The Ultimate Guide to Dropshipping on Amazon and eBay
- What is dropshipping?
- Dropshipping on Amazon and eBay: About Amazon
- Dropshipping on Amazon and eBay: About eBay
- Dropshipping on Amazon: Policy for dropshipping
- Dropshipping on eBay: Policy for dropshipping
- How to dropship on Amazon: Selling fees
- How to dropship on eBay: Selling fees
- Dropshipping internationally on Amazon
- Dropshipping internationally on eBay
- Overview of product categories on Amazon
- Overview of product categories on eBay
- Fulfillment by Amazon (FBA)
- Fulfillment by eBay (Managed Delivery)
- Dropshipping on Amazon and eBay: Summary
You are getting into the dropshipping business and have come to the question: “Should I start dropshipping on Amazon or eBay?
To find the right answer to this question you need to consider numerous factors. We prepared this guide to help you decide which platform is the most suitable for you. We will compare and review both platforms and their unique services to make it easier for you to pick the best one.
In the long run, you will gain more knowledge on the topic, and then decide whether you would like to start your business with either eBay or Amazon.
Before we begin, remember this – even if you decide not to go with either of these two marketplaces, there are still plenty more out there. Most of these marketplaces require subscriptions and other fees, but the profit margins may be greater than you can imagine.
We will start by defining the dropshipping model and its qualities. Later, we will have a look at the two of the most famous eCommerce marketplaces – Amazon and eBay. Lastly, there will be a bonus section, so make sure to stay with us until the end of the guide.
What is dropshipping?
First and foremost, let’s define the process of dropshipping for the newbies reading this. Knowing what you are getting into is crucial for achieving success in the dropshipping industry.
Dropshipping is a model of online selling goods without having to carry a warehouse or storage space. To clarify, the dropshipping model allows you as a seller to place products in your online store without dealing with the packaging and shipping process. The one that is responsible for maintaining inventory and delivering your products to your customers is your supplier of goods.
More precisely, after your customer places an order in your store, you proceed with forwarding the order to your supplier. From that point, your supplier moves forward with the shipping of the package.
This eCommerce business model ensures low start-up costs, zero inventory costs, and higher security.
So, when it comes to dropshipping on Amazon and eBay, let’s see what roles play Amazon and eBay? Practically, on these platforms, you can open your online store and start your dropshipping business. Surely, you are wondering which one to pick. Continue further to learn more about dropshipping on Amazon and eBay.
Dropshipping on Amazon and eBay: About Amazon
Even if you weren’t part of the eCommerce industry, we are sure that you have heard of the eCommerce giant Amazon. It is the top eCommerce platform that attracts every single online seller in the world like a magnet.
To put it in perspective, according to the Similar Web, Amazon holds the title of the most visited eCommerce and Shopping Marketplace in the world. What else do you need as proof of Amazon’s popularity?
As reported by Statista, in 2019, Amazon’s eCommerce sales in the USA amounted to $222.6 billion U.S. dollars and are projected to surpass $302 billion U.S. dollars in 2021.
Furthermore, Amazon announced that in 2019, they had around 50.000 sellers with revenue of over $500.000, while nearly 200.000 small and medium-sized businesses made over $100.000 throughout 2018. The good news is, that more than 50% of all units sold in Amazon’s e-stores were made by these small and medium businesses. It means every seller has an opportunity to make a profit by investing time and money.
Dropshipping on Amazon and eBay: About eBay
Similarly, as with Amazon, every human being has heard of eBay. You don’t have to be an online seller to know about this eCommerce marketplace. eBay proudly stands in second place on the list of the most visited eCommerce and shopping Marketplaces.
Moreover, according to the latest data published by eBay, there are 182 million active eBay buyers worldwide, which is a major advantage for dropshippers.
When it comes to eBay’s eCommerce sales in the USA, the data published on Statista shows a decline in 2019. The sales amounted to $33.33 billion U.S. dollars as compared to $35.63 billion in 2018.
So, how to decide between these two major eCommerce marketplaces?
Regardless of their popularity, both Amazon and eBay characterize themselves with different features and qualities. It doesn’t mean that if Amazon is the number one platform based on annual sales it would be the better choice for you. Different businesses have different needs, therefore, you need to analyze and measure every single characteristic of both platforms. Only after this, you can decide which marketplace could best meet your requirements and preferences.
