5 Reasons to Avoid Dropshipping When Selling on eBay

Every day I get people asking me why dropshipping is not good for eBay and every day I give them the same list of five reasons. So, I thought I would post it as an article so everyone can learn. Here are the 5 reasons eBay sellers should avoid dropshipping (in reverse order).

#5 – Out of Stock Equals Bad Feedback

Dropshippers often run out-of-stock on popular items. This means that after you sell the item on eBay and then go to your supplier to have the item dropshipped you learn that the item is not in stock. You then have to tell your buyer the bad news and will usually get some bad feedback in return. The eBay forums are filled with sellers who have been destroyed by the bad feedback they received by trying dropshipping. They are also filled with complaints from buyers who did not receive the item they ordered because the seller was using a dropshipper — and after the sale informed the buyer that the item was not available.

#4 – PayPal Will Hold Your Funds

About a year ago, in January of 2008, eBay and PayPal issued some new policies. One of which is to put a HOLD on funds. Here is the quote from eBay`s policy:

\”In a small percentage of cases where it has been determined the risk of dissatisfied buyers is higher, PayPal may delay release of the payment funds to the seller until the buyer has left a positive feedback or 21 days have passed without a dispute, claim, chargeback or reversal filed on that transaction.\”

Any new eBay seller who tries using dropshipping as a method for sourcing their products will find that they cannot access their funds until after the product has arrived at their customer`s door. This eliminates one of the most appealing aspects of dropshipping – the ability to sell a product and THEN use the buyer`s payment to fund the purchase. With PayPal holding your money for 21 days this will not be possible.

#3 – Direct from the Source Competition

This is a relatively new phenomenon that has come about by the recent explosion of \”direct from China\” dropshippers. Simply put, this means that many of these dropshipping companies are actually selling the items on eBay directly themselves. They are \”double dipping\”. While they provide a website that will dropship products to your eBay customers direct from China, they are also selling the same products on eBay themselves. To witness this one only needs to look in the electronics category on eBay. Many of the listings have the item location show Hong Kong or some other location in China. Yes, the dropshippers themselves are competing with their customers.

#2 – Profit Margin is Below $0

That is not an error. The profit margin you will face when using dropshipping to sell on eBay is most often zero. Nothing. Nada. In fact, most people who first try using a dropshipper to supply their eBay products end up getting frustrated and crying \”the price my dropshipper is selling the product for is MORE than the price the product is selling for on eBay.\” And they are correct. You see wholesale is all about buying in quantity. When you use dropshipping you are buying just one of an item and cannot expect a wholesale price.

Now why paying a bit more for an item may not be a big deal if you`re selling it for top dollar at your local store, it is a HUGE deal when trying to sell on eBay. eBay is a place people go to get a deal. They do not want to pay full retail price, and chances are they can find the item at a rock bottom price if they just look around eBay for a bit. Because even if you cannot sell an item for the lowest possible price (because you are using dropshipping), there are thousands of other eBay sellers who can. So it is true. The price you get from your dropship supplier will often be more than the product sells for on eBay.

#1 – Dropshipping Does Not Work on eBay

Considering the other four reasons not to use dropshipping when selling on eBay this might seem obvious. And it should be! The bottom line is that dropshipping and eBay are a toxic combination. While eBay is the place to sell products to people who want a deal, dropshipping is the way to buy products at the highest possible \”wholesale\” price. And, while your dropshipper may offer thousands of products — they probably have thousands of clients like yourself who are also listing the items on eBay. It simply doesn`t work.

Well, I hope I have convinced you to stay away from dropshipping when it comes to selling on eBay. For more information on why dropshipping on eBay is a bad business decision please visit DropShipping Sucks and read the page. Not only will it explain in detail why dropshipping will never lead you to eBay success, it will also offer you an alternative that works.

That`s all for now and remember the age-old wisdom. If it sounds too good to be true, it usually is. This is definitely the case when it comes to eBay and dropshipping.

Article Source: http://EzineArticles.com/1899963