Dropshipping is a popular model for retailers, especially when starting out. There are over one billion listings on eBay, and many of those items are being dropshipped from suppliers. Beginning sellers are often attracted by the prospect of selling to customers without keeping stock. They fantasize about a business model where all they do is add their profit margin.
However, dropshipping doesn’t turn out to be as simple as some sellers expect it to be. Dropshipping on eBay, especially, is associated with a few complications that you will have to deal with, sooner or later. That doesn’t mean that starting your own dropshipping business is a hassle or unnecessarily difficult on eBay. But it does mean that you need to be willing to put in the work and level of dedication required to be a successful dropshipper on eBay, especially after the dropshipping policy of 2019.
In this article, we will talk about this policy, what it is, why it was introduced, and what you need to do to avoid getting your account flagged or suspended.
What is Dropshipping?
Generally, dropshipping is a business model where a retailer sells items without ever holding them in stock. eBay defines dropshipping (or product sourcing) as “when you buy stock from a supplier and work with them to send items directly to your buyers.”
There are two main ways sellers drop ship items to their customers. They either source the item from the manufacturer/supplier and have it shipped to buyers or they buy it from large retail stores like Walmart and put their customer’s address in the shipping details.
The concept of dropshipping is not entirely new. In fact, it is a business model that is older than the Internet.
According to Contrado, dropshipping is said to date as far back as the 60s, since the time of mail order businesses. Large mail order businesses created fulfillment centers to store inventory in bulk and to ship fast to customers.
These businesses usually sent out their mail order catalogues where they listed items that were available for sale and the smaller mail companies took advantage of this.
They would send out their mail order catalogues where they listed similar items at a slightly higher price. They would then take requests from buyers, go on to purchase the items from the fulfillment centers, and have the items delivered from these centers to the buyers.
eBay Dropshipping policy
Before 2019, dropshipping on eBay was easy, maybe too easy. Sellers would source products from large retailers like Walmart and Amazon and have them shipped directly to the buyer, sometimes with the original receipt attached. Customers became dissatisfied, and eBay had to eventually crackdown on the practice.
In January 2019, eBay came out with a dropshipping policy that changed the dropshipping business model for a lot of sellers. It even led to some sellers declaring that dropshipping on eBay was dead. However, that couldn’t be further from the truth, as eBay never banned dropshipping outrightly.
They only added some conditions for dropshipping on their platform. This move made perfect sense since eBay was losing customers and suffering an attack on its reputation. This policy was their best attempt at salvaging that reputation.
In the next section, we will talk more about eBay’s dropshipping policy guidelines and what they mean for sellers.
eBay’s Dropshipping Policy Guidelines
eBay published its dropshipping guidelines in a post on the eBay website titled “Drop Shipping and Product Sourcing.”
There are four main takeaways from the post:
- You Should Only Dropship from Wholesale Suppliers: This is the only form of dropshipping allowed on eBay, according to the policy. Dropshipping from other other online retail stores, whether on Amazon, Walmart, or elsewhere, isn’t allowed. Consequently, eBay sellers who sell to or through other companies (such as yourself) rather than the general public must be your suppliers if you’re going to be an eBay drop-shipper. According to the first sentence of the policy, legitimate wholesale suppliers are those from whom you buy inventory. Most wholesale dropshipping services allow you to inquire about, purchase, and store inventory. Your customers will receive their orders directly from the wholesale supplier, who will process and ship them on your behalf.Wholesale suppliers may also include companies with whom you get into a contract but do not purchase inventory. Different countries have different procedures for entering into a contract with these types of vendors. You will first need to obtain a reseller certificate, contact suppliers in directories, and then reach an arrangement with them. It’s less expensive than purchasing an actual inventory, but it’s a hassle, no doubt. Find a reliable wholesale supplier for your online store so as to comply with eBay dropshipping policy.
- You are Responsible for the Safe Delivery of the Item Within the Specified Timeframe: It’s important that you give your eBay customers a great experience when they buy from you. So, make sure your dropshipping supplier delivers the product on time. Building a great reputation will help you build a loyal customer base.
- You are Responsible for Ensuring Customer Satisfaction and Providing Customer Service After the Item has Been Purchased: Customer satisfaction is paramount to eBay and you should pay attention to this if your aim is to succeed on eBay.
- eBay Stipulates Possible Sanctions for Violating these Policy Guidelines: These sanctions include a lowered seller rating, buying or selling restrictions, demoted listings in search results, removing buyer or seller protection, and account suspension.
You should note that even though it is possible to skirt this policy, it is not worth it in most cases as you can make a fair profit from dropshipping in line with eBay dropshipping policies. However, if you have to dropship from other retailers or a marketplace, you should keep in mind the risks involved.
Dropshipping from Retailers
Dropshipping from retailers like Costco and Banggood isn’t allowed according to the dropshipping policy. However, a lot of dropshippers have been using this business model for years and there’s no reason why you can’t too. As long as you adopt good seller practices and ensure that your customers are fully satisfied, your account should remain safe and active.
However, dropshipping from retailers still violates eBay’s terms and policies and the platform doesn’t take too kindly to that. Once eBay suspects an account of dropshipping from a retailer, they flag that account and remove the seller’s Top Rated status.
Flagged Accounts and The eBay selling practices email
The eBay selling practices email is sent to accounts that have been flagged for dropshipping from retailers.
