Dropshipping

5 Reasons Why I Closed my eBay Dropshipping Store after 2 Years

24th August 2018 By martinos74 Leave a Comment

After almost exactly 2 years I finally closed my eBay dropshipping store last month so I thought it my be useful to share my thoughts on this sideline hustle and give you some of the reasons behind this closure.

How my Process Evolved over Time

I originally started by using the freelistings that eBay gave me to list my products with a 30 day auction. I added all of my products manually, so this meant that my overheads were really low. The problem with this was that it took a long time to add all of these products and also I had no tracking in place, which meant I often had orders that I couldn’t fulfil as they were out of stock or their prices had changed.

Most recently my process had changed completely so that I had my Philipino listers adding all of my products to my own branded store, which was integrated with SKUgrid tracking, which automatically updated prices and removed out of stock items. This meant that the amount of time I needed to invest was significantly less, but my monthly overheads were a lot higher.

This might sound like a good position to be in and the automated business model is what a lot of digitial entrepreneurs are seeking to achieve, but why wasn’t this working for me?

1 – Hassle

I think the number one reason for me was the amount of hassle I got from different orders. Remember, any time you get to deal with the general public, they are generally going to be a royal pain in the arse. Even if I wasn’t touching the products at all, this was still certainly the case with eBay dropshipping.

Returns

One of the biggest risks with this business model was returns, because the buyers are so protected by eBay and Paypal, that they can return pretty much anything and you will need to accept it. The problem is that as an intermediary, it won’t be as easy for you to return a product to your supplier as it is for an eBay customer to return it to you, which leaves you completely exposed.

This is particularly the case for any overseas Global Shipping Programme orders that you do. Lets take a recent example I had where a customer bought a cat flap with a magnetic chip detector and this was sent to Hong Kong. They reported that the item didn’t work correctly, so I had to facilitate a return for them. My supplier wouldn’t pay the cost of the return from Hong Kong, so I had to pay this myself.

Always On

Another major drawback with this business model, is that you are tied to your computer if you want to take this seriously. This means that at least once per day you will need to check into your eBay account to process orders, deal with customer service issues and generally check what’s going on. This will be fine for a lot of people but if you’re looking for a more passive stream of income where you can travel the world as well, this is a big drawback.

2 – Mistakes

In my store I had nearly 5000 products in the end, most of which were listed by other people manually, so there are always going to be mistakes and sometimes these mistakes can be costly.

The biggest example of this for me happened about a couple of months ago, where I listed a fish tank filter. One day I woke up and found that I had sold over 30 of these. These orders had been integrated with SKUgrid so the pricing should have been correct but I checked the orders and everything looked fine. I then sent out a total of about 50 of these orders over the weekend, and finally realised why everyone was buying them…..

My original listing was for a filter which costs about £199, however, at my supplier this had sold out, so my software automatically took the price of one of it’s variations, which was the replacement filter pads, and priced these at £19.99… Unfortunately, all of my buyers thought they were getting the £199 filtration system for a bargain price and consequently meant that I had a major returns and customer service nightmare on my hands.

The next 2 weeks were absolutely terrible as I had to negotiate 50 returns with my supplier and all of the customers, and try not to get bad feedback at the same time!!! Amazingly, I only got about 4 negative feedbacks in the end and also received some really positive feedback as well, but this took a lot of work and also lost me a fair bit of money as well.

3 – Return on Investment

The other key reason for me giving this up was it just wasn’t giving me a good enough return for the amount of time that I was spending on it.

Even though I really limited how much time I was spending on it each month, the overall fees that I was being charged made it very difficult for me to make a big profit.

At a minimum each month I was paying £89 for an eBay shop, and extra 9p for every listing created over my 1500 free listings and £19.99 for the SKUgrid software, and my listers were being paid 20c for every listing they created.

On top of this every sale you made eBay would take 13% and Paypal would take between 3 – 4%.

This meant that for most of my products, I would only make a 10% margin and would need to sell around £2000 worth of products before I even broke even. I also need to add a 40% tax rate on top of this, making this pretty much unviable.

