The beginning of the end for Drop Shipping

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It was only a matter of time in my mind.. but Drop shipping is on its way out...

Ebay is now penalizing, freezing, revoking accounts that drop ship. It is simply a matter of time before many of the other market spaces do the same.

What they are against, is the market space flipping, and not drop shipping when done correctly. So Selling an item on ebay, that you the seller buys on Amazon, and that item ships to the customer.. that is basically no more.

IF you have an actual drop ship business arrangement with a supplier E-bay will request proof of agreement and allow you to continue...

So The business model isn't dead.. its just being legitimized
#beginning #drop #end #shipping
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  • Profile picture of the author dave_hermansen
    Buying from Walmart or Amazon or wherever and then shipping it to a customer on Ebay (or any other platform) is NOT true dropshipping. It is buying at retail and selling at even higher retail.

    People who do this kind of stuff is what gave dropshipping a bad name and why so many platforms and payment processors have policies in place to disallow it.

    Buying from legitimate brands and wholesale distributors and having them ship to customers (a.k.a. REAL dropshipping) has never been a problem and will never be a problem in the future. If it was a problem, pretty much every single major retail website you can name would be out of business (Target, Walmart, Home Depot, Amazon, etc.).
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  • Profile picture of the author thejames
    Yes, it was inevitable that marketplaces started cracking down on these practices. What they're essentially doing is gaming the algorithms, trying to rank for certain product keywords and arbitraging without adding any value.

    The key to ecom success is to own the platform, having your own website and systems in place, instead of having the entire business predicated on marketplace algorithms & policies.
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    • Profile picture of the author dave_hermansen
      Originally Posted by thejames View Post

      Yes, it was inevitable that marketplaces started cracking down on these practices. What they're essentially doing is gaming the algorithms, trying to rank for certain product keywords and arbitraging without adding any value.

      The key to ecom success is to own the platform, having your own website and systems in place, instead of having the entire business predicated on marketplace algorithms & policies.
      Well, I'm not sure if that is the "key" and is certainly not the point.

      The fact is, someone who is doing retail arbitrage, whether it is on Amazon, eBay or even their own site, is catering to only the dumbest of dumb consumers. The vast majority of consumers are going to realize that your prices are significantly higher than other online stores and will not buy from you.

      Limiting yourself to a very small subset of the population (the especially stupid segment) is not a model for success or growth. Those doing retail arbitrage need to grow a pair, knuckle down and contact the actual real suppliers so that they can compete online for the vast majority of the buying public's business.
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      • Profile picture of the author savidge4
        Originally Posted by dave_hermansen View Post

        Well, I'm not sure if that is the "key" and is certainly not the point.

        The fact is, someone who is doing retail arbitrage, whether it is on Amazon, eBay or even their own site, is catering to only the dumbest of dumb consumers. The vast majority of consumers are going to realize that your prices are significantly higher than other online stores and will not buy from you.

        Limiting yourself to a very small subset of the population (the especially stupid segment) is not a model for success or growth. Those doing retail arbitrage need to grow a pair, knuckle down and contact the actual real suppliers so that they can compete online for the vast majority of the buying public's business.
        I think you under estimate how the "Market" in general operates. I could give you example after example of items I buy for "RETAIL" and offer them up on eBay and Amazon for MORE.

        I will even give you an example. Keep in mind before you go and check the numbers for yourself.. they (Walabot ) were running these on "Sale" for $49.00 Nov, Dec, and Jan and they were selling THEN for the same price they are now. So goto walabot.com and look at the DIY item. $79.99 and woosh in comes the 20% off. I can currently BUY this item at RETAIL for $64.00. NOW go out to eBay and see what they actually SELL for ( ACTUAL MARKET ) the numbers are primarily NORTH of RETAIL.

        THIS one item alone I bought 100 of them at the $49.00 price and sold them for $82.00. I didnt wait for the sales price to go back to normal retail.. I was selling them right then and there. I SHOULD HAVE BOUGHT A TON MORE. On each transaction I was making $17.00 maybe a bit more Multiply that times 100. its NOT chump change.

