A simple guide to starting a dropshipping business on eBay
First, lets cover the basics – What is Dropshipping?
Starting a dropshipping business on eBay doesn’t have to be hard.
Dropshipping is a simple method where a business or store doesn’t hold the inventory. It doesn’t keep the products it sells in stock (as in physical form). Instead, when a product sells using the dropshipping model, the business then purchases the item from a third party company or directly from the manufacturer and has it shipped directly to the customer.
YOU as in ‘your business’ is the middleman.
What is eBay?
Ebay is an online shopping site. It’s an online selling platform also. Ebay is widely known for it’s auctions and consumer to consumer sales.
As mentioned above, eBay is a very popular site for online merchants to use as a sales channel and build their own business through the eBay platform.
The platform is available in over 30 countries around the world, locally and internationally. No doubt they have over millions of customers looking for things to buy everyday. It’s huge in the e-commerce industry and without a doubt if your looking to start your own business on eBay, then keep on reading.
So, now that we have dropshipping and eBay explained, lets dive into how you can start up your dropshipping business on eBay.
Starting a dropshipping business on eBay – The basic Setup and Research!
First of all, the key to any business is research. It’s vital.
We are going to go in reverse to what is essential first.
Being from this background myself, setting up the basics doesn’t take long.
Yes, becoming verified does! However that will come much later on after your business is a little established. Factors such as, length of service on the platform, number of sales, number of reviews may all contribute to this.
Having done this and taken several courses on dropshipping from successful guru’s, here is how you can be on the way to starting a dropshipping business on eBay.
The Research – Starting a dropshipping business on eBay
In order to start an online dropshipping business you need to do some research. What is your product going to be? Is it one product, or a whole niche?
This is the starting point to your online business success.
There are several ways you can do this research.
1. You already have a product in mind – Your passionate about this item and have always want to sell it, but never knew where to start? This is a great way to turn passion into profits.
Having a passion for a product before the actual launch of your business will make it even exciting for you when working on your goals towards it.
Having passion for your product will mean – you will give it more attention and this will eventually be beneficial for you in the long term as you wouldn’t want your business to ever die.
2. Use Product research tools for research – There are several, in fact there are over hundreds of product research tools that can help narrow down which product or niche you want to enter.
These tools can show you what key products are researched the most.
That way you can narrow your search down and choose a product which is in demand. Some popular product research tools for dropshipping are covered by Richard at DoDropshipping.com.
Richard explains the best 13 product research tools you can use to find your dropshipping products.
He sums up each tool perfectly and some I have verified myself.
Product research tools are a great way to find out the right products for you. You want a product that will sell, not just sit there. This leads us onto the next point.
Note: When doing product research, try to avoid “trending products”.
There’s a simple reason for this. Trending products eventually die out.
There not always In demand and once there gone off trend, no one wants to buy them.
Trending products are good for spikes of profit and visibility. So if your looking for a short term business plan then finding trending products and dropshipping them via eBay could be the right thing to do.
However If you want a long term established business which can last you more than 6 months to many more seen years in the future, then it’s best to find products which are in demand all year around.
You can incorporate seasonal products and some trending products in your niche, once you’ve established. These will help boost your rankings and profits. But to begin with, it’s best to choose a stable product which can last for years.
3. Check it’s trend – Once you’ve chosen some products you would like to start dropshipping, next step is to see if it’s actually worth the time.
This is where Google Trends comes in. My ultimate fav!
Google Trends is one of the best “real time” trending platforms you can use to see If the product you will dropship is actually in demand.
It’s super easy to use and easy to understand.
You can also do a direct search on eBay itself to find what products are flying off the shelves along with their order volume. This way you can see if your products are in demand or not.
4. Supplier research – This stage is crucial. You want to ensure you are able to find the best suppliers who allow you to dropship with the best possible margins in return.
There’s 2 ways you can do this. Graft it or use a ready made online dropship directory.
The first method (Graft it) is where you will directly approach the manufacturer of the product you wish to sell and partner with them to dropship each order directly to your customer. This way is more profitable as your cutting the middle man. In fact YOU are the middleman. You’ll get what I mean in a second.
