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Drop Shipping vs Buying Wholesale Inventory (Part 1)
Drop Shipping vs Buying Wholesale Inventory
  • Chris Labatt-Simon
  • August 14, 2013
  • How To Articles

The Difference Between Drop Shipping and Wholesale Inventory

Should you set-up drop shipping or buy wholesale inventory for your eBay store? You might have out grown your current operation, and need to expand to the next level. This two part series looks at the advantages and challenges of buying wholesale and working with drop shipment.

Both models have their own distinct caveats, which makes it different for each eBay store owner. Large online eCommerce sellers like Staples have sold via both models successfully, as many other sellers have as well.

What is buying inventory?

Typically as an eBay seller if you go the inventory route you’re making a purchase from either the manufacturer or a distributor direct. They’ll ship the products to your home or warehouse for you to handle.

Benefits of Buying Inventory in Bulk

  • Better pricing because you’re buying larger quantities from a distributor, handling packing and shipping.
  • More control over the quality of the packaging when shipping.
  • Order control because you have control over the speed of processing an order.
  • Shipping guarantee since you have the ability to provide customers with information on shipping.

Challenges of Buying Inventory

Take inventory risk

Typically once you purchase a quantity from a manufacturer or distributor, you’ll be unable to return what you can’t sell.

Liquidity

When purchasing inventory your funds get tied up and you’re less liquid. Most distributors are going to require you to pay either immediately or within 30 or 60 days of receiving the product. Typically when your new to selling online many will require full payment up front.

Higher shipping cost

When you aren’t doing enough volume to command lower shipping prices. Try to negotiate the best shipping rates possible with either Fed-Ex or UPS. You can ship USPS as a possible way to save money in the beginning, though believe it or not you can get better rates via UPS or Fed-Ex. You also tend to get speedier service from either Fed-Ex or UPS which helps build better relationships with customers.

Misc Expenses

Depending upon the amount of inventory you decide to purchase you’ll need to pay for space being used and for your time or an employee for receiving inventory. You’ll have to inspect upon receiving and assure you’re getting what you ordered, that its in good condition and not damaged.

Insurance

Will now be needed to insure the inventory you’ve purchased against theft or damage.

Purchasing inventory usually does get better pricing though you need to watch out for additional costs that do add up. In Part 2 we’ll discuss the drop shipping and how it compares to wholesale inventory.

Happy Selling!

WHAT GOOD TIL CANCELLED/FIXED PRICE LISTING CHANGES ARE YOU TALKING ABOUT?
As part of the Early 2019 Seller Update, eBay announced that all fixed price listings will be changed from timed durations to Good Til Cancelled. According to eBay, this should be great for sellers as Good Til Cancelled listings provide a number of advantages: Improved SEO, out of stock feature (keeps an item listed even when it reaches a stock level of 0), no process required to manage and relist the item, simplified selling flow and retained sales history.
WHAT DOES THIS ACTUALLY CHANGE?
In the past, fixed price listings could have a selected duration for listing – 1, 3, 5, 7, 10, or 30 days, plus a 30 day Good Til Cancelled option. This eliminates all of these options and makes all fixed price listings Good Til Cancelled. Until July 1, 2019 they will be on a 30 day cycle. After that they will be on a once per month cycle.
CAN I OPT OUT OF THIS CHANGE?
Nope. eBay is getting rid of time based fixed price listings.
WHEN IS THE GOOD TIL CANCELLED CHANGE HAPPENING?
There are a few dates. As of the writing of this FAQ, most new listings will automatically be set as Good Til Cancelled. February 19, 2019: All eBay Australia new and relisted listings. March 18, 2019: All US and APAC new and relisted listings. April 1, 2019: All eBay Motors and EU new and relisted listings. July 1, 2019: All eBay Canada new and relisted listings. There are a few exemptions: eBay Motors: Exempted categories, for the moment, include Cars & Trucks (6001), Motorcycles (6024), Other Vehicles & Trailers (6038), Boats (26429), Powersports (66466), and on the UK and Italy marketplaces: Cars, Motorcycles & Vehicles (9800).
HOW OFTEN WILL THE GOOD TIL CANCELLED LISTINGS RENEW UNDER THE NEW PROGRAM?
Until July 1, 2019, Good Til Cancelled listings will renew every 30 days. This means you will either have a listing deducted from your free listing limit or be charged a listing fee every 30 days. On July 1, 2019 and forward, Good Til Cancelled listings will renew once per calendar month. eBay feels this will help sellers align with monthly entitlements and promotions. The new monthly renewal date will be based on the listing start date. The next renewal date will be one month later and the minimum of the day the listing was created or the last day of the month. For example: Listing was created on 4/10/2019. The renewal dates will be 5/10/2019, 6/10/2019, etc. Before 7/1/2019 – listing was created on 5/1/2019. The renewal dates will be 5/31/2019, 6/30/2019, etc. 7/1/2019 and later – listing was created on 1/31/2020. The renewal dates will be 2/29/2020 (leap year), 3/31/2020, 4/30/2020, etc.
HOW OFTEN WILL I BE CHARGED?
Good Til Cancelled listings are charged each time they renew. Until 7/1/2019 that is every 30 days. Starting on 7/1/2019 it will be once per calendar month. You will either have a listing deducted from any monthly allocation you receive for free listings, or will be charged a listing fee each time a GTC listing renews.
DO GOOD TIL CANCELLED LISTINGS COUNT TOWARDS ZERO INSERTION FEES?
According to eBay, “Good ‘Til Cancelled listings renew automatically every 30 days unless your item sells before that timeframe. We charge an insertion fee every 30-day period. Good ‘Til Cancelled listings count toward your monthly zero insertion fee listings. Fee amounts are based on the terms in effect when the listing goes live and when it renews.
HOW LONG WILL GOOD TIL CANCELLED (GTC) LISTINGS LAST?
As the name of the program intimates, the products will be listed until: You cancel the item/unlist the item, The item sells (unless you have the out of stock feature enabled), or eBay ends your listing due to a policy violation.
WHAT SHOULD I BE CONCERNED ABOUT?
While overall this doesn’t affect many sellers as over 80% of all fixed price items are already set as Good Til Cancelled (GTC), those who still use durations should consider the following: You will need to police your listings to ensure you take down ones you no longer need as you will continue to be billed for listings on their renewal dates; Setting a duration used to be a method of conveying urgency for a sale. You will need to do this in other ways now, such as reducing the amount of stock you list. In other words, if you used to say there were 10+ available, maybe you now list 2-3 available. Various e-c0mmerce management systems like SureDone have this type of feature built in.; If you rotated listings to keep yourself under listing limits you may need to list less inventory or be faced with higher costs.
WILL MY ACTIVE LISTINGS BE AFFECTED?
Currently active listings will NOT be automatically moved to Good Til Cancelled until they end and are relisted.

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Chris Labatt-Simon

Chris is the COO/CFO of SureDone and is responsible for most customer facing activities of the company.

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