eBay Dropshipping: The Ultimate Beginner’s Step-by-Step Tutorial
eBay dropshipping is one of the best online businesses you can start today. But as a beginner, you probably don’t know where to start or if dropshipping is still profitable. If you are in this boat, this is the right place to be. We have shared everything that you should know before starting.
In the end, you will learn;
- What eBay dropshipping is
- Whether eBay dropshipping is still profitable
- The advantages and disadvantages of eBay dropshipping
- eBay dropshipping policies
- eBay dropshipping fees
- How to start dropshipping on eBay
- How to scale your eBay dropshipping business
Advantages and Disadvantages of eBay Dropshipping
Like any other business, eBay dropshipping has advantages and disadvantages. Before diving deeper into this eBay dropshipping guide, check out the benefits of dropshipping on eBay and the challenges you will encounter.
Pros of eBay Dropshipping
- Low-Risk Investment – Like any other dropshipping model, eBay dropshipping is a low-risk investment, as you don’t need inventory to get started.
- Free Traffic – Another benefit of eBay dropshipping is that you are leveraging already-established organic traffic to drive sales. You don’t necessarily need a marketing budget, as eBay is already a big brand.
- Promoted Listings – To stay ahead of the game, you can leverage Promoted Listings (Standard and Advanced) to give your products better visibility on eBay.
- Easy to Get Started – Launching your dropshipping business on eBay is pretty simple compared to setting up a personal online store
Cons of eBay Dropshipping
- Strict Dropshipping Policy – eBay has a very strict policy on dropshipping and won’t hesitate to ban merchants even after the slightest violation of the policies.
- Stiff Competition – eBay has many dropshippers and other merchants. This leads to very stiff competition and low margins.
- Selling Limits – A new seller can sell just 10 products for up to $500. Chek out our guide on how to increase selling limits on eBay the easy way.
What is eBay Dropshipping?
eBay dropshipping is a business model where sellers can list and sell items they don’t have. It still works on the dropshipping principle, where you sell items that you don’t own the inventory. Instead, you partner with wholesalers who fulfill the order without you handling the product.
Is eBay Dropshipping Profitable?
But should you get into eBay dropshipping, or is it a dead venture? Well, dropshipping on eBay remains a lucrative venture today as long as you get your math right, from end to end.
But before analyzing whether or not eBay dropshipping is profitable, here are statistics proving it is not dead; in fact, it is the next big thing.
” Over 33% of online stores believe dropshipping is a reliable fulfillment model. (Fundera)“
” Approximately 23% of global online sales are fulfilled by dropshipping. (Fundera)“
As you may be aware, many online retail platforms allow dropshipping.
But why choose eBay?
First, eBay is a leader in the eCommerce scene. Started in 1995, the company boasts a solid customer base. Recent statistics show eBay had over 135 million users worldwide as of Q3 2022.
eBay is also a dropshipping-friendly platform. In 2020, for example, over 36% of the sellers were into dropshipping. Obviously, the number has soared now that dropshipping has grown exponentially in popularity.
Regarding profits, the average eBay dropshipper processes 1,000 orders raking in around $2,587 per month. The biggest dropshippers, on the other hand, fulfill around 4,759 orders earning approximately $12,706 monthly.
From the above, it is clear that dropshipping on eBay is a worthwhile venture.
eBay Dropshipping Policy(Does eBay Allow Dropshipping?)
Does eBay allow dropshipping? This is an essential question if you want to dropship on eBay without getting your account banned.
Dropshipping is allowed on eBay as long as you play by the rules. eBay allows dropshipping only if you own the items before listing them or if you have an agreement with wholesale suppliers to list and sell their items.
Listing and purchasing an item from another retailer or marketplace is prohibited and is the sole reason many eBay dropshippers get banned.
Whether you own the items prior or are working with a wholesale supplier, it is your responsibility to ensure the safe delivery of the items within the time specified on the listing. You are also responsible for the general buyer’s satisfaction failure to which you may be banned.
eBay Dropshipping Fees
Besides the eBay policy, you should also be acquainted with eBay dropshipping fees. The big question is, how much does it cost to dropship on eBay? Can you sell for free as a dropshipper? Well, the answer is no. You will need to pay some fees including;
- Store Subscription Fees
- Insertion Fees
- Final Value Fees
- Promotional Fees
(a) Store Subscription Fees
You will have to get a subscription to get an eBay business account. The cost of a subscription depends on the store type. There are beginner stores and stores for large businesses.
Below is a breakdown of different stores and the subscription fees.
|Store Type||Cost Per Month When Billed Monthly||Cost Per Month When Billed Annually|
From the above fee schedule, it is clear that going for a yearly plan is much cheaper. But now that you are a beginner, we recommend starting with a monthly plan and switching to the yearly plan after learning the ropes of eBay dropshipping.
(b) Insertion Fees
Insertion fees, otherwise referred to as listing fees is, fees that eBay charges a seller to list an item on the platform. This fee is charged upfront. The different eBay stores are allocated free insertion fee listings depending on the store type. As a dropshipper, you need to understand what each package gets you.
The above table is meant to give you an idea of how insertion fees work. To avoid inconveniences, read in detail how eBay zero insertion fee listings work, especially the exclusions and terms and conditions.
As you have seen, the higher the store package you subscribe to, the less you will pay for each additional listing. But again, as a beginner, don’t fall for this trap. Stick to the lower-level store.
(c) Final Value Fees
The other crucial fee you need to be aware of is the final value fee. This fee is calculated as a percentage of the total sale amount plus an additional $0.30 per order. For the record, the total sale amount includes the item’s price, handling charges, shipping charges, sales tax, and applicable fees.
(d) Promotion Fees
As mentioned earlier, competition is very stiff on eBay. That is why the platform offers merchants extra perks to ensure they succeed. This is where promotional fees come in. With promotional fees, you can leverage eBay’s tools that enhance product visibility. There are two tools; Promoted Listing Standard and Promoted Listings Advanced.
The above are the main fees you need to know when starting your eBay dropshipping business. Also worth mentioning is the optional listing upgrade fees that let you further optimize your listings with features such as extra images, zoom, enlarge function, bold fonts, etc.
How To Dropship On eBay: Step By Step Guide
Now that you know what eBay dropshipping is, how it works, its pros and cons, its policies, and the involved fees, let’s get things started. Below is the step-by-step guide for dropshipping on eBay.
Step 1: Product Research
What do you plan to sell? Is the product trendy? Does it solve the day-to-day problems? Is the product affordable? Product research is the most critical stage in starting a dropshipping business. Unfortunately, many beginners fail to conduct proper product research and end up selling what nobody wants.
When starting your eBay dropshipping business, prioritize product research to find the winning product(s). The product can be the deal maker or breaker.
So, how do you go about finding the right product to sell?
eBay Product Research Tools
There are many methods of finding the best product for dropshipping. You can opt for Google and platforms such as Tik Tok. However, the process is time-consuming, and you won’t get accurate data and insights on whether the product will indeed be a success or will be the reason for your business’s downfall.
For the case of eBay dropshipping, we strongly recommend getting a product research tool. As the name suggests, product research tools are software solutions that collect and collate crucial data on a wide variety of metrics crucial in deciding products that have the potential to sell and yield good margins.
So, which is the best product research tool for finding dropshipping products to sell on eBay?
One is Terapeak. This tool, developed by eBay, offers key insights that enable sellers to make data-driven decisions. It has two main products; Product Research and Sourcing Insights. You can check out our detailed guide on how to use Terapeak for eBay to research hot items to sell and where to source them.
Another option is Easync, an all-in-one eBay dropshipping tool designed to help eBay dropshippers find products with high demand on eBay. Easync analyzes hard data, including sales, trends, and competitor performance, to enable you to make sound decisions on which products to sell, when, and at what price.
Best Dropshipping Products to Sell on eBay
There are many niches and products you can focus on as a beginner. Some of the best products to sell on eBay include;
- Auto parts
- Home & Garden products
- Jewelry & Watches
Step 2: Find Suppliers
The supplier is an essential player in the success of the business because they affect several dynamics that are crucial to the success of the business, including;
- Product quality
- Pricing and margins
- Shipping turnaround
A good supplier should have quality products with affordable prices that will give you returns. They should also be reliable enough when it comes to ensuring the order is packaged and delivered on time. Notably, a good supplier should handle communication promptly to avoid inconveniences.
How To Find Suppliers For eBay Dropshipping
As mentioned earlier, eBay dropshipping is allowed only when you partner with a wholesale supplier, not a retailer. So how do you find a supplier? Well, there are several methods, including;
- Supplier directories
- Trade shows
- Spying on your competition
- Dropshipping tools
Google can help you find eBay dropshipping suppliers with just a few clicks, while supplier directories have listings of hundreds of manufacturers, wholesale suppliers, and their contacts. The other option is spying and ordering particular products from your competitors to know where they are sourcing them. You can also attend trade shows, though this is hectic and expensive.
The best option, however, is to use dropshipping tools. A sure bet could be Terapeak for eBay. Its product, dubbed Sourcing Insights, has been designed for this.
However, Sourcing Insights is not as effective and accurate as Easync.io, which connects you to top marketplaces with renowned suppliers such as AliExpress, Amazon, BestBuy, Costco, etc.
But as much as you have spotted some suppliers, make sure to vet each one of them and conduct due diligence just to ensure you are working with the right team and not frauds and manufacturers with low-quality products.
Step 3: Open An eBay Account
Now that you have a niche, a winning product, and a supplier, setting up your eBay seller account is the next step. This is a pretty straightforward process that should take you minutes.
First, head to the registration page, where you can register a Personal account or a Business account. While both accounts serve the same purpose, you want to go for a Business account.
Fill in your business name and the other required details, and verify your email. Make sure to choose the correct country where you live and that of your target audience.
Step 4: Set Up eBay Managed Payments Account
Once you have set up your account, the next important thing is taking care of how you will receive payments.
As a dropshipper, you must work with eBay’s new payment system, which is called eBay Managed Payments. This is eBay’s own managed payment system that came in place to streamline all payments for buyers and sellers under one roof.
“Managing payments is a big step towards making eBay a simpler, more modern managed marketplace, and over 1 million sellers have already registered globally, and 38% of eBay’s on-platform volume globally is already processed using managed payments with more joining every day. eBay Seller Updates for Spring 2021.
How Does eBay Managed Payments Accounts Work?
In this new plan, eBay has partnered with Payoneer to connect sellers’ accounts with their banks. In a nutshell, eBay processes the buyer’s payments on your behalf and deducts all the costs before transferring the remaining amount to your bank directly.
To register for Managed Payments, you will first need a Payoneer account. Then, sync your Payoneer and eBay profiles before adding a credit or debit card to facilitate seller charges and related costs in case you have insufficient funds. The last step is to submit the request.
Important Tip: Considering eBay might take some time to approve your request, set up your Managed Payments Account early enough. This is because you must have an eBay Managed Payments Account to start selling on the platform.
For the record, PayPal has been replaced by Managed Payments platform as eBay’s payment processor, but buyers can still pay with PayPal.
Step 5: Create and Optimize Listings
You can start listing products once you have the eBay Managed Payments Account. The process of creating listings is pretty straightforward. Just makes sure to fill in accurate data.
The essential details you will need are;
- Item condition
- Item specifics
- Product description
- Shipping policy
- Return policy
Remember to optimize your listings for proper visibility. Here, consider having detailed descriptions, keywords, and high-quality images.
Important Tip: As a beginner, we highly recommend adding product listings manually. Also, add just a few listings, probably 3-5 on the first week, and maybe start importing products in bulk after 2 weeks or so.
Step 6: Calculate Pricing and Profit
How much are you selling your product for? Calculating pricing and profit is a very sensitive undertaking you should be keen on. Here, there are several factors you need to consider. These include;
- eBay store fees
- Category fees
- Final value fees
- Payment processor fees
- Promotion fees
- Buying price
- Handling charges
- Shipping charges
- Profit margin
Ensure all the associated fees are factored in before settling on the final product fees. Many dropshippers end up making losses by forgetting to account for all the fees.
Calculating Profit Margins
It’s also essential to be keen on calculating profit margin. Definitely, you are in this to make money but don’t overprice your products, as you could end up losing sales to other sellers selling the items at lower prices. When beginning, just add a small margin to get started and adjust accordingly.
Step 7: Streamline Operations
Now that your store is running, you must stay on top of operations. Several activities will require your input.
Inventory and Price Monitoring
First, ensure you monitor inventory with the supplier and pricing. What might be in stock today might be out of stock tomorrow when you land an order. Similarly, a watch that costs $25 today might be going for $30 tomorrow. That said, inventory management and price monitoring are crucial. When starting, we recommend listing just a few products so you don’t get overwhelmed with inventory and price monitoring.
They say the customer is king. You will need to invest in proper customer service. Ensure that none of your customer’s messages or inquiries fall through the cracks. And it’s not just the customer. You should also stay in communication with the supplier and watch out for any communication from eBay.
Even though eBay is already a big brand with huge organic traffic, there is huge competition from other merchants. You need to find ways to ensure your store stands out. For example, you can use eBay Promotions Manager, spend on Promoted Listings, advertise on social media, or send marketing emails and newsletters.
Step 8: Fulfill Orders
The last step is fulfilling orders. Even though the supplier does the actual order fulfillment, you, the dropshipper, is the one responsible for the order’s fulfillment, not eBay. So, make sure to transfer the order to the supplier on time and follow up to ensure the customer received the correct item per the stipulated delivery window. You will also be responsible for handling returns.
How to Scale Your eBay Dropshipping Business?
Hoping you start receiving a few orders and, of course, raking in a few bucks, don’t sit back and relax. It’s time to scale your business.
The first thing to consider is automation. When starting, we discourage using automation tools, but now, it is the time to invest in one. A good choice is Easync.io, an all-in-one dropshipping automation tool that makes running the business much easier. Easync.io can search and create listings automatically, reprice listings, and automatically make orders for you. These are mundane tasks that the tool offloads from your back so you can have more time to focus on the core aspects of your business.
Also, consider updating your stock lists with new products that may be trendy or hot in the coming season. Finding more suppliers is also worthwhile.
That’s the end of this beginner’s guide to eBay dropshipping. Now, you know what eBay dropshipping is, the benefits and possible challenges, the policies and fees involved, and how to start and scale your eBay dropshipping business. So, what are you waiting for? Start your dropshipping business today and create an extra income stream.