you do. Pricing your items well is crucial to make sure you can attract the customer’s attention, while still making a profit.

One smart and simple way to protect your profit margins is to use Wise when working in overseas markets. Wise accounts can hold dozens of different currencies - which you can then switch back to your home currency whenever you want to, using the real mid-market exchange rate with no markup.

This way you’ll avoid the higher fees that different selling platforms and payment gateways levy on sellers.

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Withdrawing money from overseas payment platforms

If you want to sell on a platform which requires local account details (such as a local US dollar account for US) for a specific market, you can use a Wise multi-currency account to get set up. Wise allows you to get local bank details for:

• Australia
• Hungary
• New Zealand
• Romania
• Singapore
• The Eurozone,
• United Kingdom
• United States

Another way a multi-currency account with bank details comes in handy, is when you’re looking to withdraw money from a payment gateway such as Stripe.

This can work out significantly cheaper than using your regular bank or relying on the platform’s own currency conversion service.

See if you can save with Wise

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Dropshipping with eBay: Pros and Cons

So - the million dollar question - is dropshipping with eBay worth it?

There are definite pros and cons to dropshipping on eBay. Whether the balance falls in favour of giving it a go depends a lot on your personal preferences, as well as the suppliers you’ve found and how much you trust them.

It’s also not necessarily a binary decision - you could always try selling a few products on eBay alongside an alternative approach like the ones we outline below, to see which works best for you.

Here are a few things to think about when weighing up the decision:

Advantages of dropshipping on eBay

• Dropshipping is a flexible and scalable model suited to beginners as well as more experienced entrepreneurs
• Low upfront investment needed which lowers barriers to entry
• eBay’s huge user base means your products will be in front of millions of customers right from the moment you get started
• You can use eBay as a testing ground to see what products work - and then start to use your own ecommerce site to sell the most successful items, avoiding eBay’s fees
• There’s a lot of research and data available to help you figure out what sells on eBay, to make product selection easier

Disadvantages of dropshipping on eBay

• eBay has strict regulations about what can and can not be done on the platform. Get it wrong and you may find your account is closed down - and you’ll still be liable for any fees you’ve accumulated
• You might struggle to find a supplier which can work within eBay’s tight rules
• Some wholesalers will require you to pay upfront for stock, at least when you first start working together
• You’re fully responsible for customer experience, service and returns - so you need to trust your suppliers to do a great job with the logistics
• There’s no way to keep in touch with your customers for follow up marketing

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eBay dropshipping alternatives

Of course, eBay isn’t your only option when it comes to building your dropship business. Before you get started it is well worth comparing a few options, to make sure eBay is the right one for you. You might find that you can create a bigger profit overall - with fewer restrictions and rules to work with - by choosing a different approach.

Create your own ecommerce store

By creating your own ecommerce store you have complete freedom to build your brand, from the look and feel of your site through to the customer experience and follow up marketing. This scope is great for creative entrepreneurs - but also comes with a lot of responsibility.

You can make it easier to get started by using a platform like Shopify to build your site, or using a Wordpress site with a Woocommerce plugin. With tools like these you don’t need to have particular technical or coding ability to set up your store. That leaves you with more time to spend researching your customers and products, and building a strong brand.

One big advantage of working from your own store is that you won’t be paying any listing or sale fees to other platforms. However, you do need to find smart ways to make sure your site is visible to your customers to drive business.

Try a different platform

Another alternative to consider is to simply choose a different platform such as Amazon. Amazon does allow dropshipping under some circumstances, and also has the Fulfilled by Amazon - FBA - service which works in a similar way to dropshipping.

This can be a relatively simple way to test the waters when it comes to dropshipping, and you’ll know you’re working within Amazon’s rules. However, there are fees to pay which can make margins tight. Learn more about dropshipping on Amazon here.

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No matter how you choose to proceed, dropshipping is a popular business model which is here to stay. The low barriers to entry make it a great way to get started in ecommerce, either as a side hustle, or to build a full time business.

If you’re just starting out it’s important to weigh up different approaches to dropshipping to find the ones which will work best for you. Different routes may suit you depending on your levels of experience and how much time you’re planning on investing into the business.

Because of the complexities and rules involved, dropshipping on eBay isn’t for everyone. You may decide that there are simpler ways to launch your ecommerce career using an alternative platform or your own site.

Once you’ve done your research and chosen your preferred approach, make sure you also check out Wise Business as a smart way to keep down the costs of buying and selling overseas.

You’ll be able to connect to a global customer base more easily and receive payments in a range of currencies to please your clients - then withdraw back to your Wise account and switch to SGD using the real mid-market exchange rate. You spend less on bank fees and currency costs - and get to keep more of your profits for yourself.

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Sources:

1. Oberlo - 10 eBay Statistics You Need to Know in 2020 [Infographic]
2. eBay - Drop shipping and product sourcing

Sources checked on 13 November 2020