How to Set Up an eBay Drop Shipping Business

From the Featured Article Series:
The Best Drop Shipping Companies 2018

By Milo Cruz | Last Updated: September 9, 2018

Table of Contents

Ever wanted to put up your own store on eBay? You can do it today!

With drop shipping, you can start selling products in just a few steps – and you won’t even need to have any inventory! Not sure how that works? Read our primer on drop shipping to get a better idea.

In this guide, we’ll show you the things you need to become an eBay drop shipper. We’ll also offer tips to help you reach success, and ultimately build a sustainable business that generates consistent earnings.

Ready to get started? Let’s dive right in.

Is Drop Shipping Allowed on eBay?

Yes! Drop shipping is legal and perfectly acceptable on eBay. In fact, a lot of other sellers use drop shipping as their primary business model with great success.

If you want to drop ship on eBay, you’ll have to meet one basic requirement:

You are responsible for the safe and timely delivery of products to your customers. As a general rule, your shipments must arrive within 30 days of a customer purchasing an item.

As long as you’re careful to avoid products that take longer to deliver, you’ll be fine.

Advantages of Drop Shipping on eBay

So what’s so great about drop shipping on eBay? The potential for profit, of course! But let’s take a look at how the marketplace fares against other options.

Compared to drop shipping on other platforms, eBay shines due to:

Easy Setup

Selling on eBay takes little effort to get into. Simply sign up, make your listings, and you’ll be up and running in no time. Producing a professional-looking online store here is as fast as it gets.

High Traffic

eBay’s massive popularity brings in thousands of customers daily. You can piggy-back on that success and instantly reach a very wide base of potential customers.

This also means that you can spend less time and money on marketing, optimizing, and other costly methods of driving traffic to your store.

Disadvantages of Drop Shipping on eBay

Drop shipping on eBay does have some drawbacks, though:

Fierce Competition

Not only will you be competing with other drop shippers, you’ll also be up against bigger businesses that can afford to offer lower prices, and likely better service.

Less Customization

eBay’s website doesn’t lend itself well to customization. If you want eye-popping visuals and multimedia content, you’ll find that creating a store on this platform doesn’t quite hit the mark. It just lacks that extra oomph you might see on other eCommerce platforms.

ebay stores

Some Suppliers Might Not Want to Work With You

Not all suppliers will be willing to work with drop shippers. This could be because they already have a store on eBay themselves, or they avoid the platform entirely to protect their brand’s image.

eBay Fees

Since eBay provides the platform that enables your business, you’ll have to play by their rules – which includes paying the associated fees. These fees add up and take away a significant portion of your margins.

There are two primary fees that are common to all products sold on eBay: an insertion fee and a final value fee.

The insertion fee is $0.35 for all listings, but is lower for eBay Store subscribers. The final value fee equals 10% of a product’s final sale price, up to a maximum of $750. Both figures are lower for subscribers.

Other fees are also applied for special listings.

How to Start Drop Shipping on eBay

In this section, let’s tackle the hows of drop shipping on eBay. These represent the first steps you’ll take on your climb to success.

Step 1: Find a Niche (Or Not)

The first thing you need to have is a business idea. And to do that, you’ll likely have to ask yourself one of the biggest drop shipping questions there are: “What products do I sell?”

We’ll talk about that more later. For now, you might want to start thinking about a specific niche for your business.

Finding one helps you focus your brand – giving customers a reason to stay loyal to your business. It also allows you to add value to your products as you become more familiar with them.

Think about what interests you. Is there something you are an expert (or at least pretty good) at? It helps to have knowledge of your products as it tremendously improves customer experience.

Or you can also look at it from a purely financial point of view. You can study market data to find top-selling products and start from there. You can also rely on third-party tools that provide you niche suggestions based on the same data.

You even have the option of not choosing a niche at all. There’s really nothing stopping you from selling all sorts of products that don’t necessarily fall into one category.

So which strategy is the best?

It really depends on your goals and what kind of business you want to run. There is no best strategy – particularly on eBay where restrictions are more relaxed.

Ask yourself:

Are you getting into drop shipping to build a real business, a real brand? Or would you be happier to focus purely on profit – possibly switching from one product to the next?

Your answer will give you a better idea than any guide ever could. Know the amount and kind of work you’re willing to put into your business, then formulate your strategy based on that.

Finally, remember that flexibility is always good. Just because a niche is successful now, doesn’t mean it will be later on. Have a plan, but be prepared to adapt as needed.

