|Wed Feb 22 2012 23:02:07|
eBay Sellers Use Amazon Prime to Drop Ship in Retail Arbitrage
By: Ina Steiner
How do you run an ecommerce business with no inventory and zero shipping costs? Try retail arbitrage.
Thursday's EcommerceBytes Newflash explains how some sellers are going beyond drop-shipping to piggy-back onto Amazon's Prime shipping program. When orders come in on eBay, sellers order the items on Amazon and use their Prime account to send it as a "gift" to the eBay buyer, thereby paying no shipping fees. And by offering free, fast shipping on eBay, they earn high marks on shipping DSRs.
This poses a problem for their competitors who choose not to violate Prime's terms and conditions, however, since it's tough to compete with sellers who are offering free 2-day shipping at zero cost.
It's interesting to note that at one point, there was a chronic problem on eBay in which some sellers offered low selling prices and high shipping and handling costs. To discourage the practice, eBay put caps on shipping costs in certain categories and now charges a commission fee on the total selling price, including S&H.
These days, eBay is pressuring sellers not simply to bring their S&H costs into alignment, but it is nearly forcing sellers to offer free, fast shipping. In that environment, it's not surprising sellers are looking for ways to do that without breaking the bank.
According to Chris Green of FBAPower, using Amazon.com as a drop-shipper is not unusual. And Amazon encourages sellers to use its multi-channel fulfillment service.
But when it comes to drop-shipping using Prime to subsidize shipping, it's hard to know how eBay and Amazon really feel about the practice. But it's pretty obvious how traditional eBay sellers must feel. One eBay seller who wrote me about the issue said these sellers probably have the process fully automated with software, and said they likely "sit in their recliners all day watching the money roll in."