At Biz-E, we believe that eBay is a wonderful platform in order to test products on or for individuals who want to get started in the game of dropshipping. The cold hard truth behind this method is that it does come with some expense. For starters, you will have to pay out of pocket the costs of the product you are selling until you sell over 25 items. Even after you’ve met the sales requirements for instant payments, eBay tends to hold your funds at random which are not released until the item arrives.
After that, you’ll have to pay the required 10% of the final sell value to eBay upon a successful sell for using their platform. Plus a 2.9% fee + $0.30 that goes to Paypal, which is required in order to operate on eBay. On top of all that they have very strict regulations on what you can list and how you can list it. You must abide by their money back guarantees if you run into any issues or customers that are not expecting long shipping times or are unhappy in general. To say the least, there are some regulations you’ll be forced to deal with that are not present when utilizing your own website.
We advise that you do not depend solely on eBay for your drop shipping business, but rather use eBay as a tool to start listing your products and to gather some customer data before trying to transition over to your very own website and running ads for your product. Depending on the product, this may not be the very best method for you but we do believe that if a product is going to sell anywhere, people tend to lean towards eBay and sites alike that have a reputation for great customer service and some customers are happier shopping on this platform versus a website that is new and that doesn’t have any credibility yet.
There are plenty of ways you can promote yourself and your brand on eBay and it is an amazing tool for this purpose. The best way to success is to build a brand that people will automatically recognize when they see it and feel comfortable spending their money with you.
The Real Cost of Making Over $500.00 Dropshipping On eBay
As we mentioned previously, there are some costs associated with dropshipping on eBay, as with any platform you use. From product cost to selling fees, the profits at the end may be surprising to some if there was anything left unaccounted for.
To keep numbers simple, let’s say that you have made $500.00 on product sales on eBay, your product with shipping from the supplier costs $10.00, and you’re selling this product for $20.00 (with free shipping of course). For taxes, you shouldn’t have to worry about too much because eBay will automatically collect taxes from the buyer but let’s use the national average (for the states that collect taxes) of around 7% because this will be added on top to determine the final sale fees brought to you by both PayPal and eBay. You sell the item for $20.00, add in 7% for taxes and that brings the final sale value up to a whopping $21.40. From there, eBay will charge you 10% of that cost ($2.14, that will be billed later but you receive the total amount to your PayPal account and from there PayPal will charge you 2.9% of that plus $0.30 for a processing fee costing you $0.9206 (rounded up to the nearest cent value in most cases making it $0.93). So in fees alone, you are paying $3.07 but we have to add that into the total product cost of $10.00 making the new cost $13.07.
This is where things get tricky for us sellers because we are initially expecting to profit $10.00 on an item that we are selling for $20.00 but now, because of fees, we are only making a total of $6.93 per sale which is nearly half of what we originally expected. There’s no issue if you had calculated this before hand but for most people this is an afterthought and it may come to some surprise when you’ve made a ton of sales but youa re not seeing the gains you were expecting.
The total cost of selling on eBay as we have calculated here would be 13% of the total sale value plus an additional $0.30 per transaction. Because of this, we highly recommend that you only use eBay to test your products and from there when you find that the product does in fact sell, utilize some if not all of the profits to scale the item. Build a website and drive traffic to that website using any of our many marketing techniques that we teach here on biz-e.net and you’ll be glad that you did.
As soon as you start selling your product on your own website, you will immediately see an increase in revenue of over 10% collectively and you can now invest that extra revenue into marketing, product research, or even some automation or virtual assistance in order to scale your business.
The Dreaded eBay Listing Removal
While writing this article we actually had a very successful item removed for it “being in the wrong category” according to eBay. This gets very confusing especially when dealing with products that may strongly represent another popular item and I believe that may be why our listing was removed. Luckily, no bad marks were put on our account so we will be able to revise the listing and move forward with selling this item on eBay after ensuring that this will not happen again.
The worse part about this is that if this happens too many times then eBay will lower your ranking as a seller and you will not be seen as much in the search results and you will find yourself in a position where you are not profiting as much from your listings with the data or even the sells. Our best suggestion is to be as detailed in your listings and to utilize eBay as only a test platform and gather as much data as possible to be more comfortable moving on to our other methods for promoting your products.
To summarize, dropshipping is truly a zero risk business model if you follow our methods and invest your time and profits wisely. We highly encourage you to subscribe to our newsletter so you can get updates straight to your inbox as well as exclusive first access to all of our content. As an added bonus, the first 50 individuals to sign up from this article will gain free access to our premium content for one year. This includes a behind the scenes look into our online shops as well as direct product recommendations where we show you the exact products that we continue to make money on.
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