How to start a drop-shipping business on eBay
Global e-commerce sales are expected to reach $4 trillion by 2020. So it’s no surprise that online sellers are increasingly turning to drop shipping to grow their businesses without overhead costs.
Drop shipping can save a lot of time, stress and money. Instead of storing the goods themselves, sellers act as a middleman, taking orders from customers and then placing wholesale orders with their suppliers.
There are extra steps required to make drop shipping run smoothly on eBay, but with the right approach, it can be an attractive option to anyone looking to start an e-commerce business.
What to sell and where to source it
If you’re set on starting a drop-shipping business but you’re not yet sure what to sell, take a look at what products are trending on eBay.
Source a supplier (Alibaba and Aliexpress are popular places to start with but eBay also offers a list of sourcing companies), crunch the numbers and see what products you think you can offer for a competitive rate on the eBay market.
When sourcing a supplier, due diligence is required, so don’t forget to research any company you’re considering doing business with before placing any major orders. While you’ll be the one placing the orders, it’s up to your supplier to follow through and fulfill them, so make sure you choose a reputable one.
Sample your goods
Reputation is everything when selling on eBay.
Drop-shippers often make the mistake of assuming a supplier’s goods are exactly as advertised and start to sell immediately. But if you take orders for products you haven’t seen, and your customers receive something different to your promotional materials, you’re setting yourself up for bad reviews.
Nothing kills an eBay business faster than receiving customer complaints early on, so always keep those buyers happy. Request a sample order from your supplier first to make sure that you’re happy with the quality of your future products.
Once orders start rolling in, don’t forget to ask for feedback from happy customers. Remember, positive reviews increase sales. xSellco helps increase your seller rating by sending smart, selective feedback requests that improve your brand reputation and grow your business. You can tailor your strategy to target orders by SKU, product type, on-time delivery, destination and more.
Carefully monitor profits
Though relatively easy to set up, a dropshipping business does require careful maintenance and attention to succeed.
You need to consider listing fees: after the first 50 listings, eBay begins to charge fees to list goods on the site. These vary depending on the type of product. Though they’re quite low, bear in mind that so are the profit margins on each product, and plan accordingly.
eBay sellers often use the auction feature to drive up prices, but drop-shipping businesses often offer products that are commonly available at a low price, making the auction feature a bit risky.
While it can be done, there’s also the possibility that goods will be bought at a low price that won’t cover your costs. All you can do in these cases is bite the bullet and fulfill the order, as an unfulfilled one will result in penalties that could result in eBay terminating your account. To avoid this problem entirely, you can either sell products at a fixed rate only or select a minimum auction price that at least covers your costs.
When dealing with suppliers you haven’t met and selling products you’re not personally handling, the risks are clear. It’s important to communicate clearly with your customers as well as your suppliers.
The feedback you receive on your goods isn’t just for the benefit of other customers—it’s a valuable tool that can help you understand your customer’s needs and grow your business accordingly. Are products being delivered in a timely fashion? Are customers getting what they expect in terms of design and quality?
The bottom line
Drop shipping on eBay requires a long-term approach where sales volume is the key to profit and great service is the key to sales.
As with anything for sale on eBay, sellers are responsible for both the item and their buyer’s satisfaction. If there’s a problem, it’s up to you to resolve it, not the supplier. That’s why it’s important to work with a reliable sourcing company to avoid any issues in the first place.
Keep your finger on the pulse at all times, respond to customers quickly (using an e-commerce help desk is key) and you will be well on your way to running a successful drop-shipping business.
Provide exceptional customer service today
Try xSellco free for 14 days. No credit card needed.