Let’s start by listing the details for dropshipping on Amazon and eBay to help you make a decision.
First off, you can’t think about selling on Amazon or eBay if you don’t know their dropshipping policies.
Dropshipping on Amazon: Policy for dropshipping
Let’s look closely at Amazon’s dropshipping policy. Although dropshipping on Amazon is acceptable and generally legal, there are some policy measures you must abide by to be able to sell on the platform.
- Make sure to identify yourself as the seller of your products on all information related to them (invoices, packaging, product slips, etc.)
- Take off all elements that contain information about your supplier before shipping them (product slips, invoices, packaging, etc.)
- Take care of issues with product returns and/or defects
- Comply with all other Amazon seller terms
Finally, Amazon strictly forbids purchasing goods from another retailer and having that retailer ship them to your customers.
If you can conform to these rules, you have a good chance to be a successful Amazon seller.
Dropshipping on eBay: Policy for dropshipping
The same goes for joining eBay’s network of sellers. Ensure to review eBay’s dropshipping policy before opening your store.
Dropshipping on eBay is permitted, as long as it involves fulfilling orders directly from a wholesale supplier.
- Ensure to handle a safe delivery of your products to your customers
- Take care of timely shipping of your products
- Handle product returns and/or defects
Similar to Amazon’s, eBay doesn’t allow listing an item in your store, then purchasing it from another retailer and having that retailer ship it to your customers.
How to dropship on Amazon: Selling fees
Just like every other eCommerce platform, Amazon charges for its services. All in all, Amazon’s fees for selling are based on diverse factors such as selling plans and product categories. The platform has two main selling plans: Individual Plan ($0.99 per unit sold) and Professional Plan ($39.99 for an undefined number of units sold).
They also charge a referral fee for each item sold which amount is based on the product category. On the whole, Amazon’s referral fees amount between 8% and 15%.
Lastly, Amazon’s shipping fees vary based on whether the seller fulfills its own orders or uses Fulfillment by Amazon (FBA).
In short, the costs for selling on Amazon depend upon your product type, fulfillment service, and other optional services.
How to dropship on eBay: Selling fees
In contrast with Amazon, eBay follows a different approach to its selling fees. To begin with, they have two types of fees: insertion and final value fees which depend on the different product categories.
For most categories of items, sellers with a basic eBay account pay a standard final value fee of 10%. For books, music, DVDs, and movies, the final value fee amounts to 12%, while for selected women’s and men’s fashion, the final fee is 0% if the selling price is $100 or more. In case the price is less than $100, the final value fee equals 10%.
Dropshipping internationally on Amazon
Amazon has a rather flexible policy regarding international sales. The eCommerce giant consists of 16 online marketplaces, covering some of the biggest markets around the world. It’s a great choice if you’re looking to expand your dropshipping business internationally and reach millions of customers.
You can officially sell via Amazon to Europe (Germany, United Kingdom, France, Spain, Italy, and The Netherlands), North America (United States, Canada, Mexico, and Brazil), Asia-Pacific (Japan, China, India, and Australia), and Middle-East (Turkey and UAE).
What about unifying accounts? Amazon offers two types of unified accounts – one for North America, and another one for Europe. This allows you to sell in all markets that fall under Europe and North America. However, to sell in the Asia-Pacific region, you’ll need to register a separate account for each country that falls under this category.
Still, before you start selling on Amazon, learn what are the requirements for each of the 16th marketplaces, including taxes and regulations. Only after that, you can consider expanding your business into a new marketplace.
Dropshipping internationally on eBay
Unlike Amazon, eBay has a more rigorous policy concerning international markets. You’ll need to fulfill several criteria to be eligible to sell internationally on eBay.
First, you need to have an account that is in good standing. Then, you need to have a PayPal account and be PayPal verified. Additionally, you need to offer PayPal as a payment option.
Furthermore, your seller account needs a minimum of 10 feedback points and the first sale must not have happened in less than three months.
There is a limit on which categories you can sell on eBay’s international markets. They’ve excluded specific ones, including car parts, vehicles, DVDs, and video games.
To enable international sales, you can do so by offering to ship to either Europe, the U.K., or worldwide. Also, it’s highly important to specify which shipping service will deliver to any of these regions so that you can rank better in the search results.
