I have been trying to make a buck by way of the Internet for the better part of the past decade. In that time, I have had three major business ventures. One is my current successful gig as an online copywriter, but I would hazard to guess at how much money I lost trying to run my other online businesses. Of these two, the one I want to focus on for this article is working as an online seller on eBay and Amazon. It can be a legitimate way to earn a full-time living, but if you want to be successful, I suggest that you avoid the practice of dropshipping altogether.
What is Dropshipping?
It sounds so good in theory. You find an item from a supplier that you think your customers would like, and list it for sale on your own website or a third-party platform such as Amazon and eBay. Of course, you mark-up the price from what the supplier is charging you and then pocket the difference. Unfortunately, it rarely goes that smoothly.
The Three Dreaded Words: Out of Stock
The biggest problem I encountered trying to list items for sale online without paying for them upfront is that the products frequently went out of stock before I received an order from a customer. There was nothing more frustrating than receiving an order from a customer only to discover the product I had listed was no longer available. It left me with two unpleasant choices. The first was to cancel the order and risk negative feedback from the customer. This literally ruined an account I had on Amazon, and destroyed a perfect rating I had going on with eBay as a Power Seller.
Personally speaking, I have never been a fan of Dropshipping at any point because of the hectic schedule involved in it although I do make occasional turns when I do order something that catches my eye like this Helium 10 review I read online and wanted one as soon as possible just to make things interesting.
The other option was to appease the customer and find the item from another seller or retailer. When I exercised that option, I almost always lost money on the deal because the price I paid was higher than what the customer paid me. Since I primarily sold books and movies, finding a replacement was easy enough to do, but it didn’t net me any profit.
Delays and More Delays
As an online seller at Amazon or eBay, you are held to certain delivery time frame standards. If you choose to use dropshipping on these platforms, all you can do is hope that the company you ordered from sends the product to your customer in a reasonable amount of time. More often than not, this did not happen. It would sometimes be days or weeks before the product was sent out, and I got to deal with irate customers as a result. Worse, I had no idea of when I could expect the product to be sent, so I was often accused of lying.
Lack of Control over Product Quality
When I ordered an item from a wholesaler or dropshipper, I only saw a picture of it, the same as my customer saw from me. If the item sent to the customer was not of the promised quality, it was my reputation that suffered. I haven’t sold online as a job for five years now, so I don’t know if things have changed, but back then buyers did not hesitate to promptly leave negative feedback. On top of all this, there was the hassle of trying to orchestrate a return as a third party to the sale.
You Really Don’t Make That Much Money
For the amount of hassle that was involved in dropshipping, I never made that much money at it even when it worked like it was supposed to. The products I sold weren’t terribly unique, so lots of other sellers had the same idea about dropshipping that I did.
Then there were the wholesalers who also sold their overstock on eBay and Amazon in addition to selling them to other online sellers. If you studied the law of supply and demand in high school economics, I don’t have to tell you that having too much of the same product available only drove down the price. When I stopped to think about it, I realized that these products were being offered wholesale because retailers were overstocked and wanted to get rid of them. That means they weren’t all that valuable to begin with.
You’re too Small to Have Any Buying Power
As an individual online reseller, you are not going to find the same wholesale discount buying power that is afforded to companies like Wal-Mart. The only way you are going to obtain wholesale pricing is to buy in bulk. In my early days of trying to earn a living online, I would get so excited at the prospect of buying a new hardcover book for 50 cents. Unfortunately, I allowed this excitement to cloud my logic and bought a whole case of overstocked books just to get the low per unit cost. I sold a few of them, and the rest got donated to Goodwill at a loss. I repeated this mistake dozens of times, causing me to get so far in debt that I eventually had to file for bankruptcy.
Product Sourcing is Not My Specialty
After my second online business also put me in debt, I decided that I was done with the whole ordeal. I declared myself an Internet business failure and got a “real” job. Three years later, I discovered that I could earn more money staying home and writing articles, so I have been happily doing that for the past 13 months.
The biggest lesson I took away from my earlier attempts at entrepreneurship is that I won’t spend money to earn money ever again. That is the only piece of advice I can offer, because I never did learn how to overcome obstacles with product sourcing. However, I’m sure there are people reading this article who have found success as online sellers. If so, I’d love to hear your story.