In the drop shipping business, your success depends on selling products that are shipped directly from the manufacturer or wholesaler to the consumer. Your profit depends on the difference between the wholesale price and the retail price (your selling price). You can run this business in a variety of ways (physical stores, catalogs, websites) but this article focuses on how to run this business through eBay.
Step
Step 1. Create a seller account on eBay
Part of your investment in this business is the cost of advertising on eBay.
If you're not familiar with eBay, read the How to Sell on eBay article
Step 2. Research drop ship companies, also known as suppliers
Choosing a supplier that is in the same country as your target customer will make the shipping process easier. Use a directory or other drop ship reference such as Worldwide Brands, Doba or SimpleSource-they will find an authorized supplier for you.
Be wary of scammers who pretend to be suppliers when in fact they are just middlemen. They will take a share of the profits themselves, thereby reducing your profits. If they charge a regular fee to use their services, remember that this is a red flag
Step 3. Decide what you want to sell
You need to check if there is a large enough demand (and not too much supply) for the product you are trying to sell. One way to find out is:
- Login to eBay
- Click "Advanced Search"
- Enter the product (e.g. artistic decorative lighting)
- Sort by "Price Highest First"
- Select "Completed listings only"
- Click "Search"
- Pay attention to what products are selling
Step 4. Create an account as a reseller from the supplier
Email, call, or mail asking how to become a retailer of their products and ask if they are willing to drop ship to your customers. You should also find out if they will put a custom label (with your name and store address) on the shipment, so consumers think you are the sender.
Don't be surprised if the supplier you contact to inquire about a reseller account asks for a tax card. In order to purchase products at wholesale prices, many require this information
Step 5. List the item on eBay
Upload images and descriptions from the supplier's website. Make a list that is detailed and looks professional. For better results, provide your own description and picture of the product you are selling (if you have a sample). The price should be low enough to compete with similar items, but high enough to make a profit, once you factor in advertising costs.
Learn how to advertise effectively on eBay and how to place an ad on eBay
Step 6. Contact the distributor if your item is sold
Give them your customer's shipping address. They will ship the product directly to your customers. Ensure shipments arrive on time and on demand.
Tips
This step may not be useful for new Paypal account holders as PayPal now freezes funds for 21 days for new accounts until the item is received by the buyer
Warning
- Make sure you keep track of how much stock the supplier has. If you sell an item that is out of stock, delivery will be delayed, and your customers will be disappointed with you. As a result you will get negative feedback, which will reduce sales.
- You may have to pay taxes on profits made through this business. Learn how to minimize business taxes on eBay.
