How dropshipping works – the good news and the bad news

Dropshipping…
But Not as We Know It!

In last week’s eletter we talked about dropshipping as a business model eBay UK hasn’t exactly fallen in love with, despite dropshipping being welcome on eBay.com.

But let’s look now at how dropshipping works – as well as why eBay UK isn’t so keen on a business concept that can help you and me sell thousands of products every month, without ever having to buy goods in advance of listing them or having to stock goods ourselves.

This is the traditional dropshipping process:

– You find a product you’d like to sell

– You look for a supplier willing to deliver goods direct to your buyers

– You list the product for sale

– You sell the product and take payment

– When payment clears, you send your customer’s name and address to your dropshipping partner with appropriate product details and an agreed share of the takings

That process can work wonderfully well and there are millions of sellers worldwide marketing other people’s products, never facing cash flow or communications problems.

So why doesn’t eBay UK like this business model?

I personally think it’s because dropshipping tends to be more professionally organised in America where hundreds of firms work as dropshippers. In the UK, however, dropshipping is a relatively recent phenomenon boasting as many very professional outfits as others ready to rob sellers of their takings and leave buyers high and dry.

It is frequently claimed by eBay PowerSellers that UK dropshippers take longer than American companies to fulfil orders… and they’re not always as nice to customers as their American counterparts.

Looking on the bright side, I’ve found nothing official on eBay’s UK site suggesting you can’t list dropshipped products. But there are plenty of hints advising sellers to be very careful doing so or risk having their selling privileges restricted or even suspended.

That’s the bad news out of the way.

The good news is, if you take your time and plan carefully, there’s no reason eBay should ever know you are listing dropshipped products and they may not even care.

And simply by introducing a few changes to how dropshipping normally works, you’ll enjoy all the benefits of dropshipping without ever upsetting eBay or your buyers.

I know that for certain because I have been listing dropshipped products on eBay UK for more than a decade and encountered no problems at all, primarily because I’ve been very careful choosing my dropshipping partners. Also, I only ever work with people I can visit in person every two or three weeks to plan our business together and discourage potential problems.

So the big secret is to contact product suppliers direct and arrange exclusive deals permitting you to sell their products exclusively on eBay. You’ll see how to do so in my dropshipping report which you can download free of charge in next week’s eletter.

Here are more tips to help you grow a profitable dropshipping business without ever compromising your selling status on eBay:

  • Do not ever tell eBay you are selling dropshipped goods or even proposing to do so. That’s because on numerous occasions, including in eBay Community forums, I have witnessed sellers claiming their accounts were frozen just because they asked eBay’s advice about dropshipping. I really don’t know if that’s true but there have been many suggesting it does actually happen.
  • Find potential suppliers at craft fairs, trade shows, business exhibitions and from ads in local and national newspapers. Set up exclusive deals and avoid working with dropshipping companies processing countless different goods through millions of sellers. I’ll show you how to do this in my free report.
  • Take your time getting to know your prospective new partners. Talk to them face-to-face, at trade shows and business fairs, for example. Telephone them a few days later to confirm what was discussed at your first meeting. Offer to meet in person to discuss your trading partnership two or three weeks ahead of listing their goods for sale. Determine how approachable and helpful your new partners are and remember, if a potential partner is unhelpful to you, he or she might be even more unhelpful to your buyers.
  • Choose high profit margins over low and avoid highly competitive products. It makes more sense to spend time sourcing a handful of items with high profit margins for which you are sole provider, than lots of highly competitive products – like batteries and CDs – where prices and profits are low and competition is rife and growing more stifling by the day.
  • Place a few orders outside of eBay. Address orders to friends and relatives and see how fast goods are delivered. Check how well the goods were packed. Have a recipient phone your supplier, asking for help to use the product or saying they want to return it for a refund. See how well your trading partner handles the call and remember that late delivery and poor communications from the outset are likely to become worse and could earn you negative feedback on eBay, as well as possibly restricting your seller privileges.

Follow my lead: I insist my trading partners replace their business details with mine inside and outside of product packaging, so my buyers always contact me first for help. Sellers who don’t agree are quickly dropped!

  • If sales are high and product suppliers close by, you might visit your partners’ premises every few days to pack and fulfil orders yourself.
  • Keep a close eye on stock levels so you don’t have to cancel orders from your eBay customers and refund their payment. Have suppliers send you a weekly spreadsheet of stock in hand. Ask how long it takes them to obtain new stock. Tell them to track goods in transit to your buyers. Make a note of suppliers’ working hours, know when they take regular short breaks and longer holidays, ask when they close down before major spending seasons like Christmas.

Get it right and you can look forward to running a dropshipping business that makes good profits for you week after week and never leaves you worried or stressed or facing problems with eBay.

You’ll learn how to do it in my free report due out next week.

This article first appeared on Auction Genie. Read more and comment here