For sellers, the dropshipping concept is unbelievably sexy. You make sales for products you never see and get paid before you even buy the products you sold. This means...
- A very low barrier to entry
- Little to no brand building required
- No handling, shipping or inspecting of inventory
AY-MAY-ZINNNNGGGG!!
[TL;DR] Did Ebay Ban Dropshipping?
Yes and no. In 2018 Ebay banned a certain type of dropshipping but not dropshipping entirely.
Well, it's not so amazing for marketplaces like Ebay and Amazon and in 2018, both cracked down on the process of dropshipping on their platforms.
Why Amazon and EBay Have Beef with Dropshipping
The big reason that dropshipping is frowned upon is because the seller isn't in full control of their storefront and performance. They aren't able to manage the package from beginning to end.
They're taking the risk that the source they purchased from has inspected the product and will ship it on time. They're hoping that the product will be authentic and that the seller they're buying from is going to live up to the quality standards set up by Ebay.
When done at scale, many issues arise. Dropshipping, especially automated dropshipping, results in lots of late shipments, cancellations and not as described orders.
So Did Ebay Really Ban Dropshipping?
Technically, no. Ebay did not ban dropshipping entirely. They did ban a certain form of dropshipping.
The kind that is taught in most of the make-money-from-home-dropshipping-courses that litter the internet.
The Ebay Dropshipping Method You Cannot Do
Sell products that you will purchase from public 3rd party retailers or marketplaces and that they will ship to the customer directly.
Example, you cannot list an item (let's say a pair of shoes for $89) for sale on eBay and then, once it's ordered, buy the shoes from Amazon at $59 and change the address to the EBay buyer's address.
The item shows up directly from Amazon and Ebay is no longer cool with that. Amazon to Ebay dropshipping and Ebay to Amazon dropshipping are both no longer ok.
The Ebay Dropshipping Method You Can Do
Sell products that you purchase from wholesale suppliers who will ship the product on your behalf.
Example, you have a wholesale contract with XYZ widgets. You are allowed to sell inventory that is not in your possession and will be shipped directly from XYZ widgets when an order is made. However, you're accountable for the quality and accuracy of your product and shipment.
Drake explaining Ebay's new dropshipping policy
Is Dropshipping on Ebay Dead? Is Dropshipping Even Still Worth It?
If you're using the approved method of shipping from a supplier, then yes, totally.
If you're hoping to keep doing things the old way, using Ebay dropshipping softwares and hoping you won't get caught, then absolutely not. The only bright side is that dropshipping doesn't require you to tie up a lot of capital so being banned won't be as awful. It will still be awful though 🙂
The Best Dropshipping Alternative for 2020 and Beyond
Let's face it, for every business doing legit dropshipping from suppliers there are probably a dozen who are doing it the old way (the one that isn't allowed anymore).
Fret not, because there is a method out there that I believe is better than dropshipping EVEN BEFORE these changes.
It's called online arbitrage and it will...
- Have higher profit margins
- Not get your Ebay or Amazon account suspended
- Be nearly as hands off as the old dropshipping methods
I've written at length about online arbitrage before, but let me explain it briefly here as well.
How Beginners Start Selling on Amazon with Online Arbitrage
Open a Professional Selling Account on Amazon
Although there's a free plan, you'll want to get the pro-seller account at $39.99/month. If you're serious and sell even just a few items, this will be a negligible expense. It will be more cost effective than the free plan.
Understand Amazon and Ebay Seller Fees and Sales Rank
You need to understand what prices you can afford to pay for products. There are several apps that will help you with this (including the free Amazon seller app). Sales rank (on Amazon) will give you a good idea of how quickly products are selling.
Locate a Prep Center That Works with Online Arbitrage Sellers
Prep centers are 3rd party warehouses that work as a middleman between where you purchase your products to sell and Amazon's own 3rd party warehouses. Most prep centers charge set fees for each unit you ship. Simply calculate these costs into your plans when considering what to buy. You do NOT have to use a 3rd party prep center, but if you've become accustomed to the "hands off" dropshipping lifestyle, you will want one. Click here to read more about 3rd party prep centers.
Start a Free Trial of Tactical Arbitrage
You do not need a software for online arbitrage much like you don't need a car to drive to the grocery store. You will just really want one and it will be wildly more effective and efficient. Tactical Arbitrage scans over 1,000 websites across the internet and finds ones that are profitable on Amazon after all costs. Click here to start a free 10 day, extended trial of Tactical Arbitrage with code ER10 at checkout.
Start Making Purchases, Testing the Process and Reinvesting Profits
Selling physical products will always be a cash heavy business. The more cash you build up to reinvest, the more you will make each month.
Keep Learning!
I've written dozens of posts about selling on Amazon here on entreresource.com. Go read them and be sure to join my closed Facebook group FBA Today where we discuss what is going on in the world of Amazon arbitrage!
Will you still try dropshipping on Ebay and Amazon in 2020 and beyond? Are you interested in online arbitrage instead? Let me know in the comments!
Hi, your blog is very much informative to amazon sellers. Thank you for the work!!
Great article. Very in-depth and thorough.Regards,Christoffer
What about cross-listing your Amazon inventory on eBay and using multi-channel fulfillment?
That should be fine since you have it in stock and have inspected it.
Only problem with this method is the free shipping you lose by not shipping from the big box directly. Or am I missing something?
Thanks for the well written article Nate, it is very helpful to understand what is allowed and what is not. Quick question, how does eBay know somebody is dropshipping from Amazon, is it because eBay will notice that your sending from address always varies as opposed to the same address that your will have from the wholesaler address?
Hey, it will result from some sort of performance errors or customer complaints. Late shipments, not as described items etc. Besides that, if it’s shipped on time and correct, it’s hard to get in trouble but not a safe, long term model in my opinion. Many people do still do it and get away with it.