Make Money on eBay

Drop Shipping

Drop shipping on eBay is an excellent method of doing business, particularly if you’re just getting started.

If you don’t know what drop shipping is, very simply it’s the shipping of product directly from a supplier to your customer. This allows you to sell items without carrying any inventory or dealing with packaging and shipping. But best of all there’s no upfront monetary investment!

Drop shipping also means that you don’t pay for an item until after you’ve sold it and received payment from your customer. After you’ve received payment, you take a portion of what you were just paid and use that to place the order with your supplier, who then ships the item directly to your customer. The difference between what you charged your customer and what you pay your supplier is your profit.

Drop shipping is so advantageous that some of the internet’s largest and most successful retailers utilize it.

Doba
If you live in the U.S. or Canada (or have a credit card issued by an American or Canadian bank) then the easiest route to follow would be to sign up with a membership at Doba.

Doba takes all the pain out of getting started with drop shipping. Rather than going out and finding drop shippers on your own and going through the hassle of setting up accounts with them, Doba does all of that for you.

By signing up for a membership with Doba, you get instant access to over 100 wholesale drop shippers and their inventories.

One more thing to keep in mind is that Doba’s suppliers do not ship outside the U.S. Additionally, not all of their suppliers will ship to Alaska and Hawaii.

Doba is great if you plan on only doing business within the continental U.S. (which are the lower 48 states), but isn’t very helpful if you plan to do business internationally anywhere outside the U.S.

Remember when we talked about finding a niche, selling in that niche until it became saturated, then moving on to another niche? Doba makes moving on to another niche very easy. They are a one stop shop for dozens of suppliers.

To try it out with no risk, you can visit the Doba website to start a 7-day free trial.

Worldwide Brands
If you prefer to go direct to the source, or are in need of drop shippers that will ship outside the U.S., then Worldwide Brands’ Drop Ship Source Directory may be what you are looking for.

The Drop Ship Source Directory is a directory of hundreds of wholesale drop shippers, eager and willing to do business with you!

Keep in mind that most of the companies you contact through the directory will require your Tax I.D. number before they will allow you to open an account with them.

It will take some footwork to contact and open accounts with your chosen drop shippers, but if you’re dedicated it will be well worth it. Worldwide Brands also offers a Light Bulk Directory, which contains wholesalers that offer items in “light bulk” quantities.

Visit the Worldwide Brands website to learn more.

Hienote
This is the only other legitimate directory, along with Worldwide Brands’ directory, that I am aware of.

Click here to check out the Hienote Directory.

Drop Ship Tips

When it comes to drop shipping, there are a few things that you will want and need to keep in mind.

To begin with, understand that by drop shipping you lose a lot of control over inventory and shipping. As such, you should look for a drop shipper that has quick ship times and also maintains a high level of in-stock items.

Naturally, you’ll also want to make sure that they stock what it is that you want to sell.

Secondly, your pricing won’t exactly be spectacular. You have to understand that it costs a wholesale supplier much more to address and ship small orders to a lot of different locations than it does to ship a very large order to a single location.

Because you’ll most often be making very small, individual purchases, the discount off of retail that you’ll receive won’t be as much as if you were to buy in bulk. In other words, your wholesale pricing won’t be as good.

Drop shippers also charge a handling fee, commonly referred to as a drop fee, for shipping single order items to different locations.

Because of the higher cost per item, combined with drop fees, your profit margins will suffer. On eBay, which is notorious for selling at a price that many people consider to be “wholesale”, you can expect your profit margins to be as low as 10%.

This doesn’t mean that you won’t be able to find items that you can get higher margins on (I’ve sold items through drop shipping that garnered me up to 100% profit margins), but the odds of doing great margins is small.

Because of this, when I use drop shipping I try to focus more on margins as a dollar amount rather than as a percentage.

If I sell an item that has a cost to me of $10, and I sell it for $20 for a margin of 100%, I’ve made $10 on it.

However, if I sell an item that has a cost to me of $500 for a measly 10% margin, then I’ve made $50, five times more than I did on the item that got me a 100% margin.

That’s another nice thing about drop shipping: you don’t need to worry so much about margins as a percentage because selling a high-priced item has no more risk in it than does selling a low-priced item.

And third, remember the key to satisfying your customers: under promise and over deliver.

Communication is of paramount importance when it comes to satisfying as well. If you sell an item and discover suddenly that your drop shipper no longer has the item in stock, be completely straightforward and honest with your customers.

Contact your buyer immediately and let them know what happened. Then put the ball in their court and let them decide what happens next.

The options are few (they can typically either wait for the item to come back into stock, or get a refund on their purchase), but by giving your customer the ability to decide what happens next, you let them feel that they are in control, and are much more likely to feel good about the whole situation. And customers that feel good are far more likely to give you positive feedback.

And when it comes to product sourcing in general, something you absolutely don’t want to do is limit yourself to drop shipping as your only product source. Use drop shipping as one of many sources.

And finally, if you choose to try drop shipping, you will quickly find that there are a lot of items that you simply won’t be able to sell for a profit. You will be required to do plenty of product research before finding products that will be successful for you.

At first, it will likely require several hours each day, but as you become more experienced, you should be able to cut research time down significantly. I, myself, am now able to find up to two or three dozen products with just two hours research that have the potential to sell on eBay.

I typically only spend one day a week researching now. Of the two or three dozen products I find, I’ll begin listing those I feel have the highest potential (knowing which products work best for you takes time and experience as you “feel” your way into the process).

Throughout the week I’ll test results of different auctions. Once I’ve found either a few products that work for me, or some kind of niche, I’ll continue selling those products, as well as similar products in the same niche, until they stop selling.

As long as I do my research every week, I don’t ever have to worry about running out of products.

But if you do run out of products, or simply hit a brick wall with your research… well, that’s part of why I recommend not using drop shippers as your exclusive product source.

Next: Government Auctions

Subchapters:

The Basics
Drop Shipping
Government Auctions
Garage and Yard Sales
Liquidation / Closeouts
How to Find Wholesale Suppliers
Finding Manufacturers in China and Other Asian Wholesale Suppliers
Selling eBooks and Other Digital Media
Other
Chapter 7 Summary & Takeaways

Jump to another chapter:

Chapter 1: Driving Traffic to Your Auction Listing
Chapter 2: Listing for Higher Profits
Chapter 3: Does Any of this Stuff Work?
Chapter 4: eBay Stores
Chapter 5: Auction Management
Chapter 6: Doing Market Research
Chapter 7: Finding Products to Sell on eBay
Chapter 8: Mining eBay's Traffic
Chapter 9: HTML Tutorial
Chapter 10: Acting Like a PowerSeller
Chapter 11: Final Words