        I do RETAIL and ONLINE arbitrage and find stuff like this all the time.

        IF you REALLY start paying attention to online retailers specifically that e-mail you 50% off offers and then they do something stupid like run a 50% off SALE so you end up paying 25% of RETAIL for an item - EMPTY YOUR WALLET - and then on top of that its not uncommon on say NERF to have the ability to charge MORE than retail.

        Its not that buyers are STUPID.. they are obviously LAZY. I might take that even a step further.. and say that the marketing for these business' and products are lacking any clue as to what the market is actually doing and looking for.
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        • Profile picture of the author dave_hermansen
          Originally Posted by savidge4 View Post

          I think you under estimate how the "Market" in general operates. I could give you example after example of items I buy for "RETAIL" and offer them up on eBay and Amazon for MORE.

          I will even give you an example. Keep in mind before you go and check the numbers for yourself.. they (Walabot ) were running these on "Sale" for $49.00 Nov, Dec, and Jan and they were selling THEN for the same price they are now. So goto walabot.com and look at the DIY item. $79.99 and woosh in comes the 20% off. I can currently BUY this item at RETAIL for $64.00. NOW go out to eBay and see what they actually SELL for ( ACTUAL MARKET ) the numbers are primarily NORTH of RETAIL.

          THIS one item alone I bought 100 of them at the $49.00 price and sold them for $82.00. I didnt wait for the sales price to go back to normal retail.. I was selling them right then and there. I SHOULD HAVE BOUGHT A TON MORE. On each transaction I was making $17.00 maybe a bit more Multiply that times 100. its NOT chump change.

          I do RETAIL and ONLINE arbitrage and find stuff like this all the time.

          IF you REALLY start paying attention to online retailers specifically that e-mail you 50% off offers and then they do something stupid like run a 50% off SALE so you end up paying 25% of RETAIL for an item - EMPTY YOUR WALLET - and then on top of that its not uncommon on say NERF to have the ability to charge MORE than retail.

          Its not that buyers are STUPID.. they are obviously LAZY. I might take that even a step further.. and say that the marketing for these business' and products are lacking any clue as to what the market is actually doing and looking for.
          Actually, the example you gave is TRUE arbitrage - NOT "dropship" (retail) arbitrage. The difference is, you bought 100 of them and then shipped them, yourself (or used an fulfillment center). You didn't really buy at full retail. There's nothing wrong with that and it is a very good model. You are never going to run afoul of Amazon or eBay policies doing it that way.

          This thread was about "dropshipping" (retail arbitrage) from Amazon to eBay customers or vice-versa. Can't you see how one method damages the Amazon or eBay brand and the other does not? I don't blame them fro cracking down on it.
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          • Profile picture of the author savidge4
            Originally Posted by dave_hermansen View Post

            This thread was about "dropshipping" (retail arbitrage) from Amazon to eBay customers or vice-versa. Can't you see how one method damages the Amazon or eBay brand and the other does not? I don't blame them fro cracking down on it.
            And this is the point. and you and I can agree to disagree on this one. IF you are in possession of the item you are selling.. that's Arbitrage. IF you are never in possession of the item, that is dropshipping. I DONT drop ship... I buy stuff bring it "Home" and then ship it out once it is sold.

            Dropshipping is exactly what the OP is discussing. listing on eBay, and then buying from amazon ( or insert an actual dropship wholesaler ) and sending the item to the customer straight from there. Again NEVER being in possession of the item.

            For ME online Arbitrage is buying online, having it delivered to me and then I sell and ship out to my customers.

            And please don't forget IM the OP of this.. I know the damage that can be done in both cases. I am GLAD they - well eBay cracked down on this.
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            • Profile picture of the author dave_hermansen
              Originally Posted by savidge4 View Post

              And this is the point. and you and I can agree to disagree on this one. IF you are in possession of the item you are selling.. that's Arbitrage. IF you are never in possession of the item, that is dropshipping. I DONT drop ship... I buy stuff bring it "Home" and then ship it out once it is sold.

