Dropshipping on eBay – 10 Actionable Tips for Success from Top eBay Dropshippers
If you want to build an e-commerce business, there’s no easier way than by dropshipping on eBay.
It’s a business model that’s easy to learn and where you can succeed even if you have less than $500. Plus, there’s very little risk involved. Dropshippers don’t actually have any inventory on hand which means there’s no staying awake at night wondering how you’ll turn thousands of products in your garage into cash by the end of the month to pay your bills.
Because of these fundamental strengths, thousands of ordinary people from all over the world have built successful dropshipping businesses on eBay. Like Vik and Joao, who were tired of their long commutes to work each day and wanted to change their lifestyles, or Shezzy, who was a bored student wanting to become an entrepreneur.
In this article, I’ll answer the most common questions about dropshipping on eBay along with our top 10 tips you can use to start a successful eBay dropshipping business.
- Common questions about dropshipping on eBay
- Pros and cons of eBay dropshipping
- Dropshipping on eBay – 10 actionable tips for success
- How to start a dropshipping business on eBay – a step-by-step guide
- How to automate your eBay dropshipping business
Common questions about dropshipping on eBay
What is dropshipping?
Dropshipping is a business model where you buy and sell products without holding any inventory. Effectively, when a customer orders a product from your store you have it shipped to them directly from your supplier.
Confused? Don’t worry – the easiest way to explain what dropshipping is, is to show you the process in action. So below, I’ll take you through an example:
Step 1: You find a guitar selling very cheaply on AliExpress
Dropshipping could involve any item, any supplier and any marketplace but for this example let’s say that you spot a guitar selling for $100 on AliExpress and notice it generally sells for a higher price on eBay.
Step 2: You put the guitar on sale on another marketplace
You see there’s an opportunity to make a profit, so you create a product listing for the guitar on eBay. Knowing that the market price is usually higher than $100, you decide to charge $110 for the guitar.
As a dropshipper, you don’t order the guitar from AliExpress until you make a sale.
Step 3: Your item sells on the marketplace
A few days later, a buyer pays you $110 for the guitar! Kerching!
Step 4: The item is shipped directly from AliExpress, to the person that ordered it on eBay.
Now that you have a buyer, you order the guitar on AliExpress and put the buyer’s address as the shipping address. This means the guitar goes direct to the buyer and you never handle it yourself.
Step 5: You make a profit on the difference
You make a gross profit of $10, which is the difference between the $100 cost of buying the guitar on AliExpress and the $110 you received from the buyer on eBay.
Depending on the marketplace there may be additional fees to pay or you may receive cashback which could vary the amount of profit you make from the sale.
Hopefully, now it’s a little easier for you to see why this is such an attractive business model for so many online sellers.
What’s the difference between retail arbitrage and dropshipping?
Retail arbitrage is a specific type of dropshipping. The main difference between them is that dropshipping usually refers to the act of sourcing your product from a wholesaler or reseller, whereas with retail arbitrage you source your products from a retailer instead.
Helpful side note: Retailers are businesses that sell products to the public, rather than for the purpose of reselling. Popular online retailers for dropshipping on eBay include Amazon, Target and Walmart.
Why is dropshipping on eBay so popular?
Whilst you could start dropshipping on virtually any marketplace, eBay is only behind Amazon amongst the biggest marketplaces in the world. According to its Q3 2018 results, it has over 177 million customers and is continuing to grow strongly.
That’s the great thing about eBay — it has huge brand recognition globally. Talk to virtually anyone and they’ll know what eBay is, and if they want to buy a product online then the chances are high that they’ll search for it on eBay.
The reason that’s so important is that on eBay you don’t need to worry about attracting buyers, they’ll already be searching for your products.
In contrast, if you start your own website or create a store on Shopify, you’ll need to invest time and energy into getting buyers to visit your website to make it a success.
How successful is dropshipping on eBay?
Dropshipping on eBay can be a VERY successful and profitable business to run.
To demonstrate this, here are a few examples of successful eBay dropshippers:
Shezzy Sheikh – Shezzy is one of the most successful eBay dropshippers in the industry, with sales in December 2018 of $200,000+. A few years ago, he was just a student looking for a small side income but after discovering the potential of dropshipping on eBay he decided to make it into a full-time business. Now he has his own office and several workers in Karachi.
Vik and Joao – A few years ago, Joao and Vik were “stuck”. Exhausted from their long days at work and grueling commutes, and sick of not getting the time to see each other or their friends, they realized that their lives weren’t working for them anymore. Fast-forward to today, and they run the e-commerce business of their dreams. They generate a full-time income, with sales of $110,000+/mo yet work just 2-3 hrs/day from a beautiful poolside villa in the Algarve.