Grafting works like this : Manufacturer, YOU and Customer. No one else you see!
The second method (using online directory) is much easier. You sign up to one of the several advertised dropshipping company’s online, who then offer you suppliers you can get in touch with to dropship your product. However, this will not give you maximum profits. In this method you are NOT the middle man. You are probably 4th or 5th down the line.
Online directory works like this: Manufacturer, Online directory, Supplier, YOU and Customer.
Do you get the difference?
Although it’s easier, your losing pennies this way. Find your own manufacturer the “grafting way” if you can.
This method is trickier as company’s who manufacture products don’t advertise themselves as “dropshippers”.
However some are willing to negotiate and work with businesses to increase their reach also. A benefit to this is that your ahead of the competition.
For example Tom, Lil, and Berny will purchase the same online directory with the same dropship suppliers enclosed, however only Kim will work directly with a manufacturer cutting out her competition and making the most profit in sales too.
Tactical thinking my lovelies!
5. Establish a relationship with your supplier – Ideally this supplier will be your business partner. Without them you can’t run your business.
They will hold and parcel your inventory so it’s best to negotiate the best plan. Ensure to cover key points such as minimum order value per day, postage rates, postage times, returns, custom labeling (if required) etc.
Also review a sample of the product before you decide to sell it, so it matches your expectations.
Now that you’ve done all the hard part, lets quickly run by the basics and get your business rolling into action – starting a dropshipping business on eBay
6. Create your seller account on eBay – Creating an account is easy! You can sign up to be a seller and after filling out some personal details, attaching your payment details, you can be on your way to listing your first item.
Listing on eBay isn’t free, so part of your investment in this business will be the listing fees for each item listed and a percentage of it’s final value price. This will be deducted monthly.
If you want to check how much eBay charge in more detail, you can click here.
In case you don’t want to leave my page just yet… It’s usually 10% of each item sold per month. So ensure to keep that in mind when calculating your margins for item prices. I will dive further into more detail on this topic below.
Depending on what payment merchant you decide to use, ensure to also deduct those fees in the cost too. Widely used with eBay is the merchant PayPal.
Paypal are reputable in this industry for these types of transactions and cover not just the customer, but yourself also when disputes arise.
They also charge a fee per item sold, which they deduct before depositing the final amount into your Paypal account. You can check here for further details.
7. List your items on eBay – Once you’ve got the go ahead from eBay, you can almost begin listing instantly!
You will be given a limit of number of items or a certain amount per month your allowed to sell at. These limits can be lifted after the first 30 days in business, allowing you to list unlimited items for unlimited revenue.
When listing your items you can upload images and descriptions from your suppliers database. Add some detail to make your listing look professional and eye-catching.
For better results, try to provide your own descriptions and pictures of the product you’re selling. You can do this by ordering samples from your dropshippers to quality check the items, along with make enticing pictures to catch your buyers attention.
When marking out your price, it should be low enough to compete against similar items, but high enough to give you a good profit, once you’ve taken into account all other fees involved.
Another difference between wholesaling and dropshipping is fund access.
When your wholesaling – you will make a sale and dispatch your item to the buyer. As the item is already in your inventory, you don’t need to worry about dispersing funds.
However when dropshipping – upon receiving a sale, you will have to transfer the funds to the dropship company and place a further order with them to get the item delivered to the buyer.
Your probably wondering – what if Paypal doesn’t release my funds immediately?
YES! Paypal likes to hold funds, it’s part of their safety measures. Read here
In that case you can wait 48 hours before placing your order with your dropshipper (most payments are released by then) otherwise you may have to pay out of pocket at first just to get the ball rolling.
Paypal rules say they are entitled to hold the funds for up to 21 days before releasing them for availability.
However once you’ve established a trustworthy relationship with Paypal, they will start releasing your funds faster and almost instantly.
Related: How to avoid scams in business
8. Contact your dropship company when your items sell – Once you receive an order you can place that via your dropshipper.