              Dropshipping is exactly what the OP is discussing. listing on eBay, and then buying from amazon ( or insert an actual dropship wholesaler ) and sending the item to the customer straight from there. Again NEVER being in possession of the item.

              For ME online Arbitrage is buying online, having it delivered to me and then I sell and ship out to my customers.

              And please don't forget IM the OP of this.. I know the damage that can be done in both cases. I am GLAD they - well eBay cracked down on this.
              Yeah, I guess we disagree. Although I agree with your definition of online arbitrage and fully support it, the other is simply not "dropshipping"; it is "retail arbitrage" (buying at normal retail and selling at inflated retail where a third party retail entity is shipping to your customer). Dropshipping is buying at wholesale and selling at retail where the wholesaler ships directly to your customer.

              Perhaps we need a new term for it ... "arbitrage dropshipping". Whatever you want to call it, it is definitely something that is bad for customers and the brands of the sites they are sold from (eBay, Amazon, Walmart, etc.). THAT is what the Amazons of the world and payment processing companies are cracking down on.

              As I said before, Amazon has no problem with real dropshipping. They dropship all the time for people who buy from them. So does Walmart, Home Depot, Best Buy, Target (and endless other major online retailers). None of those places stocks everything that is on their websites. They buy at wholesale and have the products shipped directly to the customer from the wholesale entity.

              They also have no problem with REAL arbitrage - you buying at a discounted price and then selling at a normal retail price where YOU are the shipper (or your fulfillment center is).
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      • Profile picture of the author MSutton
        Originally Posted by dave_hermansen View Post


        The fact is, someone who is doing retail arbitrage...is catering to only the dumbest of dumb consumers.
        Limiting yourself to a very small subset of the population (the especially stupid segment) is not a model for success or growth. Those doing retail arbitrage need to grow a pair, knuckle down and contact the actual real suppliers
        I don't know that they are stupid, rather, maybe lazy. And some people are very loyal to Ebay, others loyal to Amazon, etc.

        Arbitrage isn't for me, but if others can actually make money doing it, more power to them. If there's a market, you should profit from it to put food on the table.

        Not everyone's a "guru" like you. We don't all get to plug ourselves on Fox Business or whatnot.

        I don't think insinuating that someone is less of a man than you because you dropship and they do arbitrage is really called for. It certainly doesn't add any credibility to you or your business or your reputation. I'd stop doing that if I were you. But that's your call.

        Anyhoo... looooooong, time ago, I read on a now-defunct forum that what some people were doing was buying stuff locally and selling online to folks in Maine and other remote states. They pay a premium for trendy stuff because they can't get it in their area. Not sure if this is or was rue, though. This was back in probably 2003-ish when I read about this. I have my doubts it works today even if it were true.
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        • Profile picture of the author savidge4
          Originally Posted by MSutton View Post

          Anyhoo... looooooong, time ago, I read on a now-defunct forum that what some people were doing was buying stuff locally and selling online to folks in Maine and other remote states. They pay a premium for trendy stuff because they can't get it in their area. Not sure if this is or was rue, though. This was back in probably 2003-ish when I read about this. I have my doubts it works today even if it were true.
          This is VERY true. Lets take IKEA as an example. Look at the map here: ( https://www.google.com/search?q=ikea...4354999996!5i5 ) you can see there is a whole lot of Americans that do not live close to one.

          If you have ever been to one.. you also know they run in store specials all the time. So you can generally buy items at "less than retail" you can THEN turn around and sell at greater than retail to all of those that don't have one within driving distance.

          This past Christmas there was a board game released in only a select amount of walmarts, the millennial version of Monopoly. people could goto their Walmart and buy all they had and turn right around and sell it for 3x the cost. Supply and demand at work.

          Shoe companies are more and more creating this sub market by releasing shoes in limited number across stores, or in the case of Yeezy, releasing in a very limited number of stores. and again people take advantage of supply and demand.

          think about any and every Apple product release.. iPhones being sold at 2 and 3x online.

