If you are a new seller and you want to make money on eBay you have probably run into discussions and recommendations to consider dropshipping. There are some realities about dropshipping that need to be considered before you move forward to investigate this product supplier option. It is time to face the reality of the situation and then make an informed decision.

Dropshipping is simply a means of selling merchandise. The selling process becomes that a seller lists a product that a dropshipping company has in-stock for a price that is higher than will be paid to purchase the product after it is sold. Once a sale is made the seller simply pays the appropriate amount for the item (Don’t forget to include appropriate shipping charges in your pricing!) to the dropshipping company. That dropshipping company will then ship the item directly to your buyer for you.

As a seller who wants to make money on eBay you have no upfront costs for inventory procurement, storage, pulling, packing and shipping. The dropshipping company does all of this for you. This is a means to enter the marketplace for much less money.

However there are also some downsides to using dropshipping companies. Probably the biggest challenge is finding a dropshipper who can provide the right products and the accompanying services at a price that will allow you to make money on eBay. Since eBay is so competitive from a pricing perspective this can be show stopper. However there will be some products that do work if a seller is willing to invest the time to research and find those products. (In all cases we have found that margins are tighter using dropshipping companies versus buying in quantity from wholesalers. However, there is cost savings in labor and no upfront inventory investment is required!)

Bigger issues arise when dropshipping companies show items as being available in their inventory and then send a ‘back order’ notice to you and your buyer once a sale is made. Buyers want their products once they buy and pay for them. This can absolutely ruin customer retention when it happens which doesn’t help you to make money on eBay for the long term.

Finally be sure that you clearly understand the dropshipping company’s policies regarding lost and damaged merchandise. Who is responsible? How are these problems handled? Will you and your buyers get the right treatment if there are problems? The answer must be yes if you are to make money on eBay.

Research dropshipping companies carefully if you decide to use this means of obtaining products for eBay sales. It can work for you if you are careful. However understand the services that are being provided and the costs involved. Be sure that a dropshipping company fits into your long term goal to make money on eBay before you move ahead.

To Your eBay Success!

To read my free e-report "Dropship Facts" check out http://www.onlineauctionsmadesimple.net Bob Hamilton is an entrepreneur, writer and consultant. Bob sold his brick and mortor store to sell on eBay and has been helping others to get started on eBay ever since. http://www.openingadollarstore.com Article Source: http://EzineArticles.com/?expert=Bob_Hamilton