How to Make Money Dropshipping on eBay (the Smart Way)

With more than 171 million active users, eBay remains one of the top online platforms for buying and selling products. It currently sits at the number 3 spot behind Amazon and Walmart in terms of visitor numbers, with an impressive 113 million visits per month.

Why it’s a good idea to dropship on eBay

For starters, it’s fast. eBay lets sellers create an auction easily and cash in within a week. Second, it doesn’t cost much to set up shop and begin selling your items. Most importantly, it’s never been easier to reach the millions of potential customers on eBay thanks to handy features built into its mobile app. As of February of 2018, the app has an audience reach of 31.7 percent in the US, according to this report by Statista.

If you’re running a dropshipping business, utilizing all possible avenues for your income stream is imperative. And today, we’ll show you how to optimize your business to ensure maximum reach and income generation using Ebay.

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Types of Ebay Sellers

Let’s take a quick look at the different types of sellers in Ebay to give you an idea of who you might be competing with when using the service.

First Time Sellers

People dipping their toes into Ebay for the first time are usually looking to sell pre-used items.

Occasional Seller

These Ebay users pop up only when they have stuff to sell, usually items they have around the house.

On-the-Side Seller

This group of Ebay sellers trade during their free time and usually scales up when the business shows true potential to expand.

Dropshippers

These are entrepreneurs who utilize Ebay to sell their dropshipped products.

Big Time Sellers

Refers to established businesses with a large customer base and significant product turnover. They typically work full-time on their Ebay business.

Where to buy products to sell on Ebay

Knowing who to source your products from and building a strong relationship with suppliers is one of the most important pieces of the puzzle if you want to have a successful dropshipping business on Ebay.

Most beginner dropshippers will probably fire up Google and try to look for a product to sell and where to source it. But trust me, that’s like looking for a teeny-weenie needle in a haystack. Not only will it be hard, but if you do find “potential” wholesalers, there’s no way of telling if the business is actually legitimate. And while you may want to give them a shot, your Scam-O-Meter tells you otherwise.

And that’s assuming you already know which product to sell. But what if you’re starting from scratch?

To help get you started, let’s jot down the main steps required to launch your Ebay dropshipping business:

1. Determining what product to sell
2. Zeroing in on a wholesaler
3. Understanding how Ebay works

How to be a successful dropshipper on Ebay

Now that we have an overview of the process, it’s time to look more closely at the key actions you need to take to make a killing dropshipping on Ebay.

Choose your products wisely

Everyone is selling iPhones and fidget spinners, so isn’t that what you should be selling too? It’s tempting to find those lists of top-selling products on eBay and use those to start filling your store, but this is a bad move. The truth is, these products have so much competition that only the top sellers with thousands to spend on marketing and massive orders are getting the bulk of the sales.

Choose a winner that has demand but isn’t drowning in competition. You can see examples of good items to sell in our blog.

Do Your Research

As a dropshipper, you are limited only by the inventory of your suppliers, and if you’re careful when choosing your business partners, that's no limit at all.

Try using a listing analytics tool such as the SaleHoo Market Research Lab to narrow your focus to what's actually selling on eBay. This tool can show you how many people are already selling the item you want to list, how they performed over time, and the item’s overall profit potential. Once you've chosen the type of items you want to sell, it's time to move on to the next step.

To make money on eBay through dropshipping there are two things you have to know like the back of your hand: the eBay platform and your dropshipping suppliers.

Finding the Right Suppliers

We talk about this a lot in our blog and we don’t mind repeating it: choose your suppliers wisely. Price is important, of course, but there are other factors that come into play.

It’s crucial that your supplier is reliable and professional. As a dropshipper, you know that your lifeblood is in the fulfilment (packaging and shipping your goods). If your supplier fails you, your business won’t be far behind.

Take the time to thoroughly investigate your potential suppliers. If possible, visit their place of business to see how it's run. You want nothing to do with a sloppy and disorganized operation.

Ideally, you'll work with local wholesalers. If you are importing your products and visiting the supplier is out of the budget, your best bet is to find a directory of vetted suppliers to make sure they are legitimate.

Once you’ve found a potential supplier or two, start by making a few small purchases to test how fast they deliver, as well as the quality of the products and their packaging. Some buyers don't like to deal with dropshippers. It's therefore important to see whether your supplier will brand the products the way you want.

You will also see how well your supplier communicates with you, which is crucial once you start making sales. You should be able to track inventory and purchases easily. If any problems develop, you need the opportunity to spot them and respond before your customer has a chance to get cranky.

Understand how Ebay works

Selling on eBay is not the same as being successful on eBay. The weekend lister may do quite well with their occasional sales, but as a serious seller you want to do better than that. You need to seize every advantage available, and to do that you must learn everything there is to know about the site from a seller's perspective.

This includes membership tiers, seller fees, listing tools, policies, feedback, ranking factors, affiliate programs and so on. Knowing how your platform works will give you an advantage over less dedicated sellers.

Getting to know eBay from head to toe requires time. Think of it as going back to school, with your eBay listings as the written exam. Click on everything that is clickable, take notes, check forums and ask questions.