You can choose whether you want to sell your products worldwide, or in selected countries only. The products must match the eligibility requirements in each country/region where you plan on selling. You can check out eBay’s International trading policy.
eBay has several unique websites meant for different parts of the world. You can sell in Australia, Austria, Belgium, Canada, China, France, Germany, Ireland, Italy, Hong Kong, Malaysia, Netherlands, Philippines, Poland, Singapore, Spain, Switzerland, Taiwan, Thailand, the U.K., the U.S., and Vietnam. You can try selling in any of these countries, as long as you follow the cross-border rules and regulations provided on-site.
Overview of product categories on Amazon
As an overview, these are some of the products you can sell on Amazon:
- Women’s fashion
- Product sampling
- Pet supplies
- Sports and outdoors
- Baby products
- Tools & Home improvements
- Health & Household
- Toys & Games
- Smart home
- Arts & Crafts
- Home & Kitchen
- Video games
- Industrial & Scientific
- Beauty & Personal care
Even though selling in a category doesn’t require Amazon’s approval, certain products might require approval for selling. Therefore, before deciding what kind of products you are going to sell, it’s vital to know which categories and products require approval by Amazon.
Overview of product categories on eBay
As an overview, these are some of the products you can sell on eBay:
- Books, Movies & Music
- Collectibles & Art
- Home & Garden
- Sporting Goods
- Toys & Hobbies
- Business & Industrial
- Health & Beauty
Additionally, while you can sell numerous products on eBay, in compliance with local legal restrictions, there is a list of eBay’s restricted items. Ensure to double-check the nature of your products before entering the eBay marketplace.
Finally, by the looks of it, Amazon has its product categories divided without having to add too many subcategories. On the other hand, eBay has fewer categories, each one with several subcategories, to make it appear more organized.
According to users, Amazon is better with most product categories due to following the trends in global market demand. Vice versa, eBay is much more popular with its ‘eBay Motors’ category, mainly because of electronics parts and accessories for cars.
Amazon leads the list because they focus on current market trends instead of total sales per category, while eBay’s marketing team probably checks statistics for each category before they place new products for sale.
Fulfillment by Amazon (FBA)
Amazon has its own fulfillment service called Fulfillment By Amazon (FBA) which was launched in 2006. Since then, their service operates with the aim to provide storage, packaging, and shipping to sellers. FBA is a program that enables sellers to ship their products to Amazon’s fulfillment centers. They are stored in these facilities until an order has been placed. After this, Amazon proceeds with preparing, packaging, and shipping the product(s) to the end-customer(s).
If you decide to go with FBA there are some fees you will need to pay to Amazon for its services. Fair enough, if you are an FBA seller, Amazon will be completely responsible for handling the orderly packing and shipping. This comes at a fee. The FBA fees are determined by the size and weight of the products you are selling, starting from $2.41 and ending at $5.26 for standard-size products. Additionally, there are special fees for oversized products starting at $8.26 for small oversized items to $137.32 for special oversized items.
Aside from this, the FBA program comes with storage fees for the space your products seize in Amazon’s fulfillment centers. These fees are charged monthly or long-term for products that are stored for more than 365 days.
Fulfillment by eBay (Managed Delivery)
In a similar way, by the end of 2020, eBay will launch its own fulfillment service called Managed Delivery. The idea is to provide the end customers with timely and reliable delivery. However, unlike Amazon which owns and manages its own warehouse network, eBay will build a network of third-party logistics partners(3PLs) that will oversee the storing, packing, and delivery of products.
eBay is expected to build strategically located warehouses to enable sellers to keep their inventory closer to their customers. The goal is to guarantee timely and fast delivery and even reduced shipping costs.
Dropshipping on Amazon and eBay: Summary
To sum up, each marketplace has unique traits and services for starting and growing a profitable online store. Dropshipping on Amazon and eBay is a subject of discussion across numerous online forums where eCommerce professionals share personal stories and experiences. Each owner of an online store has a favorite marketplace for placing its products and you can’t argue with that. Each opinion is based on personal experience, therefore you shouldn’t blindly follow everyone’s advice.
The right approach is to measure the pros and cons of both marketplaces and compare them against your needs and requirements. Whatever you choose after reading this guide for dropshipping on Amazon and eBay, you won’t be mistaken.
Ultimately, your decision should be based in accordance with your type of product, preferred fulfillment, and desires for international business expansion.