Step 2: Sign Up as an eBay Seller

Creating an account on eBay is fast and simple.

As a newcomer, you could go with a free standard account. This will give you a total of 50 free listings per month.

You can also choose to get an eBay Store subscription, which will provide you with discounted fees and more tools to help your business succeed.

Some noteworthy benefits of a subscription include:

  • More free listings
  • Discounted listing fees
  • Lower final value fee percentage and maximum
  • Access to Promoted Listings
  • Customizable storefront homepage

There are several plans to choose from – with the more expensive plans providing even more perks. You can look at a comparison in the table below:

eBay stores subscription plans and pricing

Is getting an eBay subscription worth it?

Yes, getting a subscription is more cost-efficient if you make more than 50 listings every month.

For example, the $4.95 Starter plan gives you 50 more free listings – which would cost you $17.50 without a subscription.

Since you’re just starting out, we recommend testing things out with a free account. 50 listings is enough to get you started. If you plan to grow your business further however, we’d definitely recommend purchasing a subscription.

Side-note: Be considerate of your account name. Keep it professional and in line with your business. A bad choice here could put off potential customers – especially since you won’t yet have any reviews to back up your credibility.

Step 3: Look for Reliable Suppliers

The next step – and arguably the most time-consuming one – is finding suppliers you can count on.

This is especially true if you plan to build a long-term business. Make sure to do research on a supplier before working with them.

Take a look at their website. Does it appear legitimate and professional? Is there a reliable way of contacting them? If they have a review section or something similar, read through it. Check out their fulfillment and dispute rates if the information is available. If it isn’t, ask for it.

The aim is to build a relationship based on trust. In a sense, you’re both relying on each other to deliver their end of the bargain. Failing here means you’ll have a very difficult time when problems arise – and they will.

On the other hand, if you were planning on simply hopping from one niche to the next, building relationships might not be as feasible – or even possible. However, it’s still important to ensure that you look for suppliers who can guarantee on-time delivery of quality products..

Either way, we recommend finding suppliers using drop shipping companies like SaleHoo. They do all the work of screening suppliers for you, so that you never risk doing business with the wrong ones.

salehoo search tool

SaleHoo also lets you quickly search for products right from their directory. Just input a specific product or niche you have in mind into the search tool and they’ll provide you with a list of drop shipping suppliers you can work with.

It’s an exceptional service that makes drop shipping easier, and a whole lot safer. If you want to know more, you can go to our SaleHoo review and see why highly recommend it.

Step 4: List Your Products

After you’ve completed all the previous steps and have products for your store, it’s time to list them on eBay.

Start by naming your product, adding a description, and uploading its photos. Set your selling price and shipping cost, making sure to consider your margins.

How should you price your products?

Basically, you want to price your products high enough that all your expenses are covered. That includes the wholesale item’s cost, shipping, eBay fees, payment gateway fees, and so on.

A 300% markup is a safe bet. However, this isn’t suitable for some products. There’s no set formula, so practice your best judgment.

Also, to remain competitive, be sure to check how much similar products are being sold for.

Lastly, we recommend setting all your listings with a fixed price. Auction-style listings generally don’t work well with drop shipping.

How do you make an eBay listing?

Just click on the Sell button at the top of eBay’s website. It’s all pretty self-explanatory from that point. However, there are some key reminders we’d like to highlight:

Since you’re sourcing products from wholesalers, the product will likely have plenty of stock available. Use eBay’s bulk listing feature to avoid having to make multiple listings.

Indicate how much stock is available, but make sure you don’t post more than what your supplier has on hand. Go with a small number for now – around 30 should be fine. You can increase this number later on – depending on how successful your store becomes and how quickly your supplier can replenish their supply.

Additionally, make sure to set your listing duration as “Good ‘Til Cancelled,” and enable the out-of-stock option. This allows your listing to stay visible until you take it down; and temporarily disappear from search whenever your item count reaches zero.

Of course, if you’re confident with your supplier’s ability to meet your demand, go ahead and set a much higher number.

If the product has different variants available – like color or size – indicate that as well. eBay allows a maximum of 5 variation details with up to 60 values for each one.

Once you’re happy with your listing, go ahead and post it. There’s a few other things you can do to improve your listing. We’ll talk more about that later. For now, you’re ready to start selling!

Step 5: Start Selling

Now that everything’s set up, it’s time to make those sales. That was the whole point, right?