You could make a test run with a few items that you already have on hand just to see how it goes. Consider it on-the-job training. If you make mistakes, make sure you don't make them twice. Take notes on what worked and what didn’t, and why you think that is.

Finally, keep in mind that the customer is always number 1. You don't want to risk getting negative feedback for selling a dicey Magic 8 Ball. Whatever happens during your test run, be honest, nice and responsive to your customers.

How to make money on eBay (step-by-step)

Once you’ve found your supplier, it’s time to make your eBay listings and start selling! Your next step is to improve your exposure so that you stand out from your competition, because there will almost certainly be plenty of it. Here are five good ways to market your eBay listings:

1. Get a PayPal Account

eBay provides protection to both buyers and sellers who use PayPal. It’s also a secure and convenient way for a buyer to pay for purchases. No wonder most eBay buyers prefer sellers who offer this payment option. Getting an account will expose your listings to buyers who filter their search for sellers who accept PayPal.

2. Price Competitively

You should keep your eye on your bottom line, of course, but you also need to make sure you compare favorably with the pricing offered by other sellers of the same or similar items. Many buyers rank their searches from lowest to highest price. As with any Internet search, the top results get the most attention.

You can find information about pricing by conducting searches on eBay itself, or through a tool such as SaleHoo Labs, to find accurate pricing and other insights for your products.

3. Offer Free Shipping

Freebies are always attractive to buyers and one of the most compelling offers you can make is free shipping. Analysis of buyer behavior indicates that as much as 90 percent of buyers are more likely to complete a purchase if the seller offers free shipping. Many will even filter a search for only items that have free shipping.

Worried about your profit margins? No problem! Just add in the cost of shipping to the item price or bundle items to reduce shipping costs.

4. Craft Quality Titles and Descriptions

You should put some thought into writing an attention-grabbing title and comprehensive product description, and I don’t mean simply typing in all caps. Quality titles and descriptions are key factors in making money on eBay that many sellers just don't take seriously.

Your title should be searchable, so make the effort to find out how buyers search for particular items. You can do this by typing your item into the search panel and seeing what suggestions come up. Try to add as many relevant details as possible to the title and avoid unnecessary adjectives and buzzwords.

To get started, see what keywords and phrases your supplier used to help YOU find the items you wanted. You can also look at Google AdWords to see what related keywords and phrases are sizzling on Google. Oh, and make sure you make no typos in your title; it makes it harder for buyers to find you.

5. Become a Top Rated Seller

eBay’s Top Rated Sellers are sellers recognized for providing top-notch customer service on a consistent basis. Once you’ve met the criteria, you will receive a Top Rated Plus seal and a 10% discount on final value fees on your qualifying listings.

The savings are an unbeatable perk, but don’t underestimate the value of that seal. Having this status will help you stand out from your competitors and show potential customers that you are a trusted seller.

To qualify to be a Top Rated Seller on eBay in the U.S. you must meet these criteria with your U.S.-based buyers over the most recent 12-month period:

• At least 100 transactions and $1,000 in sales
• At least 95% of transactions with valid shipment tracking uploaded within your promised handling time
• Fewer than 0.3% of transactions with eBay and PayPal purchase protection disputes closed without seller resolution
• Less than 3% of transactions with late shipping

10 Vital Tips for How to Make Money on Ebay

Making money on eBay isn't hard, but making a lot of it takes time and effort. If you are serious about making a good (or even fantastic!) living via your eBay sales, follow these tips:

1. Understand the Costs

Listing fees, final value fees, shipping costs, marketing expenses… the list goes on, and the fees can add up quickly. It’s important to understand the costs associated with selling items on eBay. Start by listing them out, and be sure to factor them in when pricing your eBay listings. You can cut back on costs with these quick tips:

If you offer free shipping, simply add the cost of shipping to the listed price. Your customers won’t know the difference and will be more likely to buy if the shipping is “free.”

Look for suppliers who offer lower rates on high-volume sales, then try to meet their criteria for lower prices on the items you sell.

Minimize the number of costly returns and reshipments by choosing reliable suppliers.

2. Find Cheap Items to Sell

It’s okay to start small, you can grow your business while increasing your knowledge and understanding of how selling on eBay works. Many sellers start making money on eBay by selling items found in their homes.

Yard sales, flea markets and estate sales are all great places to find items to sell. You can also check sites such as Craigslist or the Facebook Marketplace for freebies or cheap items that people want to sell quickly.

3. Offer Great Customer Service

This should go without saying for any business, but it’s especially true that customer feedback can make or break an eBay enterprise. A high Feedback score will attract more customers, but a low one could make them leave and never look back. There are a few things you should always do to make sure you’re offering the best customer service possible on your eBay store:

Be responsive. Try to answer customer questions and concerns as soon as possible; within a few hours, if you can. This may seem over the top, but think about it: how long would you wait for a company to get back to you before deciding to shop somewhere else?

