I am against selling on eBay using drop shipping and have been for a long time. It doesn’t work.
eBay is a very competitive marketplace and the profit margins with drop shipping are just too thin to allow anyone to actually make a good living with this method of product sourcing. But, many new eBayers still think dropshipping is a good (low-risk, low-cost) way to get started in the eBay business.
But even if you have read my past articles about the problems when mixing dropshipping and eBay maybe you weren’t convinced not to give dropshipping a try. After all, on paper dropshipping sounds so easy.
You see, drop shipping is about getting paid first and then using that money to buy the product and have it shipped directly to your eBay buyer. So, you list an item on eBay then someone buys it. Then you use the money they paid you (though PayPal) to buy the item, which the drop shipper then ships directly to the buyer.
- You List The Item
- You Sell The Item
- Buyer Pays You For The Item
- You Use Buyer’s Payment To Buy The Item From The Drop Shipper
- The Drop Shipper Sends The Item Directly To Your eBay Customer
Well, maybe eBay’s recent policy changes will finally convince you to stay away from drop shipping. One of the major benefits of drop shipping has been obliterated by eBay. That is #4 above. You can no longer use the buyer’s money to pay for the product you are selling on eBay (using drop shipping).
eBay has an new policy in place where they will start HOLDING FUNDS FOR 21 DAYS or UNTIL POSITIVE FEEDBACK IS LEFT! This applies to small sellers, new sellers, and sellers with less than stellar feedback. Here are the details direct from eBay’s website…
FROM EBAY’S POLICY CHANGE ANNOUNCEMENT:
Occasional holds on payment
27. Which sellers will have their payments held?
In a small percentage of cases where it has been determined the risk of dissatisfied buyers is higher, PayPal may delay release of the payment funds to the seller until the buyer has left a positive feedback or 21 days have passed without a dispute, claim, chargeback or reversal filed on that transaction.
To determine if a transaction may have a higher risk of dissatisfied buyers, eBay reports to PayPal a number of factors, including but not limited to:
- Seller’s % Positive Feedback in the last 30 days
- Seller’s Detailed Seller Ratings in the last 30 days
- Final price for the item
- Shipping & handling fee
- Seller’s eBay tenure as an eBay member
- Seller’s total number of Feedback
29. When will PayPal release the eBay item hold?
PayPal will release the hold when the earliest of the following occurs:
the buyer leaves positive feedback,
3 days after confirmed item delivery* or
21 days without a dispute, claim, chargeback, or reversal filed on that transaction.
* This applies to US domestic transactions that are shipped by USPS or FedEx and either (i) use PayPal shipping labels to ship items or (ii) upload tracking information to PayPal via the transaction details page.
30. What can I do to avoid having eBay item holds?
Your payments WILL BE NOT HELD if you meet all the following requirements:
- eBay Tenure: Greater than 6-months
- Total Feedback score: More than 100
- Dissatisfied Buyers %: Less than 5%
So, now assuming you are a newer eBay seller (and if you’re established why on earth would you be considering drop shipping) you can not use the money they pay you to complete the transaction as it will be held.
You must use your own money to complete the drop ship order as the funds will not be released for 21 days. Seeing as this “pay only after you sell” feature was one of the best things about the drop shipping method of product sourcing there is really no reason whatsoever to use drop shipping any more.
While this might have you upset. I think it is a blessing in disguise. This will undoubtedly put a dent in the business of the handful of drop ship sourcing companies that have made a fortune preying on eBay business hopefuls.
Drop shipping doesn’t work on eBay. It didn’t before and it definitely will not now!