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.

[jason_incognito]

A big part of the problem of "retail arbitrage" or whatever else you want to call, is that often by the time stuff is on clearance, or in an Amazon return pallet......

The stuff is damaged, packaging is ripped, and worn.

With the Amazon returns, the seller turns it on and it heats up. Off to eBay it goes. But the problem was that it heats up and then turns off. The "retail arbitrage" seller never bothers long enough to know that. They get it back and resell it AGAIN.

I bought something from one of these pallet sellers. They never even bothered to check and see what all was supposed to be in the box, used a stock photo and shipped out a box that looked like it had survived a disaster, with missing parts...... AND THEY GOT MY NEGATIVE REMOVED.

[rainbowcolorz]

@southern*sweet*tea said: 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.

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So is arbitrage dropshipping an acceptable way to do things?

I purchased a stack full of sticky notes from an eBay seller, but they came directly to me from either Home or Office Depot.   

Both of those stores are just a couple of miles from where I live but I wasn't able to go out at the time.

I was not happy when they arrived because the seller's photos showed a lot of (I believe it was) yellow sticky pads and that was what I really wanted.  

I received only maybe 2 yellow and mostly purple sticky note pads.   I messaged the seller and asked about it but he never had the courtesy to respond.   I decided next time to buy them from the store or if I buy them again online, I'll make sure it's from another seller.  

[rainbowcolorz]

@jason_incognito said:  

 Off to eBay it goes. But the problem was that it heats up and then turns off. The "retail arbitrage" seller never bothers long enough to know that. They get it back and resell it AGAIN.

I bought something from one of these pallet sellers. They never even bothered to check and see what all was supposed to be in the box, used a stock photo and shipped out a box that looked like it had survived a disaster, with missing parts...... AND THEY GOT MY NEGATIVE REMOVED.

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Do you recall how you worded the comment you left in the negative feedback that was removed?   Did eBay notify you of the removal?  

[myangelandmyprincess]

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@alcoforever wrote:

I'll believe ebay is cracking down on drop shippers right after they crack down on Chinese sellers misrepresenting their item location as USA.  Never gonna happen.

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Well we did recently have a seller come here because they had got in trouble for this exact thing.  Although they claimed they did own their inventory but still indicates eBay is suddenly cracking Down 

[southern*sweet*tea]

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@rainbowcolorz wrote:

@southern*sweet*tea said: 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.

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So is arbitrage dropshipping an acceptable way to do things?

I purchased a stack full of sticky notes from an eBay seller, but they came directly to me from either Home or Office Depot.   

Both of those stores are just a couple of miles from where I live but I wasn't able to go out at the time.

I was not happy when they arrived because the seller's photos showed a lot of (I believe it was) yellow sticky pads and that was what I really wanted.  

I received only maybe 2 yellow and mostly purple sticky note pads.   I messaged the seller and asked about it but he never had the courtesy to respond.   I decided next time to buy them from the store or if I buy them again online, I'll make sure it's from another seller.  

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I suppose it depends on who you ask.  If a buyer receives exactly what they ordered and in a timely fashion, then yes, it's acceptable and that buyer really has nothing to complain about (even if they don't like the fact that they bought from X and it came from Y). If a buyer doesn't receive what they ordered - as in your case - then it's not. And the latter happens very, very frequently - too frequently now for it to be an accepted practice on a marketplace venue.

Arbitrage dropshipping is just too unpredictable from a customer satisfaction standpoint, and if something is causing a lot of dissatisfaction it's best to remove it.  Dissatisfied customers don't come back, and they tend to tell people about their bad experiences. Not something that's conducive to building a buyer base of new buyers and repeat loyal buyers.

It's not illegal.

Is it immoral? I don't think so, not if you deliver what the customer ordered.

Is it an easy way to make money fast? It can be since there is no cost involved to the seller as to inventory, shipping supplies, etc.

Is it a smart way to build a business? Absolutely not, because the things that are important (item availability, safe shipping and item quality) are not in your control.

Is it a good way to lose a lot of money and a selling account? Yes, because once again, the things that are most important are not in your control.

[southern*sweet*tea]

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@jason_incognito wrote:

A big part of the problem of "retail arbitrage" or whatever else you want to call, is that often by the time stuff is on clearance, or in an Amazon return pallet......

The stuff is damaged, packaging is ripped, and worn.

