How to Set up a Drop Ship Business on eBay

Last Updated: December 26, 2022 Approved

With a drop ship business, your success depends on selling products which are then shipped directly from a manufacturer or wholesaler to your customer. Your profit depends on the difference between the wholesale price and the retail price (what you sell it for). You can run your business in a variety of ways (physical store, catalog, website) but this article will focus on doing it through eBay.

Steps

1
Create a seller account on eBay. Part of your investment in this business will be in listing fees on eBay.^{[1]
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- If you're not familiar with eBay, read How to Sell on eBay
2
Research drop ship companies, also known as suppliers. Choosing suppliers that are in the same country as your intended customers will likely make shipping easier.^{[2]
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Research source} Use a directory or other drop ship source such as Worldwide Brands, Doba or SimpleSource - they do the work of finding legitimate suppliers for you.
- Watch out for scammers who pose as suppliers but are really just middlemen themselves. They'll take their own cut of the profits, thus reducing yours. If they require a regular fee for using their service, consider that a very bright red flag!^{[3]
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3
Decide what you want to sell.^{[4]
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Research source} It's important to check whether there's enough demand (and not too much supply) for the products you want to sell. Here's one way to find out:
- Go to eBay
- Click "Advanced Search"
- Enter product (e.g. Art decorating lamps)
- Sort by "Price Highest First"
- Select "Completed listings only"
- Click "Search"
- Make note of the best selling products
4
Establish an account as a retailer with the supplier. E-mail, call, or send a letter asking how to become a retailer of their products and ask if they will drop ship to your customers. You'll also want to find out if they'll put a custom return label (with your store name and address) on the shipments, so that the customers assume you sent it.
- Don't be surprised if the supplier you contact for a retail account requests a tax ID. In order to purchase products at a wholesale cost, many will require this information.
5
List the items on eBay. Upload images and descriptions from the suppliers' websites. Make a detailed, professional looking listing. For better results, provide your own descriptions and pictures of the product you're selling (if you have samples).^{[5]
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Research source} The price should be low enough to compete against similar items, but high enough to give you a good profit, once you account for listing fees.
- Read How to Advertise Effectively on eBay and How to List Items on eBay for tips.
6
Contact the distributor when your items sell.^{[6]
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Research source} Give them your customer's shipping address. They will send the product directly to your customer. Follow up to make sure the shipment came on time, and as described.

Community Q&A

Question

How do I dropship from another site and sell on eBay?

gwindolyn swearington

Community Answer

When you list your products on eBay, make sure your supplier has inventory. Once eBay customers purchase, you go to the supplier's website and place the order. Make sure your billing address is entered, but the shipping info is the customer's name and address.
Question

Do I need a PayPal account to do this?

Community Answer

Yes. eBay only lets you process the transactions using PayPal, which has fees itself.
Question

How do I manage inventory and be certain the things I am selling will be in stock and delivered on time?

gwindolyn swearington

Community Answer

Make sure you choose an established drop-ship company that has been in business for some time, have over 2500 products, and which provide a phone number as well as an email address. Most companies will have listed the inventory on stock of that product. In most cases, you can call and ask. If they have a low quantity of inventory on what you're selling, do not list the product until there is a larger quantity in stock.

Warnings

Make sure you keep close track of how many items a supplier has. If you sell an item that they ran out of, the shipment will be delayed, and your customer will not be very happy with you. That leads to negative feedback, which leads to fewer sales.

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You will probably have to pay taxes on the profits you make through this business. See How to Minimize Your eBay Businesses Taxes.

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