Re: Here's what dropship means. The Downside Of Dropshipping On Ebay!

"Dropship means the product is sent directly from the warehouse and you
wont have to store a bunch of product in your garage. You send the order
into the company, and they take care of the sending. Simple enough!"

Well it sounds simple enough, but the devil is always in the details. Dropshipping has it's drawbacks, especially when it comes to using DS companies in the Ebay Marketplace! Why?

1) Back ordered products.. IF you post an auction item on Ebay, and your drop-shipping supplier happens to be sold out, then you could have a potential problem. The reality is that DS companies run out of product, and will be back ordered. One or two customers might be understanding about the situation, but most will not. If back ordering begins to happen on regular basis, then your negative feedback rating will go through the roof.

One way to combat that is to buy all of the product, or a pallet of the merchandise in the category you have choosen to sell. Sort of goes against the idea of Drop-Shipping (buying the product in advance) but if you are selling on Ebay, you would be best served by employing that method. Bottom line, when it comes to selling products on Ebay "Own What You Sell!"

2) Fees..Some DS companies will charge you a sign up fee just to get started selling their product. That price can range from 25 to 50 dollars. There are also processing fees. These are fees to package and send the product to your customer. These expenses, plus Ebay fees, can take a big chunk out of your bottom line. You will have to pick a product that can give you a good profit margain, and that can be hard to find..

3) Circumventing your customers..While I am not sure if this is a pervasive practice among DS companies, I have heard that when they send out your product, some, will not use your return address. In other words, they will put their own information on the product instead, "cutting you out of the loop" and selling directly to your customers.

4) Market saturation..For those of you who are Ebay veterans, you all know about the Giovanni Leather jackets that were--and maybe still are--being sold throughout the Ebay marketplace. The company that most Ebayer's were getting this product from was BNFusa.com--Maxam Wholesale. Everyone was selling the jackets and other products from that one drop-shipping source.

After a while, market saturation set in and distilled the value of the product. There are some companies who sell wholesale lists, or "products for ebay" information--featuring BNFusa.com as one of the DS product sources for selling on Ebay. I also see ads for companies that claim to be wholesale suppliers. Looking at the featured pictures of the wholesale items they are selling, it is clear that they are just "sub-wholesaling" BNFusa products.

My point here is that companies like BNF, and SMC, are too well known to the general public to make them profitable. There are very few DS companies anymore that cater to the small seller crowd. There are forfillment houses that cater to large retail catalog operations, but you will need to be heavily captilized to get involved with such suppliers.

Let me make it clear that I am not anti-dropshipping. I like the concept, and think that if it is done right, it can be a great business. I have tried to find them for some of my customers, but I have not been able to find many companies that go beyond the general merchandise category. If any of you have found a DS company that you love, then "hold onto to thy DS company with bonds of steel, for true DS companies are hard to find!" The only source that I am aware of that has a database of DS companies is Chris Malta's Drop Shipping Source Directory. I have no idea if the information he provides would be helpful or not.