With the Amazon returns, the seller turns it on and it heats up. Off to eBay it goes. But the problem was that it heats up and then turns off. The "retail arbitrage" seller never bothers long enough to know that. They get it back and resell it AGAIN.

I bought something from one of these pallet sellers. They never even bothered to check and see what all was supposed to be in the box, used a stock photo and shipped out a box that looked like it had survived a disaster, with missing parts...... AND THEY GOT MY NEGATIVE REMOVED.

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hmmm, I wouldn't consider return pallet sellers to be retail arbitrage sellers. They're selling secondhand goods, unless it's something that has never been opened and the package is intact. Maybe that's just me, though.  If they're selling stuff as new, then they're being dishonest.

[moo*cow*corner]

----General Reply----
I agree with *dog* re:the origin and meaning of the word "arbitrage". It has/had a very narrow specific meaning. Which has been distorted/twisted/expanded and is now a marketing buzzword.

If the ebay seller is assuming the financial risk of buying the inventory, it's not arbitrage. Like the TJMaxx example. That's simply savvy, on the ball sourcing awareness that's rewarded with a tidy profit.

I bought a case of food service gloves (for home use) last week. Seller has great shooting star feedback, light to moderate volume. The item was represented as being in New Jersey. The gloves arrived in 48 hours from a warehouse in the Chicago area. Exactly what I ordered, at a price I was willing to pay, with stupid fast delivery. Certainly dropshipped, as they didn't come from NJ. *shrug*

[the*dog*ate*my*tablecloth]

"Retail arbitrage" is totally misusing the word arbitrage. It can be commonly called that but it doesn't make it correct. The fact that there are a bunch of people using it wrong does not make it correct. It has a clear meaning and has had a clear meaning for hundreds of years. The fact that some people are now using it wrong is wrong.

Buying something with your own money to sell it later is totally against the meaning of the word arbitrage. Like I said, it's used that way by a bunch of sellers doing the same selling they've always done and are now misusing a fancy word to make what they do seem more special.

It's just one more step in the dumbing down of America IMHO. Using words that don't mean what someone uses them for. It totally violates the entire principle of the word arbitrage.

It doesn't matter whether you call it retail arbitrage or dropshipping arbitrage. If you have to lay out your own money it is not arbitrage.

[rainbowcolorz]

@southern*sweet*tea, thanks for all that info.  

[rainbowcolorz]

@the*dog*ate*my*tablecloth said:  It's just one more step in the dumbing down of America IMHO. Using words that don't mean what someone uses them for.

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Such as in ask and ax.   Makes me sick.

As for dropshippers and the words *retail arbitrage* or whatever else they want to call it ... I guess as long as I receive what I ordered in the time frame the seller (not eBay) promised, and I am happy with the transaction  ... that's all that really matters.  

[lacemaker3]

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@eleanor*rigby wrote:

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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!

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I only watched about a minute of the video. Yes, he was describing arbitrage, but he incorrectly called it "dropshipping". If he was suspended for too many "out of stock" cancellations, then good for eBay. We don't need that kind of seller here.

eBay does not have any problem with dropshipping, (as long as the seller completes their sales without issues). That is when a seller has an agreement or contract with a supplier to fulfill their sales. As long as the seller finds a good supplier, this can be very successful. But, it is very hard to find a good supplier.

Retail arbitrage is not going to work long-term, because if the price swings the wrong way, or the item sells out at the supplier, then the seller has to either cancel the sale or lose money. Long-term, they are going to choose to cancel the sale rather than lose money. eBay doesn't want sellers who cancel (too many) sales.

To answer your last question: Yes, we need to be using the term Retails Arbitrage, because we need to be able to explain to sellers what the difference is between dropshipping and arbitrage, and why they are both very difficult business models, but arbitrage is doomed to fail (sooner or later (before long) while dropshipping can, potentially, succeed.

[moo*cow*corner]

For me, I don't like the term "retail arbitrage". To me, it's just fancy wording for buying low, and selling high, which is what every seller does if they want to stay in business. You are assuming the financial risk, and dealing with storing and tracking your own inventory. That's not arbitrage, in my book. 

They may be using it to differentiate from wholesale sourced inventory, but there's not very many true wholesalers left. Those usually involve proving you are a valid retail business, with all the appropriate gov't paperwork, minimum orders, minimum sale prices, brand and sales restrictions and things like that.

