Drop shipping on eBay – An Effective Startup Strategy

A lot of people are talking about eBay and drop shipping as a successful business model. You can make your dream of owning a successful eBay business come true using this simple, but powerful strategy. In my opinion, this is a "startup" strategy you can use. By that I mean that it should be employed in your beginning stages, and then you can either replace it with bulk wholesale or use it as a complementary source to increase and diversify your offerings.

The main advantages of drop shipping your products to eBay buyers are eliminating your upfront merchandise costs, and being able to offer a wide variety of products. On the other hand, in many cases it is hard to find good profit margins, especially for hot selling products such as consumer electronics. Drop shipping and eBay could work for you if you choose to sell certain products, but with other products you would need to buy bulk to be able to turn in a good profit.

Some sellers start with this strategy to establish a name on eBay and make a little profit in the process. This only works if you list a lot of auctions gaining little return on each. This serves a few purposes. First, you will start to establish a presence as regular buyers will see your auctions more often. Second, a little bit of each auction will accumulate to a decent amount, which you can reinvest part of towards growing your business.

In order to start using this strategy on eBay, first you need to decide what to sell, then find a few suppliers that drop ship those products at a profitable price. With a little bit of time, you can find those drop shippers for free. You use my free wholesale directory to locate some drop shipping companies as well as bulk wholesale suppliers at wholesaleinone.com. You might also consider one of the paid drop shipping directories. The ones I recommend are Salehoo and WorldWideBrands.

After finding the companies that will drop ship your products, all you have to do is set up your auction, and sell the product. You then pass the customer’s information on to the drop shipping company. The drop shipper does the rest, and they will even use your company information, as well as your company logo depending on your terms with them. When the product arrives at your customer’s home, they will have no idea that your company didn’t send it that's called "blind drop shipping". The drop shipper will package, label, and ship the products that you sell, allowing you more time to set up even more auctions, for greater profits.

You must establish a relationship with several drop shipping companies in order to become successful. This will also diversify your offerings, and will allow you to test different products and determine which ones are returning a better profit. In the beginning, most companies will require you to pay for the items that your customers order before they are shipped. You need to fill orders in a timely manner, so you should pay for the items with a credit card for speedy service. Eventually, you will be able to have the drop shipper fill your orders, and then bill you for them later.

For the pricing decision, you need to either use a "Reserve" or a "Buy it Now" auction if you can. When you set up your eBay auctions with reserve, make sure that your reserve price is set higher than the price that the drop shipper will be charging you for the item. The idea, of course, is to earn a profit! Depending on the item you are selling, a markup of about 10% should be about right, but you should do some research to see if the item is selling for a lower price in another eBay auction, or through other online sources.

By selling products on eBay using the drop shipping method, there is essentially no financial risk on your part. The product will be sold before you pay the drop shipper for the item. This is one of the few businesses where you can actually turn a profit before you have expenditures! So, use drop shipping for your eBay business and start rolling in some profits.

Best wishes with eBay and drop shipping.

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