Many eBay sellers are excited by the prospect of drop shipping.  Who wouldn't be!  Low overhead costs, low risk, and low effort.  But, there is a major downside...  LOW PROFIT!

Wholesale is about quantity...  Period.  Expecting to buy just one of an item and to get it for the same price as a company who buys 100,000 is a bit naive.  Real wholesalers and distributors deal in slim margins, their profit comes from volume.

So, let's say a wholesaler's cost on a product is $10.00 and the wholesaler sells the product to a famous department store for $11.80 each with a quantity of 100,000 pieces.  The wholesaler will profit ~ $150,000 on this sale after labor and other expenses.

If you want just one for $11.80, the wholesaler would profit less than $1.00 and have to breakup a case of merchandise.  No serious wholesaler is going to make this sale.  Enter drop shipping...

With drop shipping however you CAN buy just one of the item.  However, you can expect to pay AT LEAST 25% MORE for the product, or $14.75 each in our example.  On top of this, there is almost always a 'handling fee' associated with drop shipping.  This is usually $3 - $5 per item, brining your cost on the product to a whopping $17.75 or more!

Now you're at a base price of $17.75 for the product.  You list it on eBay and are going to take payment through PayPal...  You need to add in those fees to determine the 'true cost' of your product!  Let's assume another $3.00 in fees bringing your true product cost to $20.75.  A far cry from that $11.80 isn't it...

This leaves many eBay sellers crying "products are selling on eBay cheaper than I can buy them for!" and "the price I'd have to sell these products at to turn a profit is way too high!".

Don't get me wrong, I am not saying drop shipping is bad.  Door-to-door, catalog, kiosk sales, classifieds, anywhere that allows selling for TOP RETAIL DOLLAR can convert amazing returns.  I would strongly recommend drop shipping in any of these situations.  Heck, during the holiday season individuals can make 5 or even 6-figure profits in just a few months using drop shipping!  That said, I will also say flat-out -- IF YOU ARE AN EBAY SELLER, DROP SHIPPING IS NOT FOR YOU!

Save up $500 to $1000 to get started with some real products.  FREE wholesale websites like Wholesale for eBay at wholesaleforebay.com can provide you with access to other options to drop shipping.  Try their search engine to find liquidation products and suppliers.

Your best bet is to buy a liquidation lot of used merchandise and resell it item-by-item or in smaller lots.  You can make a nice income that way.

Need to start REAL SMALL?  Go to your local garage sales, goodwill stores, etc and find vintage items to resell for a profit.  You can almost always find items that sell on eBay for much more than at the goodwill (thrift) store.

A more complete guide to wholesale is coming soon!