When I was first starting out selling on eBay I was a regular at garage sales looking for bargains that I could resell and I also bought in bulk from various online sites and sold the items in singles. This netted me a tidy profit, but I was concerned about the time and money that it was taking me to make money. As a result I started playing with dropshipping.
For anyone who is not familiar with dropshipping, it is a method of selling by listing items for sale that someone else stocks and ships to your customer for you. You don’t actually own the item that you are listing for sale and you don’t even pay for it until your customer has paid you. The idea is that you buy from your dropship supplier for a lower price than you charge your customer and pocket the difference without having to put any money down in advance. I’ve sold quite a few items this way and generally make about $5-$10 per item shipped. You see the profit margins on dropship items are generally small unless you can get an account with a true distributor, and that means that you need to be set up as a business with tax and business registration. I’m not set up like that so I have to use middle men like Dealsdirect.com (in Australia) and Overstock.com in the US.
Which is why I’ve decided to go back to buying in bulk and selling from actual stock. I don’t have a lot of time to spend on my eBay selling, so I want the maximum bang for my buck.
The thing I have found with dropshipping is that although I don’t have to pack and post the items myself, I have still been spending quite a bit of time regularly checking that my dropship listings are still available on my suppliers’ sites. I hate the idea of having someone buy from me and then having to tell them that I can’t complete the deal because my supplier has sold out. I’ve done this a couple of times and it is highly embarrassing and quite frankly – rude.
I guess I started stressing about it too much and honestly didn’t see the time saving. I mean packing up a pair of jeans into a pre-paid postal bag was just too easy. It really takes no time at all and I don’t have to wait in the postoffice to send it anyway. The downside is now I have money tied up in stock again, but by carefully choosing stock that will sell fast and sell for a high margin I’ve been able to get a return on my investment very quickly and profitably. I am also a lot happier because I don’t have to monitor my listings on my dropship suppliers’ sites to make sure they are still available.
My decision to go back to the ‘old way’ was made when I found a seller on Oztion.com.au who was selling 10 pairs of True Religion jeans for $500. After checking on eBay I found that I could easily sell them for $70-$170 and so make more profit per item than I was making on any of my dropship listings. Also, I could start offering Auction format sales again. With dropshipping you can only use Buy-it-now format sales because you need to get at least the price that you are going to pay and can’t risk a low final price. I like Auction format sales so much more and they have the potential to net a lot more profit if a bidding war builds up. Of course you need to be careful to list at peak times and use a good title and listing description, including pics to get the maximum interest peaked with buyers.
Your comments on the dropshipping v stock and send debate are invited. What do you do? What do you think the benefits/costs are to each. Post a comment!