In my mind, I'd guess the word retail implies that the seller has no contractual agreement (wholesale contract) with Amazon (or whoever) to resell Amazon (or whoever) offered goods (not FBA). I also believe that many high end and designer brands have issues with this business model. Many buyers also have issues with this, albeit for different reasons.

I also think that the "retail" arbitrage is exactly what ebay will be targeting. The sell on ebay and then simultaneously buying and shipping from Amazon (or whoever) example is both dropshipping and "retail" arbitrage. The seller is not carrying the financial risk of actually buying the inventory, taking delivery (somewhere) and then selling it. Ebay is going to want to see valid signed contracts (or appropriate invoices/receipts, as the case may be) in order to allow these sellers to remain on ebay.

[southern*sweet*tea]

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@the*dog*ate*my*tablecloth wrote:

"Retail arbitrage" is totally misusing the word arbitrage. It can be commonly called that but it doesn't make it correct. The fact that there are a bunch of people using it wrong does not make it correct. It has a clear meaning and has had a clear meaning for hundreds of years. The fact that some people are now using it wrong is wrong.

Buying something with your own money to sell it later is totally against the meaning of the word arbitrage. Like I said, it's used that way by a bunch of sellers doing the same selling they've always done and are now misusing a fancy word to make what they do seem more special.

It's just one more step in the dumbing down of America IMHO. Using words that don't mean what someone uses them for. It totally violates the entire principle of the word arbitrage.

It doesn't matter whether you call it retail arbitrage or dropshipping arbitrage. If you have to lay out your own money it is not arbitrage.

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Arbitrage is taking near simultaneously advantage  of price differences in the stock market in order to make an immediate profit.  THAT is the true definition of arbitrage. The fact that we are talking about arbitrage at all when referring to retail buying and selling is misuse of the word, I absolutely agree. I'm just trying to explain the difference as it's referred to in the retail trade.  The horse is out of the barn and it isn't coming back anytime soon when it comes to the phrase "retail arbitrage".   Trying to explain the true meaning only muddies the water IMO.

[lacemaker3]

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@moo*cow*corner wrote:

For me, I don't like the term "retail arbitrage". To me, it's just fancy wording for buying low, and selling high, which is what every seller does if they want to stay in business. You are assuming the financial risk, and dealing with storing and tracking your own inventory. That's not arbitrage, in my book. 
...
  

No, with retail arbitrage, the seller does not have any risk associated with storing or tracking inventory. They don't have any inventory with arbitrage. That's what the "simultaneous buying and selling" part implies.

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@moo*cow*corner wrote:

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I also think that the "retail" arbitrage is exactly what ebay will be targeting. The sell on ebay and then simultaneously buying and shipping from Amazon (or whoever) example is both dropshipping and "retail" arbitrage. The seller is not carrying the financial risk of actually buying the inventory, taking delivery (somewhere) and then selling it. Ebay is going to want to see valid signed contracts (or appropriate invoices/receipts, as the case may be) in order to allow these sellers to remain on ebay.

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I agree that retail arbitrage is what eBay is targeting (they have already started). What you described here is NOT dropshipping at all, it is retail arbitrage. They aren't variations of the same thing, or two words for the same thing. They are different business models. Dropshipping is not arbitrage, and vice versa.

eBay has not used the term arbitrage, but that is what is not allowed in their policy based on the description in the policy. They are not targeting dropshipping, because when done correctly, that is a legitimate business model that does not lead to a high percentage of unhappy buyers. 

I think that eBay will continue as they have been doing, which is going after sellers who have too many out-of-stock cancellations, or whose buyers have reported them for false "buyer requested" cancellations (which of course are really out of stock).

[moo*cow*corner]

I bought a case of food service gloves (for home use) last week. Seller has great shooting star feedback, light to moderate volume. The item was represented as being in New Jersey. The gloves arrived in 48 hours from a warehouse in the Chicago area. Exactly what I ordered, at a price I was willing to pay, with stupid fast delivery. Certainly dropshipped, as they didn't come from NJ. 

This example is what I think most people think of when they use the term dropshipped. FBA is a valid business model, but most people also see that as dropshipped.

Arbitrage may or may not be involved, as I have no knowledge of what arrangement/contract that particular seller has with whoever fulfilled and shipped my order.

I'm not calling dropshipping and retail arbitrage the same thing. I'm just positing that both can be true for any given sale that comes from a seller that does not have immediate, personal possession of their inventory in their exact geographical location.