Under section 9 of the eBay software developers terms of service which is called “Restricted activities” the clause 9.7 states that developing software to promote or engage in arbitrage activity such as repricing products from eBay’s competitors (retailers), automating orders and tracking numbers updating, etc. is all against eBay’s terms of service. eBay added this clause during 2018 and then in 2019 also published a drop shipping policy for the drop shipping sellers, not just for the software developers.
These decisions made by eBay sparked the attempt of the eBay dropshipping arbitrage community to find a solution to the crisis it got into, the attempt is also known by the name “Non-API software”. Nowadays, it is nothing more than a busted myth. This blog post covers the story behind the evolvement of the Non-API software for eBay dropshipping and the reasons why the DSM Tool team and I decided not to develop and add such feature to the platform, and to the best of our knowledge what are the options available for you today if you want to start dropshipping on eBay.
The Golden Age of eBay Dropshipping Arbitrage
If you want to truly understand why the reasons behind the public discussion about Non-API software, we have to go back in time to July 2016, the month we launched DSM Tool. A few days after we launched the software I got a call from one of the biggest eBay sellers in my home country, Israel, who invited me to meet and discuss a potential collaboration. In his stores, he managed over a million of products, each and every one of them in the model of first selling the product on eBay and only then ordering it from Amazon, which is exactly what is called dropshipping arbitrage according to the eBay’s policies above.
This was also the first time I heard that there is an account manager in the Israeli eBay office that works with Amazon to eBay dropshippers. As our company grew we also started being in contact with the eBay account managers in Israel, eBay’s office is literally 10 minutes away from our office and the practice of dropshipping from retailers was so popular back then that our team was invited to eBay’s offices both fo tour visits and for discussions.
DSM Tool Is Becoming an eBay Compatible App
In order to understand why does it matter for a developer to stand in the developer’s terms of service, you need to understand what software companies like DSM Tool do when they create an eBay developer account and ask you to connect your store to an app.
Every software company that wants to develop an eBay app that performs changes to your store such as adding new products or setting a listing out of stock needs to use a connection called “API”. eBay limits the number of times the software can take actions in the stores connected to it and the way eBay limits us, developers, is by using a credits system.
Every brand-new developer account can perform 5000 daily API actions in the stores that are connected to it using it’s API credits. If you want to build a software that will serve many stores, as many as DSM Tool does, the 5K credit isn’t enough and you have to apply to get an increase from 5K to 1.5 million daily API credits. If you pass the application process, your app can then also use the term “eBay compatible” in its marketing campaigns.
The eBay Non-API Software Idea Started by Mistake
In the beginning of 2019 (or somewhere in 2018, can’t remember exactly when) SKU Grid, a wonderful and popular software for eBay dropshipping that is a bit different in the way it works and the features it offers from DSM Tool, reached their 1.5M daily API credit limit. Because they reached the limit they had to do the same thing you do as an eBay seller when you reach your store limits – contact eBay requesting a limit increase. I know they did it because when what I am about to tell you happened their CEO, Anton, which I am in good relations with, contacted me looking for advice on what to do.
Unfortunately, when eBay reviewed their app and decided that it doesn’t stand anymore in the developer’s license agreement terms, and their developer’s account, connected to all of the stores, got shut down completely and forever. That’s when they had to come up with a work-around, and that’s why they came up with the idea of creating a “non-API” version of their software.
Before launching the Non-API version of their software, they tried another tactic to deal with the problem that they faced when they lost the developer account. They asked the users still that want to use the SKU Grid software to create their own brand-new developer account on the eBay developers’ website and connect it to SKU Grid, this way each user will have its own 5K API credits. This not only did not work but also caused some users to get suspended on eBay, so that option went pretty fast off the table.
How Does this Non-API Thing Work?
What do software developers do with their 1.5M API credits? In the case of eBay dropshipping arbitrage, the most used action is called repricing. That is the action of syncing the price changes and setting products out of stock when they go out of stock on the website you source the products from. When dropshipping from websites like Amazon onto eBay, the repricing process is even more sensitive as unlike smaller retailers, the big ones are changing prices and goes out of stock all the time, literally 24/7, especially when you try to sell thousands and thousands of products on your store.
Since Non-API software can’t use a developer account with its API credits to sync the changes, it generates CSV files (which is sort of an Excel file) with the most up-to-date price and stock levels and uses your computer and browser to upload those files to eBay using something called “file exchange”. That process changes the price and stock of the products in your store.
By the way, when the first non-API software started appearing in the eBay dropshipping market, not only that software companies charged extra for the non-API feature, but also you had to keep your computer and browser turned on 24/7. Since then it has seen some improvements, Non-API dropshippers are solving the problem in a way that, as you can guess – will cost you more money. The latest solution is that Non-API users rent a remote-desktop computer, these are computers running 24/7 on remote servers so you can leave the 24/7 open browser there instead of on your personal computer.