I had thought about expanding this more and using more automated software to list products, but the main issue with this is that as a UK seller if you sell more than £80k worth of products you then need to become VAT registered and pay an additional wedge of tax.

As I’m now a freelance Project Manager I think this would have also applied to my contract income as well, which would be a massive no-go!!!

4 – eBay Fraud

The final hammer for me that made me think “Sod this for a game of soldiers”, was when I almost lost £1500 on a single transaction.

Over the past 6 months, I had over 30 occasions where buyers had bought high value products (£500+) from me, and then I found out either from eBay, from the buyer contacting me or from me contacting the buyer, that they had their eBay account hacked and these were not valid transactions.

This was extremely frustrating because when I had real orders for high value products, I had to contact the account owners to validate they had really ordered the product, which caused a delay in me dispatching the products and in a few cases led to me getting bad feedback.

Worst of all was the case where someone purchased a coffee machine from me for £1500. I bought this from my supplier for just over £1k and sent it to the address that was provided on the Paypal payment receipt.

The order was dispatched successfully and signed for from my suppliers courier. A few weeks later I received a Paypal dispute case opened up against me, saying that the buyer’s account had been hacked and they had not received the product.

I sent in the proof of delivery to both eBay and Paypal and had to wait 70 days, before I got a message from Paypal saying that the case had been closed in favour of the buyer!!!

I couldn’t believe this and contacted Paypal, showing that I clearly had proof of delivery, but they told me this had been decided by the buyers bank, so there was little they could do but dispute the claim. To be honest I really thought I’d lost this money as I was stuck between eBay, Paypal and a bank, none of whom was likely to take any responsibility for this.

I disputed the case and amazingly a month later this was closed in my favour and my money was returned to me.

This had been quite stressful and to be quite honest, I really couldn’t be arsed with this anymore.

5 – SKUGrid Customer Service

The final nail in the coffin for my eBay store came a few days later when I realised that SKUgrid was automatically changing the listings for 2 of my suppliers (Over 1000 listings) to be out of stock.

I contacted SKUgrid who told me there had been an issue with the feed, and they had no idea when this would be resolved so I would have to update my listings manually until that time!!!

As you can imagine this raised my blood pressure even further and I didn’t want to risk either a heart attack or throwing my computer out of the window so just decided to close my store instead!!!

Any Regrets?

I have a lot on my plate already with affiliate websites, Merch by Amazon and my Low Hanging System mugs, that I can honestly say I don’t miss this extra hassle.

It was a shame that I’d built up so many listings and had good feedback on my account, but it always felt a little bit that I was only a second away from disaster.

Most of the time I interacted with customers or opened my emails it would be something negative, and this can be mentally tiring.

Would I Do the Same Thing Again?

I still think that eBay dropshipping is a great way to get into making money online and for very little up front costs, you can earn your first digital dollars. This is an amazing feeling and will surely lead you on to bigger and better things.

I’ve also learned a tonne about the types of products that sell well, how to market products, retail arbitrage and using eBay in general, so for this alone it has been completely worth it.

How Much Money Did I Make in 2 Years eBay Dropshipping?

This was definitely no goldmine, and it also took a lot of work, love and attention to set up and run, but over the course of 2 years I probably made about £5-6k after tax.

If this was your only focus online, I still think that you could build this up to be a proper business, but you would need to spend a lot more time on it.

Realistically, I’d recommend following someone like Jonathan Lieu who now uses Hydralister to list all of his products and fully focuses on eBay dropshipping. If you are constantly testing different products, then sooner or later you’ll have a good set of products and suppliers that you can rely on and build up your business from, however, I think I’ve got other fish to fry at the moment, that hopefully won’t be as stressful!

12 Killer Tips from 9 Months of eBay Dropshipping

8th May 2017 By martinos74 7 Comments

I’ve been practising eBay dropshipping now for nearly a year so I thought it was time to look back and give you a bit of a progress update and reflective look at what I have achieved and some of the ups and downs from David Wu’s dropshipping technique.

If you haven’t heard about this before I explain the technique here and you can sign up to the course directly here.

