When we started dropshipping almost ten years ago we thought that everyone was doing the same but the fact is that dropshipping was a fairly unknown business model at the time (we did mainly eBay dropshipping at the beginning).
Just take a look at the graph below which shows searches for the term drop shipping, it has literally exploded in the last couple of years.
Dropshipping today is performed on all major marketplaces, here are just a few popular examples:
- Dropshipping from Amazon to eBay
- Dropshipping from eBay to your own webstore
- Dropshipping from Aliexpress to eBay
- Dropshipping from eBay to eBay
The list goes on and on, you can dropship from almost any marketplace to the other as long as you are able to make a profit on it.
In this post I will explain everything you need to know about dropshipping from Amazon to eBay:
- Is drop shipping from Amazon to ebay legal
- What does amazon to eBay arbitrage mean
- Dropshipping from Amazon to eBay – step by step example
The short answer is YES. Dropshipping from Amazon to eBay is legal, there are no explicit laws or policies prohibiting this type of business model or business strategy if you will. Beyond legality though, many people both buyers and sellers feel that there is an ethical issue here:
- Buyers who receive products in Amazon packaging feel cheated especially when they purchased something on eBay for say $17 and find it on Amazon for $10. Once these buyers find out you are dropshipping from amazon to eBay they often leave negative feedback and ratings on the sellers account in order to take revenge or simply return the item.
- Amazon sellers also feel deceived when they realize someone is dropshipping from amazon to eBay and making money on their back. I read about an amazon seller who saw one of his exclusive items being sold on eBay at a jacked up price. What he did next was he bought his item from the third party seller on eBay and then significantly raised the price of the product on Amazon forcing the dropshipper to cancel his eBay order and then wrote a highly negative eBay feedback which is always damaging to sellers.
From eBay’s perspective, they do not like dropshipping from amazon to eBay and they have taken several steps towards limiting this:
- In July 2017 eBay restricted hundreds of Israeli sellers accounts who were actively purchasing from Amazon and shipping the products to their eBay customers. The reasoning behind this was that it’s a risky business model and eBay buyers are reluctant to find out that their order came from Amazon (they feel cheated).
- Every eBay Open event there is an exhibition area with tens of ebay solutions, In a recent eBay Open there was at least one company prohibited from exhibiting because their solution facilitates dropshipping from Amazon to ebay.
eBay believes that its reputation and brand name is at risk when dropshipping from Amazon to ebay allowed since customers buy from eBay and get Amazon branded packages.
First, The customers feel they could have bought the same product for a cheaper price.
Second, it’s basically free advertising for Amazon (eBay’s prime competitor).
Basically the term arbitrage is taken from the stock market world, you buy an item for $10 on Amazon and sell it for $15 on eBay, so you make $5 arbitrage profit (before eBay and paypal fees).
Arbitrageurs know how to take advantage of fluctuations in prices and are usually familiar with a niche market such as antique tapestries for example. A regular seller who specializes in this might try to market his merchandise to antique collectors which is a limited market. But an Amazon to eBay arbitrage savant might buy the antique tapestry being sold on Amazon and market it on eBay as a vintage decoration piece for your home (and people looking to redecorate is a significantly larger market than antique collectors). The same seller will also very likely increase the price by 10, 20 or even 30 percent and in many cases get his asking price on eBay.
The formula for a successful Amazon to eBay arbitrage is having a good amount of knowledge of a niche market + being able to identify an undervalued item in a ‘foreign’ marketplace + a keen eye for marketing and rebranding.
eBay and Amazon are literally brimming with arbitrage opportunities. Sellers make a few common mistakes when listing items and you can definitely take advantage of this in order to make a quick buck:
- Misspelling – Ofen sellers misspell or abbreviate words due to lack of space in the title and then nobody can find their listing which often makes them desperate to sell and allows you to pick up items at rock bottom prices. For example: ‘designr bag’ instead of ‘designer bag’.
- Bad photos – If a good value item is being advertised with poor quality photos, buyers are much less likely to take a risk and buy that item.
- Missing keywords – often people forget to use an important keyword in their title, for example, someone selling a shirt might call it ‘beautiful size 30 top’ instead of ‘beautiful size 30 blouse (or shirt)’ which people are more likely to search for.
So how do you go about doing Amazon to eBay arbitrage ?
Here is a concise step-by-step guide:
- Go to eBay and search for items that are currently in demand. You can do this by going to eBay’s ‘trending’ page or simply by browsing different categories and seeing which items are getting a lot of bids (check out our previous posts about the best things to sell on eBay and the top selling items on eBay).
- Once you have chosen a product determine the items value based on the average price you see on eBay (try to avoid the extremes of any category ie the extremely expensive and extremely cheap – focus on the middle ground) and then knock off 10% in order to create a ‘safety net’ for yourself.
- Search eBay or Amazon using all the misspelling of your item and category as well as different word combinations or try using the correct spelling but search for items with low quality pictures.
- When you find a good potential candidate – determine if the price listed will allow you to make a profit. For example if you found an iphone cover on Amazon for $5 and you saw that people are selling that same item on eBay for $10 then your profit margin is $5 minus paypal fees, eBay fees and shipping so maybe you are pocketing $3. I would refrain from doing this with low cost items though unless you get them in bulk.
If you choose to do this on a different marketplace ie Alibaba to eBay instead of Amazon to ebay arbitrage, the process is basically identical and this strategy is easily duplicated from one marketplace to the next.
