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In theory, dropshipping is a fantastic opportunity. If you don't know what dropshipping is then allow me to define it.
"For those who aren’t familiar, dropshipping is a business term used for a situation where a seller sets a retail price for an item, collects the payment, sends the wholesale cost to a dropshipper and the item ships directly from their warehouse. In most cases, the seller never even handles the merchandise because every aspect of shipping is handled by the dropshipper."
(Definition taken from my article:10 Top Tips To Sucessful Dropshipping)
There really are so many advantages to dropshipping. It looks very profitable, easy and quite safe once you've discovered a reliable dropshipper. However, unfortunately on eBay there is also a lot of competition selling similar products, which when combined with eBay and Paypal fees can instantly wipe out any potential profit.
I've recently finished a special report examining the state of UK dropshipping. You can download it free from my forum, AuctionCUT.com when you make more than ten posts but I'll let you know the conclusion now.
The majority of sellers are either selling at a loss, or making very little profit (under £1 an item) when using dropshippers. Only 40% of the sellers we looked at were making more than £3.00 per item on some products.
Research is essential before you list an item on eBay. You should research everything including:
- the full price of the item
- postage and vat (taxes)
- listing fees
- final sales fees
- paypal fees
- search for identical items that have been sold recently and at what price
And finally work out what profit you are making after all of these costs. Because if you don't work out these things first, you will defiantly lose out. The worst part is, you may not even realise you are losing money.
Article by Mark Kenny
Trading-Web-Solutions
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