Be sure to read all the way to the end of the article as the last tip is a bit of a gem and will save you hours on your listings.

I’ve now really expanded my eBay store and now have over 1000 products in my shop, so thought this as a great juncture to bring you my top tips:

1 – Manual vs Automated Listing Tools

Initially I started listing all of the products myself, which was a necessary evil to learn how to correctly format your listings and really understand the inner workings of the system.

This is incredibly time consuming as this takes about 10 minutes to create a decent listing, however, this is definitely worthwhile.

I then went to Upwork and decided to hire someone to do this task for me to free me up to more interesting tasks where I could add more value.

After a while my Virtual Assistant persuaded me to try out an automated eBay listing tool called Hydralister, where you input the URL of the product, and the software automatically pulls in the products images and attributes. This also gives you the opportunity to bulk list items, so dramatically reduces the amount of time needed to create a listing.

This was great news for my Virtual Assistant as I was paying them per listing, however, what I found was that the quality of the listings were a lot inferior to creating manual lisitings.

You really need to check each listing to make sure it pulled in the correct information, which is often as time-consuming as creating the listing manually in the first place.

In the end I found another Virtual Assistant from the Philippines on Upwork, and she is simply amazing. She can create listings really quickly, her attention to detail is excellent and her eBay listings are of great quality.

2 – Use SKUgrid to Track Stock Levels

One really useful tool that I’ve adopted as part of my business is SKUgrid, which easily allows you to track product prices and stock levels from your product source.

It’s simple to set up and all you need to do is add the source URL of your product, add the percentage markup that you want on each item and it will automatically update the prices on your eBay listing if they change on the product source and will move items in and out of stock on your eBay store as well.

This means that your prices remain as competitive as possible and means that you no longer have to send fiddly emails to customers making up excuses as to why your product has run out of stock. In the past I found this extremely frustrating as in one minute I was excited about making a sale and the next I would be annoyed as the product was out of stock.

You also run the risk of receiving negative feedback if this happens too often, and I’m sure cancelling a lot of orders doesn’t look good either.

The only downside with SKUgrid, is that if you are adding your listings manually then you have to manually add them into SKUgrid and you are also limited by the suppliers that the software supports.

I’ll give a full review of SKUgrid in due course, however, if you have a few hundred listings already, I highly recommend you switching.

3 – Automate Your System

With a Virtual Assistant and the use of SKUgrid, I’ve really limited the amount of work that I need to put in to a few hours a week, where I am processing orders, responding to customer service enquiries and sourcing new products for my VA

4 – list Items that are not available within the Global Shipping Programme

About 70% of my sales come from UK customers, so I think it is absolutely worth listing products that don’t qualify for GSP, and in fact because other dropshippers may not be doing this, it gives you more chance to rank your product highly.

It’s often difficult to know if a product qualifies for the GSP before you list it, so I just let my VA list batches of products for me, then I check and see which products don’t qualify from them.

If they don’t qualify then I try not to add many more products in that category, as overall I still think its better to list products for the Global Shipping Programme simply because you have a broader reach.

5 – Add Seasonal Items

When I didn’t have an automated stock/repricing tool, I stayed away from adding seasonal items as they would quickly go out of stock, however, now that my system is more automated I think it pays to start looking at the seasons and understanding what is going to be hot soon.

Ideally you’ll have a list of products ready a month in advance so your VA can get these up on eBay.

For example, think about adding Outdoor Games and Barbeque equipment in May, just before the summer rush starts to hit

6 – Check your Sources

Having a solid, reliable supplier really is key to success and it’s quite easy to tell which suppliers will be good to work with from a few simple emails.

First of all, you want to check out the supplier to see if they have the credentials needed for your eBay business model ie do they send invoices, do they ship to the GSP.

To help this I use the email below:

Hi There,

I really love the range of products that you offer and want to buy some of your products for a friend of mine. I just wanted to know if you have the possibility of a Guest Checkout or something like this, where you wouldn’t include a copy of the invoice with the dispatch?

Is this a possibility, or could you send the invoice to me electronically as I will be paying for the product?