          When one does retail arbitrage at scale or beyond the extra side hustle things like Walmart ugly christmas sweater close outs for $1.00 each come into play. My wife drove around to all the local walmarts and bought over 400 of them. They are closed out right? Walmart will NOT be carrying these items next year.. so what happens to the value of these sweaters next Oct? I can tell you right now I will not be selling them for the 12.99 or whatever Walmart was selling them for at retail. I venture to say I will be selling them for $24? $30? $400 in.. and a conservative $10K out ( Gross )

          THAT is retail arbitrage, and it is very much alive and well.
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  • Profile picture of the author Kay King
    I've seen you mention the Walmart Christmas sweaters before and must admit I'm skeptical on that one.


    Our local WM sold those for a couple bucks - because they could not sell the for more. The dept manager said they got in two shipments of them - couldn't move them - very poor sales on the items - so that's why the cheap sell-off. They did the same thing last year and will do it again next year.



    Maybe you have access to areas where WM can't found (are there such areas?) I can see where you could sell those next year for profit considering what you paid - but not for the margins you anticipate. Hope you prove me wrong.
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    • Profile picture of the author savidge4
      Originally Posted by Kay King View Post

      I've seen you mention the Walmart Christmas sweaters before and must admit I'm skeptical on that one.


      Our local WM sold those for a couple bucks - because they could not sell the for more. The dept manager said they got in two shipments of them - couldn't move them - very poor sales on the items - so that's why the cheap sell-off. They did the same thing last year and will do it again next year.



      Maybe you have access to areas where WM can't found (are there such areas?) I can see where you could sell those next year for profit considering what you paid - but not for the margins you anticipate. Hope you prove me wrong.
      From what I understand... and believe me I could be wrong... Walmart does discounts based on the number of days an item is on the shelf. You can literally find items that have been discounted because there is a number of inventory that has been on the shelf for say 90 days, and then in the section of the store those are items are kept, you will find the exact same product at full retail.

      Closeouts are a bit different. when Walmart does close out, that means the item is being discontinued from Walmart inventory. So the Ugly Sweaters were closed out. I am then pretty confident that those specific patterns will not be available next year. So I am in a way "Gap Betting" that come Christmas season next year the items I have are unique in the sense you will not be able to walk into a store and buy them. basically new old stock.

      I also have a bit of an ace up my sleeve. When I identify a "hot" sustained market I have a tendency to build an affiliate site. I happen to have one such site for Ugly Sweaters and have had it for a number of years now. This past holiday season, that site produced just under 8000 sales for Amazon. I happen to have about an e-mail list of about 9000. Selling 400 sweaters really wont be an issue.

      I know YOU Kay read many of my posts.. or you just follow me around and thank all of them LOL So you will understand when I say that going into this purchase we were aware that we have leverage on our side. There are many things we buy where no I do not have this kind of leverage, but in the end if you BUY at the right price, you just can never go wrong.. and pretty much a $1.00 for just about anything, you cant go wrong.
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  • Profile picture of the author MSutton
    I used to work as a 3rd party vendor in retail stores, including walmart for over 10 years. I can tell you that not all walmarts are the same. Some stores get things others don't, some stores get more junk than others and some stores price certain items higher or lower than other stores (they have certain freedoms to do this to a degree).



    While your store got a TON of Xmas sweaters and could not sell them, other stores probably got those same sweaters and sold them just fine at slightly higher price point, if they got it at all.



    Also, most dept managers have no idea what they are doing. But that's understandable because if they are in a busy walmart they get a lot of junk in that they don't know what to do with it all. But in the end, it usually works out when welfare day comes around. Not that everything sells, but they get rid of a lot of that junk when welfare day comes around.


    When a department manager says "that stuff doesn't sell" what they probably mean they keep sending us a bunch of that junk and I have no idea where to put it lol. Walmart will literally send certain stores pallets of the same junk week after week. While other stores may not get that much. Usually, the larger stores that are in high populations of lower income folks get dumped on. Cuz when welfare day comes, those shelves can get pretty bare. But before welfare day comes, the store gets inundated in the backroom beyond belief.
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  • Profile picture of the author Kay King
    That's it -hit me over the head with some common sense.

    not all walmarts are the same
    That is so true and I hadn't considered it. The unbusiest WM I've ever seen is in the nearby college town. The shoppers there are similar to what you'd find in any grocery or department store.

