eBay Dropshipping: The Ultimate Guide for 2021

Learn how to run a dropshipping business on the eBay platform.

Ben Bitvinskas

Co-founder, Atlasmic

It’s 2021, is eBay still a thing? According to numbers - yes, it is! In 2020 eBay racked up a whopping 10.3 billion USD in annual revenue which for most of the business world was a very down year. eBay is now considered to be the 3rd largest online sales platform, behind Amazon, Alibaba Group and facing increased pressure from the likes of Facebook Shopping and Shopify ecommerce stores. So should you still be interested in eBay dropshipping and what benefits can this platform offer you? Well, let’s take a look as we present you with the ultimate guide for eBay dropshipping in 2021!

First up - what exactly is dropshipping?

If you’re hearing the term dropshipping for the first time, let us explain what exactly it is, and then, you can move forward with this knowledge to reach success.

Dropshipping is a term used to describe a particular business type. The dropshipper sells products on their site without ever actually buying or keeping stock. The way to do this successfully is to find a product with demand for cheap, market it properly and resell it for more. A lot of times, people source products on lesser-known sites or from lesser-known manufacturers and only work with marketing to make the purchase seem more appealing. And dropshipping is just that - marketing and selling a product that someone else has made. Instead of spending cash on stock and manufacturing, you can spend time crafting better ads and selling more.

Why choose eBay for dropshipping?

First and foremost, eBay is a giant in the online shopping market. Figures show that eBay has close to 200 million users, out of which, nearly 55% are actively shopping and making purchases at least once per month.

This means that once you set up a store, you have potential access to a lot of worldwide shoppers who are spending upwards of 20 billion dollars every quarter or 241 million $ each day. Care to take your piece of the pie? Well, don’t wait up and set up your shop straight away. To put it plainly - eBay has a large user base and a global clientele.

Next up, eBay is probably the No.1 platform for selling & buying collectable goods as well as rare and unique antiques, items of that nature. For sure, you have platforms and individual stores that are specifically tailored for collector items and rare goods, but as a centralized one-stop shop, eBay is the clear market leader. So, if you’re reselling old school vinyl records, restored furniture from the Colonial era, or rare post stamps, eBay is definitely the platform you should be interested in, the most.

But don’t think about the platform as only a haven for collectors and hobbyists. It’s much more than that. Actually, you can find pretty much anything on the platform up for sale there. One advantage that it has over competitors like Amazon and Alibaba is the famous auction and bidding option. Instead of setting a fixed price, you can put goods up for auction and see the price skyrocket due to rarity and high demand. But, once again, mass-market items are also in very high demand on eBay. Next chart, please!

Pretty much one in six purchases is either an electronic device or accessories for it. So, retailers and dropshippers of all sorts of goods shouldn’t shy away from eBay. Set up your account to see how it goes. With that being said, we have some important information to disclose. More on that in the next paragraph.

Restrictions for dropshippers on eBay

The only dropshipping restriction on eBay seems straightforward enough. But, if you look closely - it’s actually very twisted and requires sourcing completely unique products for your business.

To begin with, eBay’s rules say that you are allowed to dropship. Nonetheless, you, quote:

“Listing an item on eBay and then purchasing the item from another retailer or marketplace that ships directly to your customer are not allowed on eBay.”

This means that you can’t dropship from sites like AliExpress, StockX, Amazon, etc. This poses a huge issue for new dropshippers who are sourcing their items from Chinese-based or international wholesalers & suppliers. This restriction was introduced back in 2019 and experts went as far as to claim that it killed dropshipping on eBay and that dropshipping is no longer sustainable on eBay.

However, if you’re able to procure items from unlisted marketplaces and collaborate with manufacturers so that they ship from eBay, you’re good to go. This means that platforms like Shopify have a clear advantage over eBay. But looking from the perspective of the latter, you can see why they’re doing it. This restriction helps build a more sustainable business model. And in case of disputes or legal issues, having to analyze a situation where the product was sent from an entirely different source is a complete nightmare. So, sellers have to accept that there is a downside.

Successful dropshipping on eBay is still possible in 2021

Don’t be too distressed by the listed restrictions and downsides. eBay sent a hard blow to Amazon and Shopify dropshippers, but doing business on this platform is still very possible. However, the term dropshipping gets slightly stretched on eBay. Here’s what we mean:

Due to the restrictions, you can’t dropship per se
You have to buy stock
Otherwise, you can choose to collaborate with the manufacturer on an account
The most common way to dropship on eBay is to just sign a legal agreement with a supplier so they send products directly to your customer

This means that you have to find reliable suppliers that you can enter into business agreements. Here are a few pointers to help you get started.

