The point is that one of the secrets to product sourcing where eBay is concerned is how to get low cost products. This is something that eBay Power Sellers understand and is one of the foundational elements of their success. For an eBay Power Seller, low cost means prices at or below wholesale. Generally, for eBay, you want to acquire your goods below wholesale prices. One of the key ways in which you get goods this cheaply is to buy in bulk. The larger the quantities, the lower the per unit price. This is something that is generally easier for a successful Power Seller to do because they generally have the money to invest in bulk purchases. But what does this have to do with drop shipping, and why could it kill your eBay business?
Is Drop shipping the Best Model for an eBay Business?
Probably not IF you are planning on selling mass market consumer goods to the public. The reason is that eBay is already a wholesale selling environment. That means that most prices on eBay are generally either at wholesale or below wholesale. This, in turn, means that if you, as a reseller, purchase goods from a wholesaler at wholesale prices, then your starting eBay price will probably be at or above most of the other prices already showing on eBay. Your chance of breaking even, especially after eBay and PayPal fees are applied, is very, very slim.
Not everyone understands that real wholesale prices are those offered by true wholesalers. A true wholesale business must require proof of your sales tax permit in order to sell products to you without your paying sales tax. The large drop ship aggregators are not generally true wholesalers. That means companies such as Megagoods.com, Dropshipdirect.com, Doba.com, and Shopster.com are themselves not wholesale businesses, but brokers selling discounted retail goods to you and offering to handle shipping under your business name. Many of these services also charge you a monthly or yearly membership fee in addition to the charges for the products and shipping. For this reason, the cost of doing business is usually too great to allow you any chance of profit in the eBay market place.
This probably sounds very negative and pessimistic, and for that I apologize. The drop shipping model can work on eBay, and there are sellers who are making money with drop ship products. However, not all products are equal in this regard, and you do have to do your research to figure out if the product you want to drop ship will succeed. Now, what I hear from people who use companies such as the one mentioned above, is that some products may work, but that trying to sell the entire pre-loaded inventory of the sites is just not practical on eBay. Having said that, many of those same products might sell very well on a conventional ecommerce site. Again, selling environment can make all the difference.
The time you take to determine which products you want to sell and where you sell them is time well spent. This is something that is key to any business. Although eBay can be a great place to sell all manner of different items, if you plan on doing eBay as a business, then it is generally standard practice to at least start out with one niche product area. In the case of eBay, you also have to determine if the products can succeed on eBay, and then if you are planning on a drop ship business model, you need to do additional research to be sure that can succeed. As you continue, you will also continue to test products and refine, tweak, and expand your product niches and areas.
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