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eBay: Drop Shipping

Drop shipping is an interesting and potentially profitable business concept. In the drop shipping business model, you locate a wholesale vendor who has products to sell that will agree to ship them directly to your customer. Most eBay sellers purchase an item and then resell it on eBay. With drop shipping, you first list the item on eBay, at a price that is higher than the drop shipper's wholesale price. Once you make a sale and collect the payment and shipping fee, you then send a payment to the drop shipper, who in turn ships the item directly to your customer. So in a sense you are selling something you don't own. Some people when seeing this think it is somehow dishonest, but it is actually a common practice. The trick is dealing with a reliable drop shipper who actually has the product in stock and who will agree to do this as a service to you.

The advantage of this business model is obvious. You do not have to risk any money buying products until the merchandise actually sells and you receive payment.

Theoretically, if you found a vendor with hundreds of products to sell, you could list hundreds of auctions on eBay and, each time an auction closed with a winner, simply collect the money and send the payment and shipping instructions to the drop shipper. At first blush it sounds easy -- a sort of unstoppable money machine. It can work, and it does work for many people, but like many things in life, it is not as simple as it sounds.

First of all there is the issue of reliability. Remember, on eBay it is your reputation that is on the line, not the drop shipper's. If they claim to have an item and you sell it and then find out the item is backordered or no longer available, then you are stuck. Only work with reliable companies.

If you Google the term drop shipper you will come up with lots of results of companies that claim to have thousands of products to sell. I suggest you avoid these. Many of them are outright scams, while others are what are knows as virtual warehouses. Basically they do not actually warehouse products. When you sell something through them, they then order if from the distributor who actually ships it. Despite the claims, the prices they quote are usually too low to sell on eBay profitably. The tip-off to these types of companies is that they charge a monthly or annual fee or they ask you to fill out a form giving your name, address, email and phone number and they set up a salesperson to call you.

The trick to drop shipping successfully is to work directly with a manufacturer or master distributor of a product. You can find manufacturers in the Thomas Register of Businesses but this is a very time consuming way to locate manufacturers who will drop ship. There is one company that has done the work for you called World Wide Brands. They are the only provider of wholesale information actually endorsed by eBay. They charge a one-time fee for lifetime access and they do not sell actual products. Instead they connect you with actual manufacturers and distributors of products who have been pre-screened to make sure they will work with eBay sellers. They recently approached me and offered a special deal for my readers. (Click here for an additional $20 discount.)

Read Chapter 7, Winning With Drop Shipping in Three Weeks to eBay Profits. Have any of you tried drop shipping or signed up with a drop ship supplier? What has been your experience? Do you have any questions or concerns about how dropshipping works?

Reply to this message to discuss these topics.

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