Why over 90% of Sellers are Losing Money on eBay

By: Nick Destefano

Let's face it, everyone is trying to earn money on the Internet and there is no better and easier way to do that than selling products on eBay. It's very easy to setup an online auction which can only take a few minutes that can have the potential of millions of people view your item for sale. People in all different categories such as stay at home mom's, college kids, or even people with full time jobs that in their spare time, are all selling things on eBay to make a little extra income. It can cost as little as 25 cents to setup a basic auction with a description and one picture included in the listing fee. eBay also charges a percentage of the final bid price, but is usually minimal for the seller and that cost can be tacked on to the buyer in the shipping & handling fee. Since millions of people use eBay everyday, this is the cheapest and easiest way to sell your products and make a good profit.

A term that has really exploded over the Internet in easily selling products on eBay is through a method called "dropshipping". Using the dropshipping method allows someone selling products on eBay without having to carry any inventory or even ship the product to the buyer. There are many companies out there that will allow the user to purchase their products and then have them blind dropship the item to the winning bidder. The company will use the eBay auctioneer's name or company name and address as the return address so it appears the product actually came from them and not the true supplier. The true supplier will handle the packing, shipping, and any returns. Dropshipping is very popular because of the ability to not have to pay for the product up front until the auction ends and the buyer has paid you. Once the buyer has paid, you would simply send the order to the dropshipper and they would handle the rest including the sending of a tracking number for the package that can be forwarded on to the buyer. Using this method is very easy and does not take up much time so almost anyone can do it and profit. However, since more people are jumping on the eBay selling bandwagon, is there anymore room for profit?

It's getting easier to locate wholesalers and dropshippers, by either searching the Internet yourself, or simply purchasing a compiled list of dropshippers at one of the sites who specialize in this service. Either method will put you in contact with dropshippers, however using an updated database that you have purchased can save you a lot of time and headaches because they have already rated and reviewed each dropshipper in their database. There are very good dropshippers out there, however many people are finding out about them and using the dropshipper for the same products and posting them on eBay. Here is where the competition comes in. For example, you found a nice Sony DVD player that retails for $199 and you can get for $125 wholesale through a dropshipper. Not bad if you can consistently sell these for around $175 which is still below retail. People these days on eBay expect to buy products on eBay below retail to save money, otherwise they can simply go to the store and buy it and not have to wait for shipping. This poses another problem that I will get into later. Others find the same dropshipper and want to sell the same Sony DVD player and they do some research on eBay and sell theirs for $165 to undercut you. Well you can see the trend, as more and more people use this dropshipper, the same products are flooded on eBay and the selling price keeps dipping until there is hardly room for any profit.

Sellers are always searching for new products to sell and make a profit on because as in the example above, so many other products are being sold for little above or in some cases below wholesale costs. What sellers will do is try to put up as many items for sale that they can handle and even if they only make a dollar or two on the sale, it all adds up to them. But does it really? I don't think so if you put the time it takes to setup the auction, answer email questions from potential buyers, collect payment from the buyer, purchase the product from the dropshipper, and then email them the tracking number. Many people believe that if you can make as little as a dollar profit, it's worth selling as many items as you can. This is why there isn't room for a decent profit, because sellers are trying to sell their products at the lowest cost possible to undercut everyone else. Furthermore, EBay is such a huge market that it cannot and will not be ignored by the product distributors themselves. Some of the dropshippers will sell their products directly on eBay and its guaranteed that they get the product cheaper since they deal directly with manufacturer. The product is already marked up when they turn around and sell it to someone else using their services for dropshipping.

Another problem that I mentioned earlier is that everyone that buys on eBay expects to pay below retail and whatever price the item is selling at their local store. If the price was the same, they would simply go to the store and purchase the product to get it right away and avoid paying shipping costs. Speaking of the shipping costs, the final auction price and shipping costs should not be higher than the retail price of the item or a buyer will not bid on it. Buyers on eBay also love all the competition going on because they can often find products at the actual wholesale cost or even below. eBay has become a buyers paradise and a sellers nightmare that are driving many people that have been selling for years, out of the eBay business.

So where can someone make real profits outside of eBay? The answer is quite simple, but many people do not want to take the time to do it. Building a website to sell products online can be the key to success in making real profits. Sure setting up a website can take time and may be costly to some people, but in the long run, this is where the real profits are made. There are services such as one offered by DropShippingWholesalers.com that will actually create a customized website for you stocked with hundreds of products through a dropshipper ready for you to sell. You basically get your own domain name and online business in which all you need to do is promote it to be successful. The only downside is that your website won't get much traffic, right away, but if you market it correctly, the profits can be rewarding!

Not everyone buys things on eBay and that is because of a few simple reasons. When buying items on eBay, you will have to outbid everyone else which may entail sitting and waiting by your computer until the last few minutes elapse before the auction ends to put in your final bid to win. eBay does offer "Buy it Now" auctions where you can simply buy the product without waiting for the end of the auction, but these prices are usually much higher than for what an auction would go for. Some people simply do not have the time or energy to wait for an auction to end and will purchase something directly from a website and be done with it. The second reason people are more likely to buy from a website over eBay is because of the quality of goods for sale or reputation of the seller on eBay. Many sellers on eBay offer refurbished or restocked products which means they have already been used and returned to the manufacturer. Sellers at times may list their item as new when it really is a refurbished item. Some sellers may also have negative feedback on some of their transactions because of long shipment delays or never receiving the product at all. While purchasing something from a website, you have everything about the store in one place in case you would ever need to contact them or return an item. Contacting the seller or returning an item on eBay can be a difficult task if a seller has hundreds of auctions going on at one time.

Due to the over saturated seller market on eBay, many have turned to their own online website business and have reaped in better profits through that avenue. Many people can simply design their own website and their costs would be very minimal to setup and run the site. The only monthly fee for basic sites would be the hosting that can be as little as $2.95 per month at sites such as SturdyHosting.com. Otherwise there are services such as the one mentioned earlier that will fully design a site for you and stock it with hundreds of products from a dropshipper ready to sell. Although no site will succeed without traffic, there are many cost effective and even free ways to market your site. So if you are one of the 90% of the people that are losing money selling on eBay, it's time to take the step into running your own online business website and start making real profits!

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