Most dropshippers will look for sources in countries like China, Poland, India, Hong Kong, Mexico, etc. You want to find a country where raw materials and labour costs are lower than in the West. Why? Because the value perception differences and lower costs can help you gain higher profit and build a sustainable business.

Platforms like Alibaba and AliExpress are the primary sources for potential suppliers. Here are a few pointers to help you get started on the search for your new supplier on an online marketplace like Alibaba.

Enter the product name in the search bar and look at the results
Sort them by the number of orders
Refine candidates by price, customer reviews, and reputation
Get in touch with a few to ask for information regarding dropshipping
Negotiate on prices and sign a contract

Once you sign a contract, you can then get a lower price per unit, get priority on manufacturing and fulfil a lot of orders if your ad campaigns are successful. If you can reach an agreement with a supplier directly, you can then move on to eBay and put up a listing. However, without an agreement and just making an order on Aliexpress after someone made a purchase from you on eBay is just against the rules of the platform.

Alternatives and best platforms for dropshipping

It’s only natural that these restrictions don’t appeal to a lot of small businesses. New and small dropshipping companies can struggle to get wholesalers and suppliers interested in their offers. This means that they face a huge disadvantage coming in, trying to set up dropshipping on eBay. That’s a huge reason why alternative platforms and alternative choices need to be considered.

Here are a few alternatives to signing a contract and the best platforms for dropshipping in 2021.

Alternative #1 - Buy in bulk for cheap and then resell

This is an alternative to signing an agreement with a supplier. Keep in mind that this won’t mean that you’re actually dropshipping. Instead, you’ll just become a retailer for the time being. But, this is a simple alternative and a path worth going if you really trust the product or technology. Just don’t be surprised when we tell you that this method poses a much higher risk on your end. So, we recommend that you don’t spend a fortune on the stock. Just purchase enough to keep going. Also, get some packaging materials and tags to properly ship products.

Alternative #2 - Buy storage

If the supplier isn’t keen on going into an agreement with you and you know that shipping and handling stock isn’t an option, just rent out storage space in a warehouse somewhere. By doing so, you can take care of areas like shipping, packaging, and logistics. Besides, storage spaces aren’t all that expensive, so if you’re selling expensive goods or have pretty high margins, you can expect to cover these expenditures pretty quickly.

Alternative #3 - Consider going on a different platform

As you may or may not know, eBay isn’t the only platform where you can try to sell goods online. It’s one of many dropshipping-ready platforms that you can begin selling on. It’s just common sense to explore as many options as you can. By having a presence on more platforms, you increase the possibility of doing business. The fees for selling products on eBay are quite high, which means that a different platform can be a much better choice, especially if you’re focused on volume.

A platform for Dropshipping #1 - Amazon

Globally, right now, Amazon is the leading online retail site. You can look at any figures, but in terms of sheer volume and the fact that Jeff Bezos is the richest man alive, you can understand just how big and impactful this business is. Dropshipping on Amazon is much cheaper for the seller (in terms of fees), but it also has some restrictions. This means that you can’t make an order outside of Amazon to fulfil an order made on Amazon. It still has quite large commercial fees, but the graphic below should persuade you to try it out!

A platform for Dropshipping #2 - Your own Shopify store

If you don’t want to pay large fees or to comply with rules disallowing you to dropship from outside of their platform, Shopify is definitely for you. By setting up your own personal e-shop you can prosper to an even higher degree than by selling on Amazon or eBay. This will help you dropship properly by not forcing you to go into agreements with suppliers or to look for expensive solutions to keep your business model going. But, this alternative requires some insights, knowledge, and a lot of time on your hands. Keep in mind that you’ll need to buy up a lot of services and resources to launch your site. Upkeep and maintenance are also expensive, so you need to find the best value-for-money plugins and apps for your store, like Atlasmic.

But if you’re able to create engaging ads and convert visitors into buyers, you can grow a six-figure business by just dropshipping quite easily.

A platform for Dropshipping #3 - Facebook & Instagram shopping

As relatively new platforms, they are still growing in popularity. But, with billions of users from all corners of the world, Facebook & Instagram shopping definitely has potential. If you can make awesome pictures or videos with your products, definitely set up an account and sell your products via social media.

Summary

So, eBay dropshipping. What a topic, huh? As we’ve found out, dropshipping on eBay is still possible in 2021, but there are restrictions to respect and workarounds to think about. Because you can’t dropship in common sense and need agreements with suppliers, small businesses might shy away from setting up an eBay profile altogether. High fees don’t help either. However, if you’re able to sign a contract and find a way to fit within the regulations and rules of eBay, you can become visible to over 100 million monthly buyers, active on the platform. At the same time, dropshippers shouldn’t just settle for eBay. Look at Amazon, setting your own Shopify store and Facebook, as well as Instagram shopping to take your business to the next level. Cheers!

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