What is drop shipping?
Drop shipping, also known as product sourcing, or having a third party deliver orders on your behalf, is a popular way to start a business without big investments: you buy stock from a supplier and work with them to send items directly to your buyers without ever handling them yourself.
Drop shipping is allowed on eBay if you own the items prior to listing or have an agreement with a wholesale supplier to list and sell their items. A user agreement from another retailer or marketplace does not fulfill this requirement.
If you use drop shipping, you’re still responsible for the safe delivery of the item within the time frame stated in your listing and for the buyer’s overall satisfaction with their purchase.
Sellers are not allowed to list an item that is not in their possession on eBay at a premium and then purchase the item from other retailers or marketplaces that ship the item directly to their customers. This creates multiple bad buyer experiences.
- A seller who is using third-party fulfillment to deliver inventory they own, as long as the following conditions are met:
- They are clearly identified as the seller on all packing slips and invoices
- They ensure the safe fulfillment of the item within the terms stated in their listing
- They ensure that the third-party provider is subject to a contractual condition which prevents them from using or sharing any eBay order information for any purpose other than the fulfillment of the specific eBay order
- A seller who is selling items that are fulfilled by a third-party wholesaler when they have an agreement with such a wholesaler to sell specific items prior to listing them on eBay.
❌ Not allowed
- A seller who is selling items they do not own or do not have the rights to sell
- A seller who is selling items that they purchase from retail sites or other sources after the item has sold on eBay
Activity that doesn’t follow eBay policy could result in a range of actions including but not limited to: administratively ending or canceling listings, hiding or demoting all listings from search results, lowering seller rating, buying or selling restrictions, loss of buyer or seller protections, and account suspension. All fees paid or payable in relation to listings or accounts on which eBay takes any action will not be refunded or otherwise credited to your account.
Drop shipping: pro and contra
Drop shipping is a good business model, especially for novice sellers:
- The process is easy to organize
- The entry threshold is low (minimum initial investments)
- You don’t need to create your own storage facility or spend money on renting one
- You don’t have to pack orders and ship them to buyers on your own
- On a large marketplace, your listings are guaranteed to get organic buyer traffic even without extra marketing expenses
Even if you are a seasoned seller, drop shipping can help you diversify your store inventory and expand the range of brands without making extra investments.
Nevertheless, this business model has its disadvantages — namely, low profits and high competition. That’s why the right choice of items and the reliability of suppliers are so important for drop shippers.
What you should bear in mind when choosing items:
- Some goods and categories are strictly controlled by eBay. See the list of restricted and prohibited items on different eBay sites before making an agreement with a third party
- If you are just starting your business, consider the most popular items
- Choose items that are easy to ship — with a minimum risk of getting broken or damaged during shipment
- Choose items with a low risk of return
When you decide on the inventory, find a supplier with good wholesale prices, excellent reputation, and quality service.
Make customer service your priority. Answer buyers’ requests as quickly as possible. Provide complete and up-to-date information about your items: make timely adjustments to listings if there are changes in item characteristics, price, or configuration, and also if an item is discontinued. To get such information in time, keep active communication with your supplier.
Beginner sellers should also take into account that eBay has selling limits for novices.
Frequently asked questions
Why must I have an agreement with a third party that is delivering the item?
eBay expects you to be in control of the fulfillment of your orders. When you lack an agreement with a third party that is delivering items (or if you are in breach of the third party's agreement), you do not have adequate control over the delivery of the items. This creates an unreasonably high likelihood of bad buyer experiences, which is not acceptable to eBay.
I have an agreement with a third party. Can I send you proof?
eBay can detect whether you are following this policy, so there is no need to provide evidence. To follow the drop shipping policy, you must demonstrate through your sales that you are in control of your inventory. For this to reflect on your account, the change in your account activity must occur for at least one month.
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