A database of more than 80 million registered users often makes one wonder what eBay has to offer that makes it popular for both buyers and sellers. The answer really is simple. eBay provides buyers with a wide array of products that are hard to find in their locality while providing sellers (new and established) with various opportunities to earn money.
There are really different ways to earn money on eBay. Manufacturers and retailers alike can sell their products online. And more recently, people who do not really have products to sell can also make money on eBay. How do they do it? Drop shipping is the key.
What is drop shipping and how come it is popular among eBay sellers particularly the newbies?
Drop shipment or drop shipping is a process of selling a product that the seller does not own nor does it exist in his product inventory or stock. The product is actually owned and kept in stock by a wholesaler or manufacturer — the drop shipper. If a customer orders a product from the seller, the seller forwards the order and shipment details to the drop shipper, who in turn directly ships the product to the customer.
How does the seller actually profit from this set up?
The product is advertised with a retail price that could be significantly different from the wholesale price (as provided by the drop shipper to the seller). The difference between the retail and the wholesale price of the item then goes to the seller.
More recently, drop shipping is increasing popularity in eBay for several reasons. The most popular reasons include:
Reduced Stock Cost
The seller gets huge savings on inventory cost since they do not need to actually purchase and keep the product that they wish to sell. The seller also does not need to spend money for obtaining the product from the wholesaler, packing the product then shipping it out to the customer.
Simplicity Of the Drop Shipper
Drop shippers normally do not mind if the product ordered from them is labeled with their particular brand name. This allows the seller to claim ownership of the product hence the customers are usually unaware that the product did not really originate from the seller.
Interesting isn’t it? Now you know why most eBay sellers are being drawn to this set up particularly the newbies. Unfortunately, for every advantage there is bound to be a disadvantage. Take a look and see if drop shipping is really worth the effort.
Drop Shipping And Its Drawbacks
As with any selling method, drop shipping does have its own drawbacks. Some even consider the drawbacks so much more than the advantages.
You will definitely save a lot if you do not need to maintain an inventory of the products you sell. However, if you do sell a product that is out of stock, it could result to complaints and even a negative feedback. No matter how much you try to prevent this from happening, you really have no knowledge of the current status of stocks when you use drop shipping.
The customer is literally unaware that you are not responsible for shipping out the product. As it is you are prone to complaints whenever a problem arises that result to a delay in shipping, which means another negative feedback from an unsatisfied customer.
Returning Defective Items
Normally a retailer simply returns a product that is found defective to the wholesaler and gets a new one in exchange. However, for drop shipped items, you either shoulder the refund or receive a negative feedback should you choose not to give a refund since the buyer will ship the item back to you and not to the wholesaler.
This is usually identified as the biggest drawback for drop shipping. Since you act as a middle man for the product, you cannot afford to sell it at a low price even though you want to. Hence you are less competitive than the other sellers on eBay.
Selling in eBay using drop shipping has numerous advantages. However, a closer look show that drop shipping has more than its fair share of drawbacks. But then you ask yourself “what selling method does not have a drawback?”
Essentially, drop shipping does offer you an easy way to get your eBay business jumpstarted. But you must also be aware that this could also bring your business to a standstill because of the negative feedback that you’ll be getting. Really want to be successful in making money on eBay? Better forget about signing up for the drop shipping method.
Filed under: Ebay Business