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.
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.
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!!!
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!