The Non-API Myth Goes Viral
At the same time that the software SKU Grid lost it’s eBay developer’s account drop shippers started reporting their eBay stores were losing visibility on eBay, they called it getting flagged for doing dropshipping. I believe that most of the reports were of stores that sold products mostly from the 3 big retailers (Amazon, Walmart and Home Depot), and that also used the promoted listings feature on eBay.
The reports were showing a declining graph of the number of views these products were getting via the eBay promoted listings feature. That’s when influencers that promoted eBay dropshipping, mostly on Youtube, started linking the software they used to the phenomenon, instead of talking about the actual reason causing eBay stores to get flagged – product sourcing from retailers.
Many software companies saw the rising demand for the Non-API feature, and decided to develop a Non-API feature as well. I literally remember one software owner releasing the feature and saying in the release video that he does not believe this is a helpful feature for anyone, but that the demand is so high that they decided to develop it anyway. We at DSM Tool decided to stick to the truth and to look for other ways to help eBay drop shippers keep making money in legitimate ways, but more on that is discussed further in this blog post.
The “Proofs” That Software Is What Causes You Getting Flagged Busted
When the whole non-API idea started going viral “proofs” showing how using the wrong software can cause your eBay account to get flagged started showing up as well. eBay dropshipping influencers on Youtube showed how they open a fresh new eBay account and start dropshipping manually and their accounts are selling better than the old flagged accounts. Obviously, these accounts gained visibility, the fresh accounts were not yet detected by eBay’s algorithms and had no problem to gain the views, it had nothing to do with what software they connected or did not connect to their stores.
Actually, as far as I know, until today there is not a single evidence that a non-API software is keeping eBay accounts from getting flagged when you are dropshipping from big retailers. Not only that there is no evidence for the effectiveness of Non-API or manual dropshipping from big retailers, but also some Youtube influencers that were covering the events during 2018-9 now agree that Non-API is nothing but a myth.
Manual Dropshipping Get You Flagged As Well
Drop shippers who work manually and source products from the big retailers are nowadays reporting that they are being detected and get flagged as well. It’s not me saying it, look at the screenshots below of a post made by William, a manual drop shipper. He posted the email he got from eBay on the same day he made his first sale sourcing products from retailers while working manually.
DSM Tool Presents A Legitimate Solution For eBay Dropshipping
For us at DSM Tool, the 2018-9 new eBay policies came at the peak of our company’s growth, hundreds of people were signing up to DSM Tool every day. My job as the CEO was actually much more on the product side – helping to make the software more robust so it could take the load of more and more people that want to start dropshipping, and much less on the marketing side – busting non-API fiction concepts.
Since the Non-API phenomenon started we’ve been witnessing other software companies turning into a darker direction we are not willing to support. If there is one thing that eBay made clear that they don’t want to see, is a flood of thousands and thousands of products being listed every day on your store, we were requested by our customers multiple times to develop the automation that allows listing thousands of items every day, and that would allow working with dozens of fake-identity stealth accounts that are one by one a duplicate of the previous store. And we said NO.
When we saw eBay turning against dropshipping from other retailers, I immediately contacted our contact person on eBay. The same person that hosted our team in the eBay offices tour in 2017 and was the account manager for Amazon to eBay dropshipping in the Israeli eBay office. In that call I made to her I got both good and bad news. The good news was that she got promoted to the business development department on eBay, the bad news was that they decided not to hire someone to replace her. In other words – no more managed accounts for eBay dropshipping arbitrage practitioners.
That’s when the DSM team and I decided that if eBay requires us to change, we would do our best to cooperate with their new requirements. Our immediate action was adding 5 legitimate dropshipping suppliers which are websites that are used for product sourcing only for dropshipping. Then, on top of that, we decided to add as many websites as possible for product sourcing to the DSM Tool platform, Our idea was to allow eBay sellers who still want to source products in from other websites to at least focus on finding unique and interesting products that don’t exist on eBay rather than flooding eBay with the products from the Amazon catalog. so we added over 50 different websites, and to all of them, we included a find-products feature, lister, repricer, orders processing, and tracking updating automation using the DSM Tool Chrome Extension.
The Future of eBay Dropshipping
Now that we finally busted the myth about Non-API, let’s talk about what are the options of those of you who are either drop shipping already or considering starting to dropship soon.
eBay Dropshipping Is Going To Stay Popular in 2020
Its because unlike other dropshipping methods it still holds the lowest risk and it’s the easiest type of business model to operate, especially if you don’t have prior experience in digital marketing. Unlike building your own website using Shopify, it