    It's 15 minutes north of my house - 15 min south is another WM in a small city....totally different clientele (you could film a 'fashions of walmart' video in that one) - and somewhat different products, too.

    Somehow I find it reassuring you are able to sell hundreds of ugly sweaters every christmas - some things don't change.
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  • Profile picture of the author Samfakroon
    This is a big Myth. I know dropshipping will just even be bigger this year than any previous year.

    Forget Ebay, amazon, and ali express. now we have got USA suppliers who actually support drop shipping so its just growing bigger and better. and the trend is now moving towards Print on Demand stuff, forget tshirts thats old, but many many other stuff that your potential buyer will just not be able to resist.

    Dropshipping is a business that will just evolve but not vanish any time soon.
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  • Profile picture of the author MSutton
    The biggest problem USA suppliers have with dropshipping is the labor cost involved in processing/shipping an order. That is a fact. It's not worth it for them or the retailer because then end cost per product/shipment is too high.



    The only way around this for a retailer is to master good selling products at higher-than-average prices, keeping margins at a healthy point.



    There are quite a few US-based dropship suppliers out their (most suck), but their prices are high, most don't offer decent quality products, most donut offer brand products and many that do are selling end-of-life or surplus. Most people who want to get into dropshipping can never make a dime using these suppliers because their marketing skill is limited to "be the cheapest" do to the high wholesale price and processing costs.



    The only thing that will allow a US-based supplier to offer dropshipped products at a reasonable wholesale price is to employ automation and "undocumented" workers. Otherwise, US-based dropshipping does not work well for the average joe schmoe.
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  • Profile picture of the author techwizard
    If your definition to dropshipping is getting products from Aliexpress, eBay, Amazon, Salehoo. Then yes, Dropshipping was dead more than a year ago.
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  • Profile picture of the author MSutton
    Dropshipping from AliX is not dead. But it only works for those experienced in marketing, especially FB ads. This is what happens in every market. Once saturation sets in, only the strong survive.
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  • Profile picture of the author MValmont
    It is harder than before but it is still the easiest method to make money online as of right now.

    You just need to evolve and know what you are doing.
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  • Profile picture of the author elbeer
    LOL I chuckle when people say things like this "its dead" or "its the end" people have been saying this for the last 15-20yr. Its only dead when you quit.


    Go onto google trends and type in ecommerce its the fastest growing business model on the planet hence why high street stores struggle.



    The likes of walmart are lucky to make a 0.5% profit yet dropshipping is making on average 22% (on my stores anyway)
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    • Profile picture of the author savidge4
      Originally Posted by elbeer View Post

      LOL I chuckle when people say things like this "its dead" or "its the end" people have been saying this for the last 15-20yr. Its only dead when you quit.

      Go onto google trends and type in ecommerce its the fastest growing business model on the planet hence why high street stores struggle.

      The likes of walmart are lucky to make a 0.5% profit yet dropshipping is making on average 22% (on my stores anyway)
      So I dont have a brick and mortar... and I dont drop ship - USUALLY.... and I make 300%+ on my eBay store. My other non affiliate commerce sites.. if im not pulling 100% profit at a MINIMUM.. there is something WRONG.. and I am not bragging here. there is a point in this...

      Drop shipping I dont think is an overly good business model... UNLESS the numbers are right.. and 22% profit.. that would not be right for me. I think thats why you read around the net why people struggle with drop shipping.. margins are tight, and if you dont understand paid advertising, YOUR TOAST.

      BUT put the product in your hands.. and things change. Profit margins increase quickly.. the number of platforms you can sell on increases dramatically. You simply can sell more and make more. oh thats right I cant be day tripping the globe collecting cash without doing anything tho
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