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To drop ship or not to drop ship...that is the question. Selling on Ebay

Updated on February 4, 2013

The Good, The Bad, and the Ugly...

After a recent run of GREAT luck selling on Ebay, I have found that I am more excited by the thrill of the sale then the profit I am making. It is like a high to check my items and see bids on all of them. The more I sell and ship, the more I dig to find items that I can put up for auction. Just like a drug addict, I was finding it harder and harder to score and to get my fix. I am running out of items to sell and running out of the energy needed to scavenger my local goodwill to find profitable items. So, I began researching the fascinating world of DROP SHIPPERS.

Drop shipping is a simple way to start your own online business and work from home without a large amount of start-up money. With drop shipping, you will have a fully stocked store online. You never touch a piece of inventory nor do you pay for anything until its paid for by your customer. You achieve this by teaming up with a wholesaler who carries and ships items from their own inventory. You simply list their items for sale on your website or on popular auction sites. Once these items are SOLD, you transfer your order to the Wholesaler who then ships your item directly to the customer. This is typically done in a "private label" shipping manner so your customer has no idea that the item came from a large warehouse instead of your small home office!

Finding Your Drop Shipper:

As with anything in the technology era, you can use your search engine to find results for "Drop-Shippers". This search will result in MANY different companies all promising the lowest price wholesalers and even can provide options on managing your online store,website, or business. Some popular drop shippers are companies like Shopify, Doba, and Inventory Source. Each will link you to thousands of wholesalers providing hundreds of thousands of products. DOING YOUR HOMEWORK HERE IS VITAL TO YOUR SUCCESS. Some drop-ship websites will allow for Free Access to their collection of wholesalers and others will charge varying monthly fees based on services you select. Once on board, you browse a virtual mall of wholesalers and specifically select only the items you want to sell. Each wholesaler may have different terms (prices, shipping costs, terms, etc) so be sure to get all of the information up front.


THE GOOD

1. Low Start-up costs and a massive inventory : you have very little money involved and haven't paid for any inventory that will either fly off your shelf or collect dust on it!

2. Easy to execute: It has to be one of the easiest ways to build your e-commerce business! There are different ways to utilize the services of these drop shippers. With many drop-shippers, you can select your items, tell it what markup you want to list your items at, set shipping preference, etc. then its just a single click to upload inventory items to your online store. The drop shipper will handle everything else. This comes at a price so my suggestion is to start small. It is still easy to upload items for auction, transfer orders, and check your ebay, amazon, or other online auction account daily.

3. It works: It sounds too good to be true and in many respects, it is. You probably even buy items online from big-box retailers that are shipped by drop shipping services and you never know it! Thing about the last large order you placed online....did it all arrive at once?...did it all come from the same location???

4. Low Risk: If it doesn't work for you or you grow bored you don't have to liquidate inventory, sell your business, or even lose money. Worst case scenario is that you are out some of your time and a monthly fee or two depending on your business model.

The Bad:

1. Competition: It is public knowledge that drop shipping is easy to use therefore many e-commerce entrepreneurs are using them. This means you have to be on your game to get your item chosen over the other entrepreneurs. Being cheaper isn't always the answer! After all, you want to grow your business! Specify a niche that you are comfortable with instead of choosing items willy-nilly.

2. Low Profit Margin: Remember...it was so easy to start-up! Although you set your prices, you are at the mercy of your wholesalers on your item cost. Look for trusted wholesalers who have decent prices and who provide great customer service. Having these in place will cause excellent seller ratings and will allow you to concentrate on making money!

3. Oops....out of stock! Be sure to check your wholesalers inventory often. If they are out of a product, you will need to refund money and possibly be subject to a bad rating on your online auction site. This is probably the worst of the issues you can encounter but hopefully not common for you as you grow you online business. Using a third-party supplier also increases the possibility of human errors. Be realistic in what you offer to you customers! Under promise & Over Deliver!

THE UGLY

The easiest way to put it is that you aren't going to make a million dollars overnight. Sure, you can find people claiming to make thousands the first week of their business launch but remember that not everything on the internet is true. This WILL take work. You will need to promote your business through SEOs, Social Media Outlets, Friends and Family. You will need to establish a structure for how and when you work your online business. Its great to work in your pajamas but would you do business with an investment officer in pajamas and with unwashed hair..probably not. Treat this like an investment - Get to your computer READY TO WORK. You will make the best decisions and hopefully the most money when you are "at work" instead of in bed.

IF YOU HAVE DECIDED THAT AN E-COMMERCE BUSINESS IS FOR YOU, HERE ARE SOME TIPS

1. Research, Research, Research. - Find trusted and well respected wholesalers. Investigate their fees, turnaround times, and policies.

2. Make your items stand out- Instead of using the "stock photo" provided by the wholesaler, order one of each of your items and take your own picture. In many cases, you are competing online directly against your wholesaler!!!! This means that they are probably using the same auction listing as you as well as the same picture but offering the items at a lower cost!!! I know that this will result in money spent but you can always sell the item! Trust me, it will buy you some legitimacy in the long run.

3. Streamline your e-commerce store- Whatever you choose to sell -electronics, clothing, baby items, purses, or one of the other thousands of items available----stick to one genre! It will allow you to do better business because you are more aware of trends, profits, and your relationships with wholesalers.

I hope that the information provided has helped you to decide if you should choose a drop shipper or not. There are many successful companies using this method of doing business and also a long list of those who will steer you far away from the concept. Remember that at the end of the day, this is your business to operate. Do the homework, make the investment of time and effort, then make the decision that is right for you.

Good luck in your business ventures!

Have you ever used a drop-shipping service

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    • Mommymay profile image
      Author

      Heather May 4 years ago from Ohio

      Believe it or not...the Goodwill and thrift stores hold TREASURES! My best finds are purses, shoes, and workout apparel. Just today, I found a pair of shoes---in the original box ---that were at one time priced at $115!!! Today, my bargain price was just $3.99!!!! Have also purchased real Coach purses for $6.99. Buying this low results in a high profit BUT it involves a lot of trips to the thrift store and knowing which ones to go to! At the end of the day, this method of getting inventory is more for fun and the hunt!

    • Mommymay profile image
      Author

      Heather May 4 years ago from Ohio

      I am pretty new in my researching and in the whole "drop-shipping" business. I plan to share all that I learn along the way!

    • Mommymay profile image
      Author

      Heather May 4 years ago from Ohio

      Thank you and good luck on retiring early!!!! If you find a great wholesaler...share please!

    • KA Pederson profile image

      Kim Anne 4 years ago from Texas

      Very interesting. What were you selling from Goodwill? Voted up for useful!

    • KristenJennA profile image

      Kristen 4 years ago

      This is interesting. Thanks for the post. It sounds like something to look into and better for those that have the time to research and start it up. A nice summer job.

    • point2make profile image

      point2make 4 years ago

      A very good informative hub. I have been toying with the idea of "drop shipping" for a while now and your hub has reminded me that I need to start researching the idea. I would like to retire early and the internet offers endless possibilities....both good and bad. Drop shipping sounds very interesting. Thanks for the info. voted up.