Can you also let me know if you’re happy to ship to freight forwarding addresses?

One final question is whether you provide a tracking number when your deliveries are dispatched?

Looking forward to hear from you soon,

Thanks,Martin

Send this to the customer service contacts for each of the suppliers just from how quickly they respond to you and how professional their replies are you’ll get a good initial impression of if you want to work with them or not.

When you’ve found a few suppliers that you think you can work with, add about 20 of their products to your eBay account and test what their sales process is like.

You could reduce the markup that you are asking to increases the likelihood of selling a product, or even better you could buy a product from them and then ask for a return.

This is a great test as you’ll find out what the packaging is like, if they send automated emails to you with tracking numbers, how quickly they dispatch the products and also how easy it is to make a return with them.

This is crucial information that you must find out before you start adding hundreds of products from one supplier.

Some suppliers also have a tendency to change products quite quickly, which I would avoid as well, as you’ll have a smaller window of opportunity to sell your product before it goes out of stock.

7 – January and February Suck

Yes, be prepared that some months of the year will be better than others and January / February simply suck.

I had by far my worse months ever, at the same time that I was trying to build up the store, which was really discouraging.

However, if you keep the faith and keep on listing then your sales will recover.

8 – Diversify with Other Business Ideas

If eBay dropshipping is your only income or you want this to become your main source of income then you should be aware that at any moment this business could disappear.

You could receive negative ratings, which is a quick way to lose sales.
eBay could review your account and even though you are making money for them, they don’t look so favourably on dropshippers so could quite easily close your account.
Paypal could close your account as well. For example, this month they froze my account for a couple of weeks due to a fraudulent payment, which was nothing to do with me, but showed how fragile this business model is

Remember, the market and the business could change very quickly, for example both eBay and Paypal have increased their fees recently, which decreases the chunk of the pie that you can take.

As digital entrepreneurs we need to be able to adapt to change quickly and there are usually ways around obstacles, however, you should also be prepared for the fact that this business can quickly disappear as well.

9 – Invest in a Shop

Whilst it was great when I was starting out using free listings on my personal account to list items, there were a lot of downsides. For example, I couldn’t scale as quickly as I wanted and the free listings couldn’t be used as Good til Cancelled listings, which in turn meant I couldn’t use stock tracking tools.Investing in a shop is well worth the investment because:

You’ll get cheaper listing fees
You can add branding to your store and start to build out an identity. This in turn gives buyers more trust that you are a bonafide company and increases your chances of making a sale
You can use categories – Creating a decent taxonomy with well-defined categories and sub-categories will increase your sales as you’ll benefit from cross selling items and if buyers don’t like the product they were originally looking at, they can more easily navigate around your store and find similar products they like
You can create sales – Using the Markdown Manager functionality, I have a look at which products have a large number of people watching them and add a 5 or 10% sale for a few days. If you’re worried about your profit then increase the price before adding the 10% discount so your mark up stays the same! It’s a bit sneaky, but it works
The Seller dashboard is also a lot better if you use a shop and you’ll get a lot of other useful tools and statistics that you can use

10 – Buy a Responsive Theme

In 2017 if your store is not accessible on a handheld device then quite frankly you are crazy. Imagine if you had a queue of people outside of your shop and suddenly you decided to only let half of the queue enter your shop…You wouldn’t do it, right?

So, you don’t have any excuses and if your store is not using a responsive theme, then you’re cutting that queue in half.

You can buy a decent them for as little as $20 and adding this to your site and to your listings is really easy to do and well worth the effort.

11 – Use Good Til Cancelled Listings

Using 30 day listings has the advantage that your listing is featured immediately at the top of search results when it is a new listing and has the advantage of adding a bit of scarcity when your product’s listing is due to expire, however, I have now switched all my listings to Good Till Cancelled for the following reasons:

You keep a sales record of each product sold… When you sell an item it is shown on the listing and usually you’ll find that if you have sold one item, it is a positive signal to buyers that the product is of good quality and will help them choose you over other listings who haven’t previously sold
You get to see the cumulative number of views and people who have been watching your product, which helps you monitor products• You’re more likely to have your product listing ranking well in Google… A lot of visits will come directly from Google to your listing
You don’t need to continually re-list your products
GTC listings are more compatible with stock tracking software like SKUgridOf course, there are pros and cons for each of these options but I think more serious sellers usually prefer to go with Good Til Cancelled listings.

