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.
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.
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.
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.