Product Supply, EBay, and Drop Shipping
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?
Whether or not drop shipping will work for you in the eBay market place will have everything to do with the kind of products you plan to sell. If you sell items that are highly competitive with a narrow profit margin, then drop shipping could help wipe you out. It is important to understand that the eBay auction market is already pitched at wholesale and below wholesale prices. What this means for you is that the cost of drop shipping will eat into your profit margin, and if that is already small, then you may not sell enough to stay in business. In fact, it is possible that your starting price for drop shipped items, if they are mass market goods, will likely be at or above many of the other competing prices.
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.
I don’t want to give you the idea that drop shipping can never work on eBay. It can. But you have to find the right products for a market that is still open enough to allow you to profit over the costs of drop shipping. If you try to sell mass market consumer goods in where the market for those products is already glutted with competition, your chances of success are slim. Also, keep in mind that the subject of this article is the eBay market place. Mass market items that are impossible to sell at a profit may do very well in another environment, such as your own ecommerce site, or on Craig’s List, Yahoo Groups, or other Internet venues.
It is important to consider just what it is you want to sell and why. If you are intent on running your eBay auctions as a business, then you have to look at your product choice as a business decision, which means that regardless of how cool a product is, if the chances of it making profit are nil, you have to give it up. When you start out on eBay, you will probably focus on one product niche, such as vintage clothes. As time goes on, you will have the opportunity to experiment with different kinds of items, different product niches, different auction types, and you will gradually figure out what works best for you. However, with regard to drop shipping, keep an open mind about this, especially where eBay is concerned. Remember, eBay and drop shipping don’t always mix well for every kind of product.
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