Ebay cracking down on dropshippers

[tunicaslot]

https://www.youtube.com/watch?v=zVhkDKSgm64

Just viewed this video and it looks like Ebay has been getting a lot of complaints about drop shipping on the venue. We may see a lot of posts in the next few days as notices started going out the last day or two. There are some in my Facebook groups who already received the notices. I do feel bad for those that have legitimate contracts with wholesalers or who have FBA accounts with Amazon. Hopefully they can provide whatever documentation is required and will be unaffected.

[eleanor*rigby]

So you would disagree with these definitions?

Drop shipping: Drop shipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.

Retail arbitrage: Retail arbitrage is a fairly simple concept. A retail store (such as Walmart, Target, etc.) sells a product (either online or in-store) for a certain price. You purchase that product and sell it for a higher price yourself and pocket the profit.

So isn't this video about drop shipping? He's describing the first definition I cited. I'm not sure we're all using the same definitions in this thread or on the boards in general.

[the*dog*ate*my*tablecloth]

I argued with specifics of the retail arbitrage section. If you pay for and buy something from Walmart, get it then sell it for more that is regular selling.

Arbitrage is simultaneous selling where you take advantage of differences in pricing between markets. So if you sell it for $50 and THEN immediately buy and have it shipped from Walmart for $25 then it is arbitrage.

[the*dog*ate*my*tablecloth]

Otherwise it is a bunch of people using a fancy word because it sounds sexier than “buying and selling”

[annadryl]

Okay, I watched as much as that loud youtube guy as I could, and it's simply Dropshipping For Dummies. I don't think ebay would ever crack down on anything (foggy but legal) that makes them money, he's simply warning that too many OOS = no more selling for you. And dropshipping is a quick way to get to that.

[eleanor*rigby]

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@the*dog*ate*my*tablecloth wrote:

Arbitrage is simultaneous selling where you take advantage of differences in pricing between markets. So if you sell it for $50 and THEN immediately buy and have it shipped from Walmart for $25 then it is arbitrage.

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I know you posted that you don't watch videos, but that's exactly what the vlogger was describing. So he was describing "arbitrage," and not drop shipping, right? So is eBay objecting to arbitrage or drop shipping?

I'm not sure there was an "arbitrage section" in his video. I don't think he mention "retail arbitrage" at all--his comments were all about "drop shipping." Is the objection to the use of the term in this thread rather than the video?

Last question for you: do you think "retail arbitrage" is a phrase that has any useful meaning in 2019 in the context of buying and selling goods rather than stocks/currency/commodities? Or is it a phrase we shouldn't be using here at all?

 I know this is going to come up on the boards in the future, and I just want to get a sense of the correct terms and their definitions. Thanks for your thoughts!

[the*dog*ate*my*tablecloth]

This is my personal opinion.

You can be a good dropshipper, meaning someone who wants happy customers and manages their business personally. I don’t have a problem with sellers who do this well.

The new style  “retail arbitragers” are dropshipping but they are doing it all using software without interacting with their customers. It’s automated and soulless and if the item they sell is out of stock they would blow off their buyer instead of trying to fix the problem.

I see a difference in morality but that’s because I am an old fashioned seller who sells to make my buyers happy before making a quick buck.

I think retail arbitrage is meaningful when we use it for people who buy after they sell. If someone buys inventory then puts it up for sale later it is not arbitrage in the true sense of the word.

[southern*sweet*tea]

**general reply**

Dropshipping is selling when you do not have possession of the merchandise you are selling.

Legitimate dropshipping is when you have a contract with a wholesaler or distributor, who will handle your shipping for you. You do not have the merchandise in your hands, but you do have a relationship with the supplier and have paid either upfront or on contract for the merchandise they are shipping for you. In other words, the seller has skin in the game. These sellers can verify item quality before purchase, so they know what they're selling. The suppliers (at least the good ones) notify the seller in a timely  manner about any sell outs so the seller can make quantity adjustments on their end, thus eliminating out of stock situations. Legitimate dropshipping has its place, and it's fine and works well when the seller and supplier have a good relationship.