KEY TIP : 12 – Use an EAN / UPC Generator

Trying to source the EAN / UPC for each products is a massive pain in the butt and also quite a time consuming activity.

You’ll often find a number of different EANs available for each product and in some cases none at all. I also find that for products that I have listed with an EAN, eBay will often add a ‘similar products’ carousel underneath your product listing, which shows other people on eBay selling the same products, which are usually going to be a lot cheaper and makes it difficult for you to make a sale.

An EAN number is simply a unique number that is given to identify a product.You will find a lot of services out there where you can buy EANs, however, I don’t think you need to use these at all and can generate them yourselves a lot more easily.I just use the attached spreadsheet and generate all of my own EANs from this list.

A word of caution however, is that eBay is on a bit of a mission to try and categorise products out there so that it makes it easier for you to list and buy in the future.

There is a rumour that in the future you may be penalised if you don’t list your products with the correct EANs, however, until I see more evidence of this I’ll continue to list with my own numbers.

EAN / UPC GENERATOR

Download our EAN / UPC spreadsheet for free here

WHAT ARE YOUR KILLER TIPS?

If you like these tips then please let us know in the comments below or if you have some more killer tips of your own then we’re keen to find out

The Pros and Cons of Working with a Virtual Assistant

20th March 2017 By martinos74 1 Comment

eBay Drop Shipping with No Inventory

19th September 2016 By martinos74 10 Comments

I haven’t made many updates to the site recently as I’ve been focusing mainly on my latest make money online scheme… eBay dropshipping. EBay whatshipping I hear you say, well let me explain!

If you’ve never heard of dropshipping before, then simply explained the following happens:

You advertise a product somewhere
Someone buys the product from you
You buy a product from a manufacturer
They send the product directly to your buyer

Simply put, you make money by charging more for the product than the manufacturer sells it to you.

Basically you are just acting as one massive middleman, who passes the product from the buyer to the seller.

You’ll find examples of dropshipping everywhere from niche websites, to Amazon and EBay and strangely enough some of the large high street stores are actually just big dropshipping agents.

Yes, that’s right, if you buy from some of the UK’s major retailers, you’ll find that their products are bought and shipped directly from a third party…. That’s dropshipping.

In most cases dropshipping will involve building up a relationship with a dropshipping supplier, however, there is actually a much simpler way to do this, which I learned about on David Vu’s course: eBay Drop Shipping with No Inventory Guide

The approach that is taught to you on this course, is that you don’t need necessarily to bother with a dropshipping supplier, and instead you can just sell products from any online retailer.

That’s right you can simply go to a major retailer like Argos, or Walmart in the States and resell their products on EBay, and if you add a decent enough markup, you’re going to make some money!

David Wu’s model is quite simple:

You list a product on EBay with a mark up of 40% on top of the retail price
You optimise your product titles so you can attract as many people as possible
You sell a product, deduct 10% EBay fees and 3% Paypal fees
You get to keep the remaining cash

Ok, so the reality is that the products that you are selling are going to be a lot more expensive than the same product listed either directly at the source, other websites and even other EBay sellers, so you’re probably thinking why on earth would someone buy your more expensive product?

Well there are a couple of reasons really:

1 – People are stupid and lazy – Most people will only buy a product from the first 5 listings that they see on EBay, so if you have good feedback and well optimised titles then there is a good chance you’ll be in this top 5. People who come to EBay are still under the mindset that they are getting a bargain, so won’t always check other sources online before purchasing on EBay.

