eBay aggressively banning dropshipping / arbitrage accounts
Reading Time: 3 minutes Last month we published news that eBay changed its policy regarding drop shipping which directly affects accounts that use arbitrage to sell items on eBay.
Drop shipping arbitrage is the practice of listing an item on eBay without having it in stock and sending it from another online retailers such as Amazon, Walmart, or other.
Last year sellers engaged in that form of arbitrage noticed that many of their listings were being downgraded by the marketplace.
READ MORE: eBay Being Accused of Manipulating Search Results on Some Listings
At the time there was no “stated” policy prohibiting drop shipping arbitrage, but it was clear eBay is no longer interested to support the practice.
Even online retailers such as Amazon, a popular source for products to sell on eBay using arbitrage, updated its buying policy that effectively prohibits the practice too.
Fundamentally, marketplaces (such as eBay), brands (product manufacturers), and supplying retailers (online retailer such as Amazon) prefer straight forward supply chain sales.
It boils down to consumer transparency and dropshipping arbitrage sales seem to increase the risk of consumer confusion, complaints, and returns.
eBay Crackdown
With eBay changing its policy on these kinds of arbitrage listings, it also seems they have stepped up their crackdown on such sales.
In a popular Facebook forum, the number of sellers stating their accounts are being closed or their items are virtually invisible has risen dramatically.
eBay is even asking some sellers to validate the ownership of the products listed on the marketplace after it placed a restriction on the sales account.
A few members in the forum claim their accounts only lasted for a few days before eBay shut them down or severely restricted new listings and sales.
While eBay may never completely rid the platform of arbitrage sellers engaged in drop shipping from retailers, it seems eBay has developed tools that can quickly find such listings, cancel them, and restrict the sellers.
For sellers who are thinking about trying dropshipping arbitrage sales, it seems the days are basically over and they’ll spend more time trying to evade eBay detection than making sales.
For clarification please note: The eBay policy does not prohibit “Retail Arbitrage”, which is a form of arbitrage when sellers purchase goods from retailers at a discount (discontinued, season end, etc.) and then sell that product on eBay. In that case the seller has the item in stock and eBay has no issues with such sales.
READ MORE: eBay’s Updated Drop Shipping Policy Bans Arbitrage – Creates Other Policy Conflict
What do you think of eBay’s crackdown on arbitrage? Please use the comments section below or head over to our Facebook Group for Small Business Sellers and interact with other small business owners.
And don’t forget to follow us on Facebook, Twitter, and LinkedIn to stay up to date with important news and business insights for your online retail business.
If you liked this article and would like to engage with other small business entrepreneurs selling on marketplaces, join our . You can also find us on , , , and or sign up for our newsletter below.
SIGN UP. BE INSPIRED. GROW YOUR BUSINESS.
We do not sell your information. You can unsubscribe at any time.
Richard Meldner
Richard is co-founder of eSeller365. He has over 17 years of experience on eBay which includes tens of thousands of sales to buyers in over 100 countries and even has experience with eBay’s VeRO program enforcing intellectual property rights for a former employer. And for about two years Richard sold products on Amazon using Amazon FBA in the US.
To “relax” from the daily business grind, for a few weekends a year, he also works for IMSA as a professional race official.
There are thousands of Dropshippers that pay ebay hundreds of thousands of dollars in fees per year. I don’t think ebay has considered the impact of what this will mean for them when that revenue is lost.
Most dropshippers (or drop shipping arbitrage sellers to be correct) offer products already offered on the site. Having worked at a major brand in the automotive aftermarket business that eliminated “problem” sales channels without loss of revenue, I believe the impact will be the same on eBay. Someone that has the item in stock will sell the product. In other words, the sale remains on eBay, just goes to another seller.
From a brand’s perspective I think this is good for the marketplace. It protects sellers that invest in inventory and can provide the proper customer service. While I won’t say every drop shipper is a problem, a large number are just poaching sales from sellers that stock products.
Not to mention issues around consumer warranties and intellectual property, IMO eBay is better served working with sellers that sell products through standard supply chains. That can also mean drop shipping, but usually means drop shipping from a wholesale distributor or the manufacturer’s warehouse. eBay has been very careful to make that distinction as they don’t want to lose that business.
Richard
Then, your statement means only the big guys will have a platform. EBay sellers whose accounts were fine should be allowed to sell. If eBay loses alot of money, the it will only have itself to blame.
The majority of sellers on eBay are micro and small businesses who invest money into inventory and marketing. They are not the “big guys”, but usually family run or single person operations trying to make a living. Fundamentally, that is who eBay is trying to help with this policy.
Richard
That sounds like the same complaints brick and mortar retail stores have with online re-sellers using eBay, and Amazon.
Your reporter needs to know the difference. Retail arbitrage is when you actually buy the item and have it in stock yourself. Dropshipping is when you don’t buy it until it has sold on another site and then go purchase it and send direct.
These are two different models. I fo Both and understand both. But to say that arbitrage is drop shipping is totally false.
In the context of the story it is correct. The story is about dropshipping arbitrage, not retail arbitrage.