Arbitrage dropshipping (lazy selling) is when you  do not have possession of the items you are selling. You do not own the items, nor do you have contract to those items. The seller has no skin in the game.  Most of these sellers are in it to "get rich quick". When someone orders from an RA dropshipper, the buyer pays the seller, who then turns around and orders the item from another retail venue. The seller is at the mercy of the other venue as to the quality or availability of the items.  They get no notice of OOS situations, which causes many problems.  They also have no control over the pricing on another retail site, so if that site suddenly decides to have a sale, the seller can find themselves losing money on the transaction, which could possibly lead to more bad buyer experiences with cancellations. In other words, RA dropshipping sucks.

[the*dog*ate*my*tablecloth]

Great explanation of the implications and the differences between responsible dropshipping and “retail arbitrage”.

[southern*sweet*tea]

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@southern*sweet*tea wrote: They also have no control over the pricing on another retail site, so if that site suddenly decides to have a sale, raise their prices, the seller can find themselves losing money on the transaction,

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Didn't mean to say "have a sale", meant to say raise their prices.

[tunicaslot]

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@the*dog*ate*my*tablecloth wrote:

I don’t watch videos but we talked about this earlier. EBay seems fine with dropshippers with agreements who can fullfill orders. What they don’t want is people using software to do retail arbitrage where they have no control over their inventory. 

Some sellers would rather make a slim margin doing arbitrage than make buyers happy.

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That's too bad - it's a good video - but many here don't seem to know the difference between drop shipping and retail arbitrage.

Retail arbitrage is buying items in retail stores and then selling them in a different marketplace for a profit. ex. I go to TJ Maxx and buy some Nike sneakers to resell here vs I go online and have a store drop ship those sneakers to my buyer without ever having seen them. They are 2 different things.

With retail arbitrage the items are in the seller's hand - drop shipping - you never have the item in your hands.

[tunicaslot]

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@the*dog*ate*my*tablecloth wrote:

If it doesn’t ship direct from the store it can’t be arbitrage unless maybe you can get something on store credit and sell it all before you have to pay for it.

Simply buying something and reselling it is not true arbitrage.  

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dog - google or bing Retail arbitrage - this is an actual term. What you are comparing it with is regular arbitrage in the financial aspect where a person doesn't use their own money and in today's society it is considered drop shipping with material goods.

[robot-hands]

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@jennzet-0 wrote:

  I mean no one comes here and tries to sell at a loss.

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What?

There are plenty of sellers here that come to sell at a loss, especially if that is the only money there are going to see.

[the*dog*ate*my*tablecloth]

True retail arbitrage the items would NEVER be in the sellers hand. It is buying and selling simultaneously. It is a form of dropshipping. But like automated spot selling. Not like regular dropshipping where the seller has a long term arrangement with a supplier.

[the*dog*ate*my*tablecloth]

I know what the sites say. I say it’s a stupid use of the word by people who don’t understand it. Most sellers who use it ARE doing arbitrage . They’re spot selling using software that searches for differences in value.

If retail arbitrage is buying then selling at a profit that is regular selling and doesn’t need a fancy name. If you’re buying then reselling at a loss then you are losing.

[southern*sweet*tea]

**general reply**

There seems to be some confusion about what retail arbitrage is.

Retail arbitrage is NOT arbitrage dropshipping.

Arbitrage dropshipping  - listing stuff you don't own, purchasing a sold item from another venue in the buyer's name and having that item shipped to the buyer. You don't own the item, you don't see the item, you never touch the item, you don't send it to your buyer.  It's a fast way to make a few dollars. It's also a fast way to lose your shirt and have a lot of disappointed buyers.

Retail arbitrage - buying at a lower cost from a retail venue, taking them home (or wherever) then selling them for a higher cost elsewhere. You own the item outright, you have it in your possession, and you ship it to your buyer.   If you've ever found some sweet NIB clearance items at your favorite big box, bought them and flipped them elsewhere, you've practiced retail arbitrage.  Absolutely nothing wrong with this whatsoever.  It's no different than reselling yard sale or thrifted items.