Again, I’m not crazy about the Amazon to eBay arbitrage model but I cannot argue with the fact that many sellers are implementing this model successfully. With proper research and tactics you can be making money in no time. Just be aware of the risks such as knock-offs and angry buyers and sellers who might try to take revenge on you for ‘duping’ them. Happy arbitraging 🙂
Dropshipping from Amazon to eBay is actually much simpler than one would think. Here is an example:
- Find an item which is underpriced on Amazon (in comparison with eBay) and make sure they offer free shipping!
- Create a new eBay listing for the item (you can use CrazyLister to make it look professional and increase the chances of selling). If the pictures are good you can use them and if not you should find better ones on Google – either way I would recommend making the listing more visually appealing in order to add to the perceived value of the product. As far as the text you can copy and paste it but again I would spend a few minutes editing and changing it – make it more convincing, hit home why someone should buy your product.
- Sell the item on ebay and purchase the item on Amazon. Be sure to check the box specifying that the product is a ‘gift’ so that your buyer does not find out how much you really paid.
- That’s it ! You made a few dollars profit. Now repeat this process with the same item or multiple items and you could be supplementing your income or generating enough money for this to be your primary source of income.
Here is an example of a dropshipper who found good potential value in a product on eBay meaning he found a cheap item on eBay and then created another listing for the item on eBay and Amazon. Keep in mind that this could just as easily be Amazon to eBay – it’s almost an identical process.
- Like I said before. The first step is to find an underpriced item and in this case a poorly represented item. I think there would be a consensus that this credit card knife is utterly unappealing from picture to description and that is why it can only fetch 0.99 cents.
- What this seller did was find a better image and then he most likely edited it using Adobe Photoshop or Adobe Illustrator. He did three very smart things here in his eBay listing which dropshippers would be wise to mimic:
- He found a high quality image which has appeal
- He gave the impression of a brand by using text and color ie writing ‘Kinifecard’ in large letter and using pink and teal
- He fabricated a sale – telling potential buyers that this product has been marked down when actually it was being marked up
3. Here he took the same product and created a listing on Amazon minus the graphics. I don’t know exactly why he lowered the price (on eBay it was $9.99 and here it is $7.99) but one can assume that the simple answer is competition. Theoretically, a seller could buy this knife on Amazon and then compete with him on eBay though this wouldn’t be very profitable.
There are several potential pitfalls to avoid when dropshipping from Amazon to eBay:
#1: Customer satisfaction
The seller you are buying from on Amazon is responsible for the packaging, shipping and ultimately the quality of the product. If her or she fails to ship on time, package with care or provide a high quality product you will be the one bearing the brunt of the customer and not your dropshipper. You will be punished with negative feedback and ratings.
You don’t really know who your dropshipper is or where he is from, where he gets his inventory and what his story is. For all you know he has a one time 200 product supply and after that he disappears. This puts you in a very precarious position as far as chain of supply goes.If you sell too many items that you can not supply your eBay account may very well get suspended.
#3: Shipping costs
Yes, usually you can find and sell products from Amazon which offer free shipping. But what if a customer on eBay orders a product from you and suddenly your dropshipper is out of stock. Now many people instinctively say ‘cancel the order’ – it is not that simple because if you cannot fill your order one too many times eBay will penalize you and eventually close down your account. So where do shipping costs come in here ? Well if you are already on eBay’s naughty list (meaning your ratings are down and you may be disqualified from becoming a top seller) then you will most likely look for another seller to temporarily fill your order and that seller might be overpriced and/or not ship for free.
#4: Low profit margins
As I mentioned in my previous example – sometimes the profit margins are not high enough to be worth your time. Let’s say you did buy that knife for $7.99 and assume you are bold and sold it at a 20% markup of what he is selling it on eBay ie $12 (20% of $10) you would still only be making $4 minus fees ( paypal, eBay etc) and you might only come out with $2-3 profit. With many products, profit margins tend to be low on the one hand, on the other hand you aren’t working especially hard to make this profit so it might be worth your while especially in large quantities.
#5: Lack of competitive advantage
I constantly write about the importance of competitive advantage (one of my repetitive eBay selling advices throughout the blog) and it is no coincidence since that is exactly how we grew our eBay business to over $100K a month and it’s essential for every business out there (selling on eBay or otherwise) to be aware of this.When you dropship you have no competitive advantage, you are essentially ‘copying and pasting’ products which are already on the market and you can be outpriced by the original seller if he gets wind of what you are doing and decides to try and flush you out of the market. Additionally many dropshipping companies are actually selling their products independently on eBay and competing with their own customers!
At first glance dropshipping seems easy as you don’t have to deal with shipping or purchasing the product but in reality this is not true. You are responsible for answering all of the customer’s questions and apologizing and/or compensating them if anything goes wrong with the purchase.
I personally am not crazy about the arbitrage model as it lacks originality and is too volatile in terms of price and product fluctuations for my taste.
But should you decide to sell using this model or if you are already doing this it can be a fantastic way to increase your monthly cash flow and make a nice profit. Just keep in mind that you should try to automate as much of your business as possible in order to stay efficient and ahead of your competition.
Also, you need to be a very dynamic person – constantly looking for new opportunities, markets and products to spin and sell. This is a time consuming process but we all trade our time in one way or another for money – choose your products wisely and good luck to all. Please share your experiences or concerns about dropshipping below – positive or negative, I would love to hear from anyone and everyone so we can keep learning and growing together as a community.