Tom Cormier – In 2017, Tom (or “eCom Tom” as he goes by on YouTube) was working as a chemical engineer, but didn’t feel fulfilled by his work. After leaving his job, and in Tom’s very first year of dropshipping on eBay, he made a whopping $1m+ in sales and $80,000+ profit.
Dropship Tyler – Tyler is a prominent eBay dropshipper and YouTuber that started dropshipping in January 2017 and made $900,000+ of sales in his very first year. Since then he’s used his income to buy a house, go traveling and create online courses to help others start dropshipping too.
Tom Kubala – Tom is a great demonstration that dropshipping on eBay is a profitable business for the long-term having been in the business for over 5 years! His results speak for themselves. He handles a whopping 94,000 listings on eBay with sales of £144,000/mo and an average profit margin of 8-11%.
Is dropshipping on eBay legal?
Yes, dropshipping and retail arbitrage on eBay is legal.
For many years, there have been thousands of dropshippers that have used eBay as their primary platform to dropship too.
One cautionary note though – whilst our understanding is that dropshipping on eBay is legal and allowed, you must make sure that you abide by their dropshipping policy and provide a great buyer experience, otherwise, eBay could suspend your store.
This means using software (like Salefreaks) to help prevent you from selling items that are copyright protected or out of stock, as well as always providing item tracking.
Pros and Cons of dropshipping on eBay
If you’re reading this article, there’s a high chance that you’re thinking about ways to sell products online.
So here are some pros and cons to starting an eBay dropshipping business:
- You can start with as little as $500. Or potentially, even less! eBay dropshipping is a super-low-cost business to run because you only need to buy products after they’ve sold. That means it’s very cash-flow positive too. As an eBay dropshipper, your main costs will be eBay fees and software to automate your processes.
- There’s very low risk if you fail. If you manufacture your own products and they don’t sell, you’re going to lose a lot of money. But if you start an eBay store and get no sales it doesn’t matter because you haven’t had to buy any products. It also means that if you try eBay dropshipping and decide it’s not right for you, there’s little to lose other than your time.
- It’s a business model with proven success. If you’ve ever typed in “how to make money online” you’ll see hundreds of search results, but very few that can cite real success stories. eBay dropshipping is different. At Salefreaks, we’ve written about entrepreneurs like Vik and Joao and Shezzy, and we have a team of mentors with proven success in coaching our customers.
- You can work from a laptop anywhere in the world. If you hold physical stock, it can drastically limit your options for travel as you’ll need to arrange the shipment of products to customers. But dropshipping means you can sell products worldwide with ease. The result? You can work anywhere you want as long as you have a laptop and an internet connection!
- You don’t have to worry about getting customers, eBay has plenty of them! There’s no need to pay for any ads or marketing to drive customers to your products when you’re dropshipping on eBay. This is a huge benefit as it means you can focus on finding great items to sell and growing your business.
- Average profit margins are low. This is typically a business model that requires you to sell lots of items at a low-profit margin (around 5-10%) to make a decent income. As you add more and more items to scale the business, it could become more complex to manage.
- You need to pay eBay fees. That’s right, eBay isn’t free. Typically you’ll pay around 10% to eBay in final value fees which will eat into your profit margins further!
- You don’t own anything. If your dream business entails handling your own stock, creating your own brand or shipping your own products, then dropshipping isn’t right for you. Dropshipping is very much a “middleman” business where you don’t own anything.
Dropshipping on eBay – 10 actionable tips for success
If you’re feeling the urge to start your eBay dropshipping business, it’s time to learn from the best. We’ve put together 10 actionable tips for success from some of the industry’s best eBay dropshippers to help you on your journey.
1. Don’t quit your job until you match your income
Tom Cormier (aka eCom Tom) – $1,000,000+ sales in first year on eBay
When you start a dropshipping business and experience the freedom it can give you compared to a regular 9-5, it’s tempting to go “all-in” straight away.
But according to 7 figure dropshipper eCom Tom, this isn’t the wisest strategy.
“I quit my job way too early. I wasn’t making much money, maybe not even breaking even. When I quit, I did it on a whim and decided ‘Hey, I’ve got some money saved so I’m just gonna do this’ — I wouldn’t advise this at all.”
Therefore, his advice is that however tempting it may be to quit, you should be sensible about doing so.