Basically, it states that you haven’t followed eBay’s selling practices policy and your Top Rated status has been removed as a result. Interestingly, this same email is also sent to sellers that haven’t achieved Top Rated status.
It means that for as long as you’re dropshipping from retailers, you aren’t eligible for the Top Rated Seller status.
The flagging process is automated, hence it is less than precise, and even sellers that don’t dropship can be sent the email.
Top Rated Status
The Top Rated Seller program offers certain perks to sellers who offer exceptional customer service on eBay. This status is not mandatory for selling on eBay. You can generate a lot of sales and make considerable profit without becoming Top Rated.
Listings by Top Rated sellers do rank higher in search results but this boost can be negligible if your listings are well-optimized and your store offers exceptional customer service. A lot of stores perform excellently with the Standard status rating.
eBay Promoted Listings
Promoted Listings allow you to get your items in front of more buyers. After the policy change, eBay made changes to its algorithm that caused a drop in views for products that were being dropshipped.
It is generally accepted among eBay sellers that promoted listings don’t work for items that are being dropshipped. Dropshippers, therefore, need to focus more on optimizing for organic search traffic.
It’s up to you to weigh the pros and cons and decide what suits you and your business the most.
A Guide To Avoid Suspension When Dropshipping on eBay
The following are some tips that will help you avoid getting suspended when dropshipping on eBay:
- Stay clear of restricted items: eBay has a long list of product categories that are restricted or outright banned on their platform. You can find a list of these items here. Apart from these restricted products, you should also avoid selling VeRO products, i.e products that are part of the Verified Rights Owner (VeRO) program.
- Ensure that shipping is always on time: Late shipping is a huge no-no when building your brand on eBay. Make sure your supplier ships on time to your customers. If necessary, pay extra for the fastest shipping option. Better a positive review about fast shipping than a complaint about a late shipment.
- Provide excellent customer service: Always attend to your customers’ complaints quickly and respectfully. Ask them to leave feedback and be sure to leave positive feedback for them as well. Leave your customers with a positive experience. Your reputation will either make or break your success as an eBay dropshipper.
- Handle returns on time: You should generally try to avoid situations where your buyers feel the need to return your products. But since this can be an impossible task to handle, you should instead make sure that returns are handled as quickly as possible.
- Update tracking numbers on time: Tracking information lets you and the buyer see where the item has gotten to. Make sure that your tracking numbers are updated on time according to the time stated in your shipping policy.
- Keep your transaction defect rate as low as possible: Your transaction defect rate is the percentage of your transactions with one or more defects, i.e returns or seller-initiated cancellation due to the items being out of stock. According to eBay, your transaction defect rate should not be more than 2% to meet the minimum standard. That means that you should aim for even less. Always maintain communication with your supplier and switch to another supplier immediately, if any unworkable complications arise.
Despite what some people believe, dropshipping is still a feasible and profitable business. Dropshipping still makes up a considerable percentage of the e-commerce industry. Dropshipping on eBay is not without its complications. It does require a lot of dedication and also that you pay a great deal of attention to buyer satisfaction. But as long as you can manage your input and maintain your profit margins while smoothing out any kinks in the process, you can achieve success with dropshipping on eBay.
Is Dropshipping illegal?
Dropshipping, by itself, is certainly not illegal. Anyone who tells you otherwise is likely misinformed. That said, it is possible for a dropshipper to engage in illegal activities such as buying watchers and using fake identities to run accounts.
Can eBay suspend your account for dropshipping?
No. eBay will not suspend your account unless you’re violating their policies. That means your account will not be suspended for simply dropshipping on the platform. However, if you’re dropshipping from another retailer or marketplace, it is possible, but almost unheard of, for eBay to suspend your account.
Is eBay suspension permanent?
Suspensions aren’t so common on eBay. Less stringent restrictions are usually applied before a full suspension. Suspensions can last for several days or even indefinitely. You can usually call eBay to resolve the issue.
Tips for Dropshipping on eBay
eBay dropshipping definitely has its advantages and downsides, but when done right and treated as a business, it has the potential to bring steady, extra income. Here are a few tips for successful dropshipping on eBay:
Conduct product research. Product research is how you determine whether a product idea is viable and can succeed on eBay. Product research can involve examining trends and researching your competitors to find out the strategies they employ in marketing and promoting their items.
Zik Analytics is a powerful tool you can use to conduct product and market research. Zik Analytics helps you find your direct competitors and examine their selling strategies. It also helps you validate product ideas by analyzing market trends to find the best products to dropship on eBay.
Find a supplier you can trust. A trustworthy supplier is crucial to the success of your dropshipping business. An unreliable supplier will lead to missed delivery dates, shoddy product quality, and reduced buyer satisfaction.
Stay in touch with your supplier. You should be aware of your supplier’s stock availability at all times. Your success at dropshipping basically hinges on this information. Your supplier should be able to give you regular updates on stock levels.
Keep learning. There are always new niches to explore, new tools to apply in streamlining your listing process, and new free and paid online resources to learn from.
Optimize your listings. Optimized listings rank higher in search results. Make sure to optimize your titles, product descriptions, and item specifics. Also, include high-quality pictures that show your item from different angles.
Create an attractive return policy. A longer return window boosts your rankings in search results. You can make your return policy the same as the one your supplier offers. Or, you can opt for a little more risk and offer an even longer return window.