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eBay Dropshipping Policy Explained – Is Dropshipping Legal In 2021

eBay Dropshipping Policy Explained – Is Dropshipping Legal In 2021
CJOct. 19, 2020 10:20:302703

If you are considering starting a dropshipping business, I hope that this article will clarify to you the gains and risks of that business model. There is a huge opportunity awaited for you when you decide to start dropshipping on eBay using retailers and marketplace such as CJdropshipping, etc. But in business, inevitably, together with every great opportunity, comes at least some risk.

In this article, you will find the answers to the following questions:


1. eBay dropshipping policy;


2. eBay Flagged Accounts – the selling practices policy email explained;


3. Is it dropshipping legal;


4. How to Avoid Suspensions When Dropshipping on eBay.


1. The eBay dropshipping policy

It says that drop shipping is when you buy stock from a retailer and then deal with them to send the product directly to your customers.





Defining the word dropshipping may sound trivial, but note that the word did not even exist just a few years ago. This is the trend from Google Trends that since 2004 shows the online search volumes of the term dropshipping, as you can see it has only been growing in popularity for a few years.


Wholesale Dropshipping Is Allowed According To eBay

The dropshipping policy continues, starting with what you are able to do while dropshipping on eBay, by defining the dropshipping operations that eBay allows and does not accept. It notes that on eBay, dropshipping is permitted if you fulfill orders directly from a wholesaler provider. In order to emphasize its importance, they even marked this sentence in yellow.


What Are Wholesale Suppliers For eBay?

First, some consider only wholesale suppliers that you purchase inventory from would count as legit. This is probably the most accurate definition according to the first sentence in the policy. A good example of that is the service CJ Dropshipping offers that allows you to make an inquiry, buy stock, and have it stored. CJ then processes the orders for you, drop shipping directly to your customer.

Second, some consider suppliers that you don't buy inventory from rather get in a contract with as wholesale suppliers. There are different ways to get in a contract with such suppliers depending on which country you operate in. For example, if you are selling to the US market you will need to first get a reseller certificate, then contact suppliers you find in directories, then get in agreement with them. It costs less than buying an actual inventory, but it's a hustle no doubt.


Last, many including me consider wholesale suppliers for eBay dropshipping as the two types mentioned above plus what I call dropshipping friendly suppliers. These are suppliers like CJ Dropshipping.


All of which just online websites used as dropshipping suppliers you can purchase from and ship the products directly to your buyers, but unlike retail suppliers, they are oriented to drop shippers. They send the goods in "dropshipping friendly" packages with no invoices nor branding of other retailers (as opposed to Amazon, Walmart, and Home Depot that ship the goods in branded packages).




2. What Are eBay Flagged Accounts

Flagged accounts are eBay stores that their owners got the selling practices policy violation email. These stores are going to be affected in a few ways: first, they are losing the option to get ranked as top-rated sellers on eBay. Second, they sometimes get reduced visibility in one of eBay's features called Promoted Listings. Still, there is a way to make great money working with an account that got flagged by performing great market research and optimization.


The eBay Selling Practices Email Explained

This email is sent to everyone who is dropshipping on eBay and sourcing their products from other retailers or marketplaces like Ali Express, Amazon, Home Depot, etc. Below is the full content of the email:

"Subject: Your Top Rated Seller status will be removed: Selling practices – drop shipping policy


Your Top Rated Seller status will be removed: Selling practices – drop shipping policy

Hello, We've determined that you haven't followed our selling practices – drop shipping policy therefore, we will be removing your Top Rated Seller status until your account is in compliance with the policy.

There is evidence on your account that you are purchasing items from an online retail or marketplace site after you sell the item on eBay and having that retailer ship the item directly to the customer. This is a violation of the terms and conditions section of our Selling practices policy, which states:

·Items you list must be in your inventory or you must have an existing agreement with a third party to fulfill the delivery of the item under the terms of your listing.

For more information on this policy, please go to:
Selling practices policy

The eBay team"

The email is sent also to sellers who aren't at all ranked as top-rated sellers, which is quite weird indeed. If you get it that means your account is "flagged" and that you are not eligible for the status as long as you practice this type of dropshipping. How bad is that? Not so much, in my opinion, let me explain why.



The Top-Rated Seller Status Is Not Important For Dropshipping

The eBay top-rated seller status is a luxurious status among eBay sellers in general. Top-rated sellers are far more likely to generate sales for two reasons. First, customers that see a top-rated seller are more likely to trust the seller and make the purchase. Second, top-rated sellers tend to appear higher in the search results of eBay, the status is gaining them organic traffic.

By choosing to run a store using the dropshipping model, you are giving up on the option to become a top-rated seller. But it doesn't matter, and here is why: unlike any other seller on eBay you, as a dropshipper, are able to replace your entire inventory within a click of a button. By not holding stock you can continuously find opportunities for products to sell, by performing market research and sourcing cheap products from reliable dropshipping suppliers.


What Are eBay Promoted Listings?

