Before I get into the details, it might be helpful to describe dropshipping for those who haven't come across the term before. If you know what dropshipping is, move on to the paragraph after next.
Dropshipping is a way in which you can sell new products without having to buy them first. In summary, the dropship company holds the stock, you market their products and when you make a sale you send the agreed price for the item to the dropship company and they deliver it directly to your customer. This concept lends itself nicely to eBay, as you can list a wide range of items for sale without having to invest in any stock. Another reason it can work well on eBay is that you receive your customer's payment before you pass the order and their payment on to the dropship company. Your profit is the difference between the amount you sell the item at and the price you send to the dropship company.
Essentially you're acting as a retail outlet for a manufacturer or wholesaler who offer a dropship facility.
A key point is that you need to make sure the numbers work for the products you're interested in selling. By this I mean be careful about your net profit calculations. For example, remember your eBay and PayPal fees, as well as the total price you have to pay to the dropship company.
Before you start looking for dropship suppliers I would recommend you research eBay to see what is selling well and also to get a feel for the level of selling prices that are being achieved for those items.
There are a couple of ways you can conduct this research. First, you could view Completed listings on eBay. You do this via eBay's Advanced Search page where you type in product keywords and/or select a category - and then make sure you check the Completed listings box.
You are then presented with the results of your search where you can see items that meet your search criteria. You can see which items have sold by the little "sold" box and also the selling price, all in green. Red amounts indicate a listing that didn't sell. From this information you can get an idea of how popular a particular item is and also the price people are willing to pay it.
Another research idea would be to use eBay Pulse. With eBay Pulse you can see the most popular search terms by category and also see the Most Watched items, again by category.
When you've decided on the types of products in which you're interested, you can start looking for appropriate dropship companies. The starting point might be to use Google, searching for your product together with the word dropship or dropshipping.
If you're in the UK and are struggling to find UK based dropship companies, you might like to consider my own publication "UK Dropshipping Sources":
I have had good success dropshipping with a company called ArtsCafe. This is a company who dropship personalised products directly to your customer. The unique aspect of their service is that you can have any image attached to any of a wide range of physical products. For example, I created a range of alarm clocks with golfing and World War II airplanes designs, and these sold well on eBay. You can download a free ebook I produced describing the ArtsCafe service - it's a little dated now but all the principles are still valid:
Finally, a forum I recommend you look at is http://dropshipforum.co.uk. This is a busy forum all about dropshipping. They also have a section in the forum which concentrates on using dropshipping for eBay and other auction sites.
I hope this has been helpful. Dropshipping on eBay can work great but, as I mentioned earlier, please do the sums properly so that you don't lose out on your dropship sales.
Does Dropshipping Work on eBay?
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25 March 2011
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