Is drop shipping the best way to get wholesale prices?

Is drop shipping the best way to get wholesale prices?

We have people asking us if drop shipping is a good way to sell on eBay and every time we're asked we give the same reasons on why it's a bad idea. We're posting why we feel this way and here are the 4 great reasons we feel you should avoid drop shipping.

#1 - If your supplier doesn't have the item in stock it almost always equals Bad Feedback for you.

Drop shippers are known to run out-of-stock of items and forgetting to tell their customers.  It's not a good idea to sell the item on eBay and then have your drop shipper tell you the item is not in stock. You then get to tell your buyer that they won't be getting the item they purchased and typically all you get is some bad feedback in return.  If you want to see sellers that had bad results and negative feedback from drop shipping check out the eBay forums because there's a lot of unhappy eBay sellers.  

#2 - Your supplier could also be your competition

This happens a lot with the "direct from China" drop shippers. Basically this means that your drop shipping supplier is usually selling the same items on eBay themselves. Usually you'll find the drop shipper's website saying they will drop ship to your customers directly from China, what they neglect to tell is that that they are also selling the same products on eBay themselves. If you look at the electronics category on eBay, don't be surprised to see  many of the listings being located in Hong Kong, Beijing, or some other location in China. So you're going to see many of the drop shippers competing with their customers.

#3 - PayPal has been known to hold funds for new sellers

 Ebay and PayPal issued some policies a couple years ago. One of which is they will at times put a HOLD on your funds.

 "In a small percentage of cases where it has been determined the risk of dissatisfied buyers is higher, PayPal may delay release of the payment funds to the seller until the buyer has left a positive feedback or 21 days have passed without a dispute, claim, chargeback or reversal filed on that transaction."

So if you're a new seller trying to use drop shipping as your source for products, you might find that you can't access your funds until the product has arrived at the customer's door.  This is going to eliminate the best aspects of drop shipping - the ability to sell a product before you pay for the item (instead waiting to use the buyer's recent payment to fund the purchase.)  If you have PayPal holding your money for up to 21 days that isn't going to work.

#4 -Making a negative profit is common

 Most people who end up using a drop shipper for their products get upset when they find out the price the drop shipper is selling the product for is considerably more than the retail price on eBay. This happens a lot more than you think. Honestly, if you're thinking about drop shipping please check out the wholesale price from the drop shipper compared to the retail price here on eBay. The thing about buying wholesale is all about buying in bulk or at least a lot of items. If you're just buying just one item every now and then don't expect expect a wholesale price. 

Ebay is a place people go to look for the best possible price. They're not looking to pay full retail price but if you still insist that drop shipping is your best option.

Let me say that drop shipping can and does work on eBay but you need to spent a large amount of money with a wholesaler who will give you a true wholesale price on items that they are willing to drop ship.  

A little info about the author. We've learned a lot about the wholesale business due to the nature of the business we're in which is selling million dollar estates on eBay, there's no telling what you might find in one of our auctions. If you get a chance take a look at what we're offering, we're sure you'll be impressed. We feel you should be able to easily resell the items from our lots for a minimum of 20% profit and probably a whole lot more. We do hope this guide has been helpful and appreciate you taking the time to look at it.