Give them your customer’s shipping address and simply pay.
Your dropship company will send the product directly to your customer. This will be in the length of time set for shipping between you and them.
Next day delivery is best however if the item location is not local, ensure to set the expectations correctly so your customer is not kept waiting for long and wondering.
Follow up with your customer to make sure the shipment came on time and request their feedback.
Feedback will help boost your accounts on eBay and Paypal allowing you to grow more faster.
It doesn’t end their my lovelies, I’ve broke it down further for you so you can get an idea of what kind off costs are involved in starting your own dropshipping business on eBay.
Cost to start a dropshipping business
Some people find dropshipping very profit worthy, whereas for some – it’s just not worth it!
If you don’t calculate your margins right, you could find your self making no profit at all, you may even be working out of pocket.
You firstly have to consider whether it’s worth going into this business model before you lay the stretch. I mean, doing all the steps above only to find out it wasn’t making you money is kinda useless right?
So lets craft out what the cost of your dropshipping journey could look like.
Please note: These are not exact figures and will differ to each individual depending on their products and platforms.
Although the dropshipping model follows the famous phrase “zero cost to start”, that’s false!
Costs are involved and although they are not major, such as buying out a whole inventory costing thousands, you will still be investing in other things to get running.
With dropshipping on eBay, the main cost will be it’s listing fees. You will need to have these covered from own expense before you can start relying on any profit to cover these.
See it as an investment. After all every business requires investment right?
Here’s a breakdown of the costs to start a dropshipping business
- Listing fees
- Paypal fees
- Dropshipping membership fees – if used. Read above on why you should avoid these company’s and put your time and effort into ACTUAL research of the product manufacturer. This will save you a tonne of money and cut out the extra middle men involved.
- Advertising fees
- Legal entity fees
Click here to read more in depth detail in relation to the cost to start a dropshipping business.
Top dropshipping companies UK
After hearing me hammer on about how you should avoid dropshipping companies who charge a monthly membership fee and rip you off, you’re probably wondering why I have a section on some of the top dropshipping companies in the UK.
Well the truth is, not all are garbage, in fact some are good to join if your starting up and are completely NEW to the dropshipping world.
It will give you an idea on the business model and whether you wish to even pursue it as a career. It will also cut your time in half when doing the research as it’s already done for you.
It’s a good stepping stone!
And if I’m honest, I also began this way too.
That’s when I realised that I could actually be making more money if I contacted the manufacturers direct. By then I had built the foundations I needed for my store and overcame a few hiccups along the way making my game stronger.
I’m going to lay it out straight for you. Most of these below are tried and tested. Some are even my favourite.
Top Tip: You can sign up to dropshipping directories and once you’ve chosen the niche you want to form your business in, you can use the supplier recommended to dig further into finding out who the manufacturer is. Have a nose like a fox!
Above provide a range of products from almost all popular niches that sell daily. Whether it’s electronics, toys, jewellery or t-shirts, the above company’s can provide you dropship suppliers for them.
Overall dropshipping is still trending in 2020. More people just want to earn some extra cash so decide to run this model, whereas some want a full blown business from it. Both are totally doable!
Related: Key social trends trending in 2020
Hard work and dedication is what will be required. Hours of research too. Only then you will reap the rewards and make your game stronger.
If you decide to go down the RAW route, where you source your own manufacturers, that will be time consuming and much harder than just looking up a supplier from a dropship directory. However it’s reward will be sweeter, reaping you in – More Cash!.
Top Tip: When searching for your product manufacturers, look on the 2nd-3rd page of Google. They will most likely be hiding there. Smaller company’s who don’t highly advertise themselves don’t make it to the 1st page of Google. And being human nature, if it isn’t on the 1st page, we don’t want to know. That’s where your missing out on the gold mines.
Remember – You want an in-demand product with a LOW competition.
Choose wisely my lovelies.
To read about each dropship directory in detail, click here where I explain more about each dropship directory and what they entail.
Until next time, happy dropshipping my lovelies.