Stay professional. Angry customers are a given in any retail setting, but the last thing you want to do is fire back with that perfectly crafted insult. Remember, those feedback comments are public! Keep a professional tone at all times and do your best to help resolve any issues your customers face, and they’ll be more likely to return to you in the future.

Prevent issues from cropping up in the first place by choosing quality, reliable suppliers for your dropshipping business.

4. Find Reliable Suppliers

You’ll save yourself a lot of time, money and hassle by avoiding suppliers you can’t trust. A good dropshipping supplier will ship products on time, notify you of inventory changes, and be responsive if there are any problems with the shipment.

Always research and talk to your suppliers before you do business with them. If possible, meet with your suppliers in person, or schedule a phone call. Ask questions about their policies and try placing a sample order for yourself to test the quality of their service and product. There are plenty of online resources to help you find quality, pre-vetted suppliers for your eBay store.

5. Build Out Your Profile Before Selling

Having a solid, established profile is a huge perk if you want to make money selling on eBay. It’s not a bad idea to start out by using your account as a buyer first. This way, you can build out an eBay history and have positive reviews before you start selling.

One factor that’s often overlooked is your username. This username will serve as the name of your eBay business, so choose wisely; Sw33tBunn1es12 might not give off the professional, trustworthy vibe you’re going for!

6. Use High-Quality Photos

There are two main advantages to using high-quality product photos in your eBay listings. Firstly, it will help your potential customers find what they’re looking for more easily, leading to better exposure for your store. Secondly, using accurate photos lets your customers know exactly what to expect, which can mean fewer returns from disappointed buyers.

Chances are, if you’re using dropshipping to make money on eBay, your supplier will already have high-quality product photos that you can use.

7. Set Prices Wisely

Offering the cheapest pricing options for your products might seem like the best way to get sales on eBay, but you could lose money this way. Pay attention to your supplier’s cost, shipping fees, eBay fees and your own profit goals when pricing your listings. If you do choose an auction format for your eBay listings, always keep in mind that you are obligated to provide the product, even if the auction ends below your costs, so plan accordingly when setting low starting bids.

8. Always Get Proof of Postage

Avoid problems by making sure your supplier provides proof of postage for every sale you make. This prevents potential scammers from contacting eBay and claiming they never received their orders. That postage proof could save your store if you ever need to challenge a dispute.

9. Do Your Research

Before you decide what products to sell on eBay, ask yourself, is there a market for this item? Take the time to find out just how well (or poorly) an item is selling on eBay. Seller tools such as the SaleHoo Labs can help you pinpoint top-selling items and offer valuable data such as price range and sales potential, and even help you find a list of suppliers.

10. Ask Yourself These Questions:

• Is this item worth the effort? Can I make a decent profit even after the fees, postage and packaging costs?
• Would someone purchase this item in its current condition?
• Do I feel the need to embellish the details about this item to make it more sellable?
• Is there any reason the customer would be unhappy with this item once they received it?

Think carefully about your answers and use them to decide whether or not to go ahead with the listing. Remember that the key to making money on eBay is providing a quality experience for your customers.

Some additional tips before running your dropshipping business

1. Confirm shipping times prior to picking the locations you’ll be selling to
2. Be clear on your shipping times - Add a shipping disclaimer
3. Make a Refund Policy Page
4. Set aside some money for inventory purchases
5. Tap the power of social media to market your product

5 Newbie Dropshipping Mistakes you should Avoid

Too much friction in the order process

Asking your customers to put in too much information during the order process may sway them away from buying due to the extra hassle. Ever noticed Amazon’s “One Click Payment” button? I always end up buying more Kindle books than I planned. Why? The one-click payment scheme is so quick and easy that I didn’t mind buying an extra 2-3 extra books from the “Recommended” section.

Not presenting your products professionally

If you’re selling something, do your best at staging it on your website. Hire a professional photographer if you need to. Why? Because images are your best shot at enticing potential buyers to click the Buy button. A beautiful product shot trumps epic copywriting any day. This study by the Nielsen Norman Group reveals that only 16 percent of people read web copy word-for-word. The majority of readers (79 percent) only scanned the pages.

Having Ridiculous Expectations

I know, I know. You watched a YouTube video of someone who made hundreds of thousands of dollars doing dropshipping, so you probably have a good shot at doing the same, right? Sure, you have a chance. But to expect your business to take off just like that is just a pipe dream, buddy. It takes commitment and dedication to run a successful dropshipping business. From finding the right products and wholesaler up to the day-to-day operations, each step requires careful planning and execution. Always be realistic and patient with your expectations, especially now that there are a lot more dropshippers competing for customers.

Running out of stock

It happens. Some suppliers simply tell you they’re out of stock and you’re left with an order waiting to be fulfilled. You can cancel the order, you lose the sale and probably the customer too. Or, you can work with multiple suppliers moving forward so you can completely avoid this type of fiasco.

Lack of Customer Support

I have my fair share of experiences when buying stuff online and one surprising realization I had was customer support matters way more than I thought. There were plenty of times when I was asking a few questions about the product but the seller wasn’t accommodating or simply didn’t care. That always had me moving on to the next seller in an instant. Good customer service is essential in any business.