2 – Reach – If you use the full 80 characters available in your product title field and optimise your title, then you will reach a lot more people than other listings for the same product might reach, which could mean you would appear as the only listing for certain search terms. For example the following title [insert example] would reach a lot more people than this one [example]

3 – EBay’s Global Shipping Programme – This is something that EBay recently introduced and most EBay sellers do not take advantage of yet. If you click a checkbox to sell via the Global Shipping Programme this means that your product will also be listed on other EBay sites around the world and you will be listed as an International Seller. You would have seen examples of this on listings before where it would say ‘Shipped from China’ for example. The good thing about this is that all you have to do is pay the postage to the UK EBay distribution centre, and they will pay the rest of the charges around the world.

Well, in truth a lot of the retailers aren’t so happy for you to resell their products and a lot of them will cancel your order if you send it to the Global Shipping Programme address.

I find this a bit bizarre really, because you are giving their product free promotion and sending sales to their websites, so why on earth would you try to limit this?

I guess the reason is that they still want to retain a certain amount of control over their pricing policies so aren’t so keen with this practice.

In the past I’ve used Argos, John Lewis and Homebase without a problem

However, if you do a bit more digging there are plenty of other suppliers out there who will be willing to ship your products.

There’s nothing illegal about this practice, but you want to make sure your supplier doesn’t mind you selling their products, otherwise you might be stuck in a situation where someone buys a product from you and you can’t fulfil their order.

I’ve only be doing this for about 3 months now but I can say that it does actually work.

The graphic is from my actual account and so far I’ve sold over 30 products in the last 2 months. If you take out eBay and Paypal fees you’ll probably make about 20% of the sale price.

The beauty of this money making tactic is, that the more products you list, the more you’re likely to sell, so you just need to beef up your store with as many listings as possible.

Realistically I think you need to have about 1500 products in your store to be able to make £1k a month from this business model.

The idea is then that after you get to a certain threshold you can then keep scaling up and pay a Virtual Assistant to do a lot of the mundane chores such as listing products, fulfilling orders and even providing customer service.

2018 Update: I currently have about 4000 products in my store and am making about £500 a month profit after I take out expenses. This isn’t a huge amount, however, I invest very little time in this at the moment. I have a team of listers who add the products for me and all I day is deal with customer service and managing the orders.

Unfortunately, there is no silver bullet to success and like any other way of making money online, you’re going to need to put in the hours.

Once you’ve chosen the product to add, it typically takes about 10 minutes to add a new product listing to eBay and to correctly format the titles and source the images.

On top of this you’ll also be spending time on the following:

Buying the actual product (10 mins per sale)
Uploading tracking numbers and comms with the buyer (10 mins per sale)
Answering customer service and product enquiries
Managing stock levels (Yes, even though you’re not stocking any products you need to ensure that the retailers don’t run out of stock, otherwise you’ll be left with no product to ship)

This all sounds great so far, but there are a number of things that aren’t so great when you get involved in this:

If you don’t have an old eBay account and need to set up a new one, then you are initially limited to listing only 10 products. You can contact eBay to increase this limit after one month, and then every following month you’ll need to contact them again, which is a minor irritant
It takes a long time and is a really laborious task to source products, copy their pictures, add all the product details and optimise your listings titles
Trying to monitor stock levels is a major pain and you’ll often find that you’re supplier is out of stock, which can leave you having to source the product from a more expensive alternative or a less reliable source, which could risk your reputation
Once you start building up your eBay dropshipping empire, you’ll quickly realise that this is going to tie you down too. One of the key metrics that eBay uses to give your seller rating is whether you ship your products out within your specified timescales and how quickly you can add tracking numbers. Basically this means that you need to be able to get access to the internet at least once per day, or risk running behind on orders and affect your ratings.

Overall, out of everything I have been looking into this year, I really would recommend this way to make money online for a number of reasons:

You’ll be able to make your first sale really quickly, which is really motivating to see how you can make money out of nothing really easily
You won’t need to fork out loads of capital to buy stock, as you only buy something when an order comes in
You get to learn how eBay works and also which products will sell well, which can be an essential education for other money making strategies
It has potential to become fully automated once you build the business up to a certain level and can be generating the ultimate goal of passive income.

The best thing about this is that you can get started in next to no time and it won’t cost you anything, so what are you waiting for?

Give it a go and let me know how you got on!!!