If you want to generate sales, you need to get potential buyers to see the products you offer. When selling on eBay there are a couple of ways to get your products in front of potential buyers and generate sales.

a. Optimizing the listing to gain organic traffic using eBay SEO techniques;

b. Using the eBay Promoted Listings feature;

c. Advertising the products yourself.


How To Generate Sales With eBay Flagged Accounts

Search engine optimization or SEO in short is a method in which you are optimizing the eBay listings before you add them to your store. When you source products using software like DSM Tool you import the information of the product from the source site, let's say Ali Express, then you perform optimization:

a. Editing the title using keywords from a keywords research;

b. Filling up missing item specifics;

c. Optimizing the main imaged;

d. Finding more imaged and creating collages;

e. Using an eBay template for in the product description.




These optimizations, together with the understanding of how to find products for eBay dropshipping and how to choose cheap yet reliable suppliers are the key to continue generating sales when dropshipping on eBay.

The idea is quite simple: as long as you can generate value to the eBay platform than even without the promoted listings feature and without the top-rated seller status you will still generate organic sales. By doing good market research, reducing the costs (by sourcing from cheap and reliable suppliers), and optimizing the listings before publishing them you do just that.

Another theory that came up at the time of releasing the dropshipping policy was that the reason eBay dropshipping accounts were getting flagged it that these accounts are being managed by using software. That is not only false but also a risky claim that can cause harm to your account.


3. Is Dropshipping Illegal

Dropshipping is a method that is completely legal because the term dropshipping refers to how you process the order once you made a sale. But just like in every industry, from the weapons to the pharmaceutical industry, there are both legal and illegal activities you can engage in when running a business. That happens also in the industry of using the dropshipping business model.

eBay dropshipping from retailers is also legal. When your store does not comply with the eBay dropshipping policy it doesn't make your activities illegal, it is just against eBay's policy. A corporate the size of eBay would not allow illegal activities to happen with no response, they would shut down and report to the authorities every account they flag. It seems like flagging dropshipping accounts is more of an alert to the sellers: "you guys better give a remarkable experience to the eBay customers or you're out".


Illegal Activities In eBay Dropshipping

The illegal activities that you might be offered to get involved in, directly or indirectly, are:
a. Buying highly discounted gift cards from the black market using Bitcoin or other cryptocurrencies (for example Amazon gift cards);

b. Building a network of multiple un-linked eBay stealth accounts and duplicating listings between them;

c. Using fake identities to run eBay stealth accounts;

d. Buying fake watchers to your eBay listings to promote it in the eBay search results;

e. Using fake UPC numbers in your listings to avoid competition analysis.

An easy way to recognize people who are engaging in some of these illegal activities is when someone tells you that they own multiple eBay stores (30+ eBay stores for example). Typically, these are all fake-identity stealth accounts managed on remote desktop computers. There is no way that small businesses like an eBay dropshipping store would need more than one eBay store when big companies like Overstock own one single eBay store.




4. How To Avoid Suspensions When Dropshipping On eBay

To keep your eBay store safe, you have to keep high standards of account health. By finding the best products to sell you run make sure your business will run and make money. But there are more factors that ensure your eBay dropshipping business safety levels that you need to take care of if you want to keep it running it for the long term.


Maintain The eBay Seller Level Metrics

To make sure your eBay account is in good health, monitor the seller-level metrics and mantain them.  


a. Avoid late shipments: make sure the supplier is shipping the products within the time stated in your shipping policies. If you are dropshipping from Ali Express, for example, offer economy/standard shipping and use ePacket as a shipping method. Better to surprise the customers with early shipments than surprising them with late shipments.


b. Avoid defect rates by not canceling transactions due to items being out of stock. Look for the same item from another supplier or offer the buyer a similar item before canceling the order.


c. Avoid defect rates by always answering cases that buyers open on eBay and PayPal.


d. Avoid cases closed without seller resolution by always looking after your customers, even if sometimes it costs you in losing on some deals, even if it feels unfair.


e. Update tracking numbers on time according to the time you set in the handling time in your shipping policies. For example, if you set 3 days handling time that means that from the moment you made the sale you must update the tracking number within 3 days.


Don’t try to manipulate the system, that would push your account towards the “below standard” seller tank. This would harm the overall traffic you listings are gaining organically.




Provide an Excellent Customer Support

Make sure you are very responsive, try to build a routine of answering customer buyers on a daily basis. Don't only answer your customers before they make the purchase but also maintain communication with your buyers after the sale. If you are using DSM Tool make sure to automate the post-sale messages to automatically increase the eBay feedback rate of your account.


Avoid Selling VeRO And Restricted Items

Get familiar with the eBay restricted items section. It is honestly impossible to follow these policies by 100%, it's just way too general. But read at least a few of them to get familiar with the essence of how eBay wants you to act as a seller in their platform.

Avoid selling products from brands that are part of the eBay VeRO program. You can use the DSM Tool rapid lister to avoid selling VeRO products on eBay.


Remember the main takeaway of the eBay dropshipping policy: you are responsible for the safe delivery within the time frame you stated in your listings and for the buyer's overall satisfaction with their purchase.


Article from dsmtool.com