How I Made A Fortune On Ebay Using Dropshippers... And Then Lost
It All
My name is Kevin and I'm 24 years old. This is the true story of
how during the summer of 2001, I made $40,000 selling
dropshipped goods on ebay only to lose it all and end up with
$4,000 of debt. Read my cautionary tale to prevent yourself from
making the same mistakes that I made.
I first found out about dropshipping back in June of 2001 a
little after I started a not-so-profitable business on eBay
selling cell phone accessories and such. I saw dropshipping as
an all profit method of business. You don't pay for shipping.
You don't pay for inventory. You basically just advertise the
product on auction websites such as eBay, take orders, collect
the money, and pay the set amount for each item to the
dropshipper keeping the remaining amounts for yourself as
profits. I now realize that it is only that easy when you're
dealing with the right person.
I first started dropshipping with a guy named Chris. I was
selling Nike Air Jordans on eBay. I saw that Jordans are real
popular on eBay and people pay huge amounts for them. I've seen
some pairs go for $1,000+. Chris only charged me $67 a pair. So,
I basically just doubled the price and sold them on eBay for
$134 a pair. I sold about 20 pairs of shoes within a week giving
me a profit of $1,340. I suddenly became happy with the success
I had because obtaining over $1,000 in a week at the age of 19
is pretty rare. So, I wanted to start putting up way more
auctions so that I could make way more money. Unfortunately,
this is when Chris became unreliable. He never returned any of
my e-mails and never got back online. Plus, he only had shipped
half of the 20 orders I had. So, I decided that I needed a
replacement quick before I started to have some unhappy
customers on my hands.
This now brought me to dropshipper #2. I talked to the guy about
the situation and he said that he would be able to handle it. I
paid him for the remaining 10 orders I had left and he shipped
the shoes off to my customers. I respected the fact that he
picked up right where my previous dropshipper had left off at
and took care of business. So, I assumed that this guy was all
about business and was a very reliable and legitimate
dropshipper. So, I started to put up more buy it now auctions
and these shoes were selling faster than I could put them up for
auction. This is the unbelievable part. I had sold 250 pairs of
shoes in a matter of 4 days. I collected over $40,000 in 4 days.
That's $10,000 a day! This came as an amazement to me especially
since I was only 19 at the time. I've made some people's yearly
salaries in a matter of only 4 days. Little did I know though
that I was in over my head. I got a little too greedy and
started to splurge on money that wasn't even mine yet; buying
clothes, shoes, and even put a $1,000 down payment on a new car.
My dropshipper shipped my first 30 orders only to find out that
he had shipped off nothing but all wrong sizes and wrong colors.
So, I had a lot of complaining customers. Some even went
straight to PayPal to complain causing PayPal to limit access to
my account. So, now I had over $40,000 sitting in my PayPal
account that I had absolutely no access to and over 200 orders
that need to be shipped off. So, my only option was to refund
everyone their money back to get my PayPal account back to
regular standing, which brought me to my next dilemma...
I spent almost $4,000 of the $40,000 I thought would be mine to
keep. So now, my Paypal balance was negative $4,000 and I needed
to come up with that $4,000 quick before PayPal took legal
action to get that money. I thought the only way to get me out
of this mess was by the same way that got me into this mess.
This is what brought me to dropshipper #3.
I stumbled upon a guy named Jarell. I found him through a
legitimate business website so I decided to sell enough pairs of
Jordans to make up the $4,000 and then I'd call it quits because
this was too much for someone so young. Everything went smooth
and I was able to make the $4,000 using my girlfriend's PayPal
account. Unfortunately, PayPal then limited access to her
account also finding out that she was linked to me. This then
aggravated me because now I had 15 orders that I in no way could
pay my supplier. If I had shipped to my customers it would bring
more complaints and negative feedback which was very bad for
business. That was then, this is now.
After reviewing my whole experience with dropshipping in
hindsight, I realized all of the mistakes that I had made. For
anyone who is looking into working with dropshippers, please pay
close attention.
1. Before going into business with someone who is going to be
dropshipping merchandise for you, be sure to get to know the
person really well. Don't go by instinct. Have a few
converstations with the person before you start anything.
Collect all methods of contact of the dropshipper for emergency
contact.
2. I suggest that you do not start off having the dropshipper
ship the merchandise to your customers. Order some of the
merchandise for yourself and examine it thoroughly before you go
into business. I started to recieve e-mails from angry customers
stating that the Jordans were of terrible quality when I was
told by my dropshipper that they were of authentic quality.
3. Don't bite off more than you can chew. As stated previously,
I sold 250 pairs of shoes in 4 days. Within those 4 days, I had
to deal with about 600-700 e-mails which is almost impossible
for only one person to deal with that also has school to worry
about. Patience is the key to success.
These were a few of the mistakes that I made dealing with
dropshipping. I had a price to pay for my mistakes. I owed
$4,000 to PayPal and I had a $2,000 eBay bill that I ended up
working during the summer to pay off. My purpose in writing this
is for everyone considering going into business with a
dropshipper to take precautions and use the tips I provided. I
would also like to say that even though I had a bad experience
dealing with dropshipping, that is not always the case. I know
there are some people who have become successful and wealthy off
of dropshipping.
Five years have passed since I began my journey in this
industry. I finally did pay off all of my debts that summer and
have made it my mission to educate and inform people of the
scammers out there waiting to ambush the inexperienced and
naive. I wrote this article because I don't want anyone else to
go through the experience that I did. There were times where I
felt hopeless and bitter for falling into a trap that left me
feeling depressed. Needless to say, I have learned from my
soul-crushing mistakes and now make a decent living selling on
ebay.