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.

About the Author:

Kevin Nobleman has researched and uncovered numerous scams in the corrupt online drop ship industry. He has written special articles to help people avoid drop shipping scams. Kevin has discovered over two dozen legitimate dropshippers, wholesalers, independent suppliers and buyer/seller communities. Read about it at http://www.restaurantandbar.org/