You can wait for sales to happen naturally. Or as we recommend, promote your products to give things a boost.

eBay has built-in marketing tools that let you do that. You can also use social media to draw more attention to your store. Other tactics like customized discounts and coupons can also incentive visitors to buy from you.

There’s plenty of ways to go about it. Now that you’re still starting out, we encourage you to experiment. A good start is looking into eBay’s Promoted Listings. It lets you advertise a product but only pay when it leads to a sale.

Best Products to Drop Ship on eBay

The find the best products to sell on eBay, you’d have to look at how successful they might be, and what things you can do to make them better. Let’s break it down below:

Selling History

See how well a product performs by taking a look at its selling history. You can do this on eBay for products that have multiple listings (more than 1 item count) by clicking on the number of items sold, highlighted in red.

If you see a specific product that performs exceptionally well (with hundreds of sales), look at its listing and try to find what makes it successful.

You can also look up an entire niche like ‘home decor’ or ‘motorcycle parts’ and see which products are performing well. Take note of these products and look for similar ones that you can sell.

Competition

Take into account the number of competitors you might face when selling a product. A simple search on eBay will show you how populated a niche or product is. If you see hundreds of similar offerings, you might want to reconsider or just narrow it down further.

You’ll also want to stay away from competing with larger household brands. Not only will competition be a lot tougher, but you’ll also be restricted in how you can price a product.

Price and Potential Margins

You’d want to end up with a profit on every sale you make. Sounds obvious, right? But this is something first-timers may not give enough thought.

Every sale you make is just as important as the next one. This means that you have to put in pretty much the same amount of effort for every order you fulfill. So while it might seem like a good idea to sell products in the single-digit dollar range, you won’t be making much money for your work.

By contrast, if you choose products in the hundred dollar ranges, you’ll have big enough margins to maximize your time. You’ll only need to deal with a few orders and customers at a time, compared to potentially dozens of simultaneous orders that require your equal attention.

Current or Projected Demand

Some products have stable demand throughout a year. While it may be profitable to stick to these products, you should look at trends for opportunities to add to your product line.

fitness products

For example, you might want to focus on fitness products at the start of a year to cater to New Year’s resolutioners.

Riding on pop culture is another example. Look at what’s currently trending and find products that reference these. Is everyone talking about that new Star Wars film? Now might be a good time to look for suppliers sell toys relating to the franchise.

Your Own Expertise

Since you won’t have possession of the products you sell, you’ll have to bank on your own knowledge to serve your customers.

Customers will often ask you questions about a product before making a purchase, especially when it comes to technical niches where compatibility is always a consideration.

If you don’t know much about motorcycle parts, for example, it might not be such a great idea for you to start selling them.

Opportunities to Add Value

Since competition can get fierce, choose products that have the potential to be marketed better. Look at what’s available on the market, and see if you can make it more attractive.

You can add value by being more descriptive and highlighting a product’s most important features. Altering a product’s images can also make it more appealing, as long as you know what you’re doing. You can even go the extra step and order an item yourself – allowing you to write a credible review or create more unique content.

Some products are hidden gems just waiting to be polished. If you find an underselling product that looks like it could do well, go ahead and market it to its fullest potential.

At the end of the day, finding the best products to drop ship on eBay requires a lot of careful thought. While it can be helpful to find inspiration from pre-generated lists, it’s best to do a more thorough analysis.

And while all this may take time to get right, it’s very easy and inexpensive to experiment and learn from your mistakes. Just make a new listing, see how it performs, and adjust accordingly.

Conclusion

And there you have it! That’s everything you need to know to start drop shipping on eBay today.

…for the most part, at least.

Drop shipping on eBay is relatively straightforward. The platform is very easy for sellers to use, and drop shipping makes it even less demanding. It’s so easy, anyone can do it.

Just keep in mind that like any business, it requires thoughtful decision-making on your part.

With that in mind, here’s a summary of what we’ve discussed here:

  • Finding a niche helps you focus your business. It can be very rewarding, but it isn’t at all necessary to make money.
  • An eBay Store subscription is totally worth it if you’re a high-volume seller. If you’re just starting out, the free service will more than suffice.
  • The suppliers you choose to work with will either make or break your business. Choose wisely.
  • There’s nothing like good old research and your own personal judgment when it comes to pricing your products.
  • The best products to drop ship will always depend on many factors. There’s no secret formula. Stay ahead of the game and do your homework.

If you’re interested in learning more, be sure to read our ultimate guide to drop shipping. You’ll find even more useful tips and things to avoid.

And as usual, please feel free to bookmark this guide and share it with your friends!