The problem is that the term “dropshipping” is a bit misused by dropship arbitrage sellers. There is “legitimate” drop shipping that eBay specifically allows when it is shipped from a standard supply chain wholesale distributor or manufacturer. What eBay is trying to do away with is dropshipping arbitrage where the product is sourced from another online retailer such as Amazon.
However, to make sure that is properly understood, a note has been added to the story.
Richard
It would be different if everyone they look at are really dropshipping. Some people buy from the stores as items are on sale and use the stores photos. Also people buy pallets and sell their products with store photos. Ebay is going to end up running off all their sellers because of accusations they are making. Then they will lose all their millions they charge in fees.
eBay can identify the drop shippers doing arbitrage from the retail arbitrage sellers. I don’t think this will impact retail arbitrage sellers and those are not the ones they want to lose.
For the drop shipping arbitrage to really make any sense for a seller, it requires them to use automation software. The behind the scene method on how those listings are posted is what is going to give it away. Retail arbitrage seller mostly use their own image and if they do use listing software, it will be something like Sixbit Software, InkFrog, or similar.
So if you are doing retail arbitrage, I don’t think you will be impacted by this at all.
Richard
I’ve been using Easync for 2 years, they’ve somehow prevented eBay from detecting me as a drop ship arbitrager.
This actually isn’t true. I work at eBay and they are indeed cracking down on people that list items on eBay that they don’t have, then run to walmart.com or amazon.com to order it. A package arriving from one of the previous when you’ve ordered from eBay creates a negative buyer experience for the consumer. However, if you have a vendor’s license, have an agreement with a legitimate dropshipping company, there will be no consequences.
Ebay needs to know they are just a sellingplatform. its not their concern where i got the item as long as its not stolen.
Who are they to tell me where i can source my items.
If i do my home work and get it cheaper whats the problem, i win, ebay wins and the customer gets his product
Problem is the customer gets made when the see it comes in a box from walmart or amazon, but thats their problem if they done do their homework to find it at the cheapest price.
Thats why i get paid a few bucks is for me doing “their” homework
So ebay should essentailly mind their business. i should not have to prove where i get my items and show invoices. what so they can start their own business like amazon sells their own private label stuff when they find out my cheaper prices from suppliers, whats to stop them from going to my suppliers and getting a better deal.
Good point
In all fairness, you are wrong, in that the cheapest price isn’t the only thing that motivates a sale.
I recently saw an item on Ebay; same item for a bit less money on Amazon. I loathe Amazon and everything that it represents, so made the conscious choice to buy it on Ebay. Yes, even though it meant paying a little bit more.
When the item arrived, from Amazon in Amazon packaging, I was livid. If I wanted to buy it from Amazon, I would have done so myself.
Please don’t insult me or others, by suggesting that you are doing my homework for me. I will gladly pay a higher price for a product that supports good things/people, and does less damage and hurt to the world, along its value chain.
The only reason why you can scoop a few dollars here and there in arbitrage, is because somebody else further up the value chain was abused. Example: all the Amazon or Walmart workers being shafted, to provide such low prices.
I know how to do my own homework. Please don’t be patronizing to suggest that I need you to do it for me. By hiding the ultimate source of the item in your listing, you send an item to the customer that they did not necessarily want. Everybody loses, and you get a few bucks.
If your only source of income is being deceitful in this way, then you have my sympathy. I wish you every luck in improving your situation.
I can only suggest reporting the seller to eBay. This is an area they are actually working to clean up. In my view, the biggest problem with dropship arbitrage is that the consumer thinks they are buying a product from an authorized seller of a brand when in reality they are not. Many brands now will not warranty the product (subject to local laws) unless it is purchased through authorized channels.
Richard
Thanks. I probably should have mentioned, I did report the seller to eBay. Not sure that much will really come of it, but I did take the time to phone them.
A seller has no justification to list that an item as shipping from the United States *with the listing giving every impression that the item is actually in the United States* when it’s actually still somewhere in China.
The buyer in such a case expects the item to arrive within a week or two from within the U.S. Instead it takes a month-and-a-half because it was never in the United States.
But the seller didn’t mention that.
Because the seller didn’t disclose the drop, it is a form of fraud. That type of seller should be banned.
By the way, this is happening to me as we speak. I purchased an item that SAID it is in California. It is an item available on many listings from China…same pictures, description and everything. Only this one was marked up considerably, which I figured would be worth it if it got to me faster.
It’s been weeks and USPS is still waiting for package to enter their system. I know what’s going on.
I agree with you Ron, the UK eBay site has suffered from similar examples of Chinese sellers pretending to be based in the UK, even having weird UK addresses on the listing, but items then clearly coming from overseas and leaving the buyer waiting weeks and weeks longer than originally thought.
Hopefully their actions are cutting down on this happening, until eventually it becomes eradicated
I’ve now made an additional report of the same problem. An item was listed in my own state but, only after digging with the eBay app, I discovered the seller is in Hong Kong. Customer service said they’ll investigate and are banning sellers caught doing this. Good.
Of course, unscrupulous sellers will simply re-register with a new handle and try the same scam again and again, so buyers must learn to match the item location with the seller location, as well as look at their recent feedback re: shipping times.
Oh, and my original purchase has been canceled and fully refunded.