“My first mentor told me you should only quit your job when you’re making the same money that you’re making at your job and when you notice your job is interfering with the money you could be making from your side hustle”.
In addition, Tom says he notices a lot of people that want to start, but haven’t properly prepared themselves financially.
“A lot of people say they want to start full time and they have no money which I don’t advise either, whilst you don’t need much, you do need some money (~$500) saved to start this business.”
2. Find reliable software that can automatically place your orders
Vik and Joao – Over $110,000+/mo in sales, read their story here.
If you want to become an eBay dropshipper, you need to make sure you provide a great buyer experience. Doing this helps you achieve top rated seller status and avoid account suspensions.
One common problem is when dropshippers list items on eBay that are in stock with their supplier/retailer at the time but become out of stock a few days later.
This happens when dropshippers don’t update their listings and a buyer subsequently makes a purchase on eBay that can’t be fulfilled.
For top dropshippers Vik and Joao, this was a problem they used to regularly encounter.
“When we manually placed item orders this used to happen a lot. Then in 2015, we did find some software but it was unreliable and gave us loads of problems, items weren’t being tracked and it was messing up our strategy.”
Eventually, Vik and Joao started using Salefreaks auto-order feature and their problems seemed to disappear overnight.
The moral of the story? “Make sure to find a decent, reliable software. We still occasionally have out of stocks but much much less than before when we used to place orders manually.”
3. Create training videos for your Virtual Assistants
Tyler Philip (aka Dropship Tyler) – $900,000+ eBay sales in first year
As you grow your eBay business, there will come a time when you’ll need to hire virtual assistants to do some of the manual work for you.
But hiring VA’s comes with risks. Not least that you have to be willing to trust someone you’ve never met before to run your business.
That’s why Tyler believes that good communication is key to successfully working with VA’s.
“What might seem really obvious to you, won’t be obvious to them. It’s your job to give them instructions that are as clear as possible for them to follow.”
Whilst some dropshippers will just send text messages to their VA’s with instructions, Tyler believes that training videos are the best way for a new VA to learn the ropes.
“I highly advise that you use OBS Studio to create a video series or training video of the tasks you want your VA to do. And after creating the videos, make a 10 question quiz for them to complete afterward.”
But what if your VA makes mistakes even after watching your training videos? Tyler thinks you shouldn’t rush to judgment.
“Watch your training videos back and be sure that you were clear in your instructions. If you were, calmly explain the mistake to them and the impact it can have. If not, change your training videos for the future. We’re all human and you should forgive small mistakes as long as they’re not continuous. If despite your help and training they make regular mistakes, they might not be up to the job.”
Tyler’s other suggestions:
- Use Upwork / Onlinejobs.ph to source a quality VA
- Use Lastpass to safely share passwords with VA’s
- Use TimeDoctor to monitor your VA’s activity
4. Join Facebook groups and find wisdom from communities
Shezzy Sheikh – $200,000+/mo eBay sales, read his story.
One of the best things about eBay dropshipping is that it’s a very social business.
There are so many groups and communities, filled with dropshippers from all over the world that you can connect with at the click of a button. This, Shezzy Sheikh says, can be a major advantage for anyone starting an eBay dropshipping business.
“There are a lot of really good people hanging out on Facebook groups that can help you out massively – some of them are very clever, and can give you very good advice.”
He continues; “Facebook can be great for getting the latest information, but it’s also great to reach out and send a message directly too”.
Action step – Join a dropshipping community! You can click here to join the Salefreaks Facebook Group
5. Use a maximum of 3 different software tools
Tom Kubala – £144,000/mo in eBay sales
There are so many functions of an eBay dropshipping business; from finding profitable items to sell, listing them, fulfilling orders, messaging customers — the list goes on…
So Tom’s advice for newcomers to eBay is to focus on finding an “all in one” software, or at the very least to use a maximum of 3 software tools.
“Choosing to settle down with a maximum of 3 software tools can really help you to manage and grow your business.”
Further to that, Tom believes that one common mistake people make is wasting time dealing with software rather than focussing on generating more sales.
“I advise using Salefreaks because in the last 2 years this software has allowed me to settle down and concentrate on growing my business instead of just trying to maintain multiple software tools for all my tasks and procedures!”
6. Learn from someone new every day
Amit Vanunu – Runs 18 eBay stores with 18 employees
eBay make changes every day, and the winners are the ones that can learn fast and keep adapting, so says Amit, an eBay dropshipper with 18 eBay stores.
Amit thinks a lot of his success comes from talking to new people every day, asking them for their ideas and tips, and most importantly applying them to his business.
“I make good money today yet I still talk to new people every day to learn new ways, new tips and new features that can boost my business.”
“Every change that you make in your business could boost your profit, and eBay changes every day so you can’t be slow to change. If you don’t learn to change and adapt you won’t make money”
According to Amit, you can learn from nearly anyone, and you should always be on the lookout for new people.
“It doesn’t have to be people on Facebook, I’ve reached out to another seller on eBay before.”
7. Get a cashback credit card to scale faster
Nathaniel Daye – $80,000+/mo eBay sales
When dropshipping on eBay, there’s logic is simple. The more items you sell, the more money you make. So the question is how can you scale fast? Nathaniel believes one trick is to use cashback credit cards.
“A great credit card can help you get lots of cashback which will help to make items more profitable to sell.”
But Nathaniel points out another hidden benefit of having such a credit card. PayPal holds an amount of money in reserve to cover potential chargebacks and claims and having a credit card is great for ensuring you can continue to cover this while growing quickly too.
“Dealing with PayPal reserves is inevitable when selling on eBay, that’s where a decent credit card can help you keep growing.”
The US credit card market is full of great cashback cards. But as a UK seller, Nathaniel has one specific recommendation for the credit card you should use:
“I always refer my students for the American Express Platinum Cashback Card, it’s an extra 1.25% cash back when you spend over £10,000 which quickly adds up when you’re scaling your dropshipping store.”
8. Treat your customers properly
Clayton Blackshear – $7,000+/mo profit on eBay
According to Clayton, your success on eBay depends on how you treat your customers.
Whilst a lot of people try to save a few dollars here and there to cut costs, Clayton’s advice is that tactics like these will actually cost you more money in the end.
“Make sure to handle returns and cases right away. The little bit that you think you may save from delaying could cost you much more later (e.g. in final value fees, below standard account status and negative feedback). Looking at that you can easily see that a few dollars aren’t worth the risk.”
Not only does Clayton believe that treating customers properly helps to avoid losses, but he also sees more sales because of it too.
“Stay on top of customers questions. I can’t tell you how many times I have gotten sales and repeat business from answering customers questions quickly and with the information needed.”
9. Set long term goals to manage your expectations
Karim Ahmed – Manages 100,000+ eBay listings
It’s easy to get caught up and think when you start a business you’ll become an instant success. But the reality is, behind every success story is a lot of time and hard work.
That’s why Karim believes if you want to succeed at eBay dropshipping, you must have the mindset of patience.
“Work work work! And don’t expect to see any quick results, even within your first 3 months.”
Whilst this may prove challenging, Karim believes that having this mindset means you’ll reap the rewards later after others have quit.
“Set a goal of working 6 months in a row without results on a project consistently and you will learn to value the results later.”
10. List items every day to increase your visibility
Jose Galeras – £600,000 eBay sales in the past year
One of the things you need to learn about when you sell on eBay is its search algorithm (otherwise known as Cassini).
In layman’s terms, Cassini is the all-powerful brain of eBay. Its job is to decide which listings to display when someone searches for a product on eBay. That’s why Jose’s tip is all about getting Cassini to show your listings ahead of everyone else’s.
“The one thing you need to do to get results on eBay is to be consistent. That means listing items every day and making sure your account is always active.”
Jose continues; “When your account is very active, eBay give more visibility to you over others that aren’t so active. That’s why if you stop listing items for a couple of days this can cause eBay to reduce your visibility.”
How to start a dropshipping business on eBay – a step-by-step guide
Now that you’ve learned a few tips from some of the best dropshippers around, here’s a basic step-by-step guide of how to start dropshipping on eBay.
Step 1. Choose your supplier(s)
You only have an eBay business once you have products to sell.
There are endless suppliers you could use for your eBay arbitrage or dropshipping business.
If you want to find a private supplier to dropship from instead, you’ll want to do some research. If you have an idea of the type of products you want to sell, Google is a great place to start. If not, there are many wholesale supplier directories such as SaleHoo, Doba and DropshipDirect.
The main advantage of using a private supplier is that you can bring items with less competition to the market and the items are often available at a lower cost.
However the disadvantage is that you’ll need to spend time filtering through directories of suppliers and contacting them.
If you would rather do eBay arbitrage here are some of the most popular suppliers to consider:
- Home Depot
When deciding where to source products from, you’ll want to think about some of the following things:
- How fast is the shipping, and what does it cost? Can they ship worldwide?
- Are the prices competitive?
- What is the reputation of the supplier? How good is their support if there’s an order issue?
- Do they actively support dropshipping?
- Is the supplier financially stable?
- Does it integrate with other market research software?
- Is there dropshipping software that is compatible with your supplier?
If you’re brand new to dropshipping on eBay, we advise using Amazon. This is because it has fast shipping, great service, support of most dropshipping software (including Salefreaks) and is very popular amongst dropshippers.
Step 2. Find software to automate your eBay dropshipping business
To scale your eBay dropshipping business, you’ll need to find software to automate most of the tasks involved such as finding products and fulfilling orders.
Here are a few things to consider when choosing your software:
- Is the software compatible with your chosen supplier?
- Do they have good reviews from other dropshippers?
- Is it cost and time effective? (Don’t just focus on cost – it can often be worth paying more for quality software that can save more of your valuable time)
- Which tasks can it automate for you?
- How long has the company been trading?
- Does it have a trial version so you can test it for free?
Later in this article we’ll talk about a list of functions you should look for your chosen software to automate.
Step 3. Find profitable products to list on eBay
You have some software and a supplier, so now it’s time to find products to sell.
Depending on which dropshipping software you’ve chosen, it may be able to find profitable items for you.
As an example, Salefreaks includes an item locator which can scan thousands of items at a time to identify high-profit opportunities.
However, if the dropshipping software you’re using doesn’t include an item locator then you’ll need to find some market research software. Market research software helps you analyze sales statistics to find which products can be sold for a profit on eBay.
Step 4. Create your listings
Your dropshipping software should be able to upload the profitable products you’ve found to eBay and create listings for you.
If you’ve found the items using market research software, simply import the list of items into your software, ready to list!
Step 5. Start making sales!
In terms of the basics, that’s it! All you have to do is wait for the kerching noises to hit your phone.
However, maintaining your success means you’ll need to:
- Deal with any messages from customers, or cases
- Keep your listings up to date, and make sure they are repriced as your supplier’s prices change
- Continue to list more items and remove items that aren’t getting sales
How to automate your eBay dropshipping business
When you’re dropshipping on eBay, time is money.
The more you can automate, the more items you can sell and the faster you can scale your store.
Not just that, but the more tasks you offload, the more time you free for yourself. For example, we talked to Vik and Joao, a couple of eBay dropshippers that run 4 stores and manage 30,000+ listings yet spend just 2-3hrs/day actually working.
Here are a few essential tasks you should look to automate with software or delegate with a virtual assistant:
Nearly all dropshipping software should be able to list your items automatically. Good dropshipping software will also integrate with eBay market research software too.
Customer service is a task you’ll likely hire a virtual assistant to handle for you.
However, you may notice that the tickets your assistant receives tend to be very similar, like:
“I haven’t received my order”
“My order was damaged”
“Where’s my order?”
While you can’t automate this process entirely, good eBay dropshipping software will include a CRM with template replies that should help your assistant to reply quickly and professionally.
When you list an item on eBay, you’ll choose how to price it based on your desired profit margin and your total costs – with your biggest cost being the price of the product from your supplier.
Example: Item Cost $20 + eBay Fees $5 = $25
Desired profit = $5
Your price on eBay = $30
The problem is, what happens if your supplier changes their price after you’ve listed your product on eBay?
That’s where a repricer comes in handy!
A repricer will automatically adjust your prices when your supplier changes theirs to ensure you’re not selling your products at a loss.
Top Tip: The best dropshipping repricers will also change your prices based on the prices of your competitors on eBay – making sure you’re not just making a profit, but staying competitive and maximizing sales too. Salefreaks’ repricer will do this for you.
For more information, you can read our guide on why eBay repricers are one of the quickest ways to boost your eBay dropshipping profits.
Fulfilling orders from your supplier
When you’re dropshipping on eBay, it’s highly advisable to use software to order products from your supplier once you receive an order on eBay.
The difference with software is that your orders will be automatically placed within minutes of eBay receiving an order.
In 2019, it has become more important than ever not to sell lots of items that are out of stock as it will damage your seller metrics and could even result in your suspension from eBay.
VeRO is eBay’s “verified rights owner program”, which in plain English allows companies and rights holders to report listings that they feel are infringing on their intellectual property.
You don’t want to receive emails like this!
It’s absolutely essential that you have software to check your listings for potential VeRO violations because even one violation could result in your suspension from eBay.
Make sure that the software you use has a comprehensive VeRO list to cross-check your listings against a list of known VeRO products.
For more information on VeRO violations, check out our guide about how to avoid VeRO on eBay.
Looking to start an eBay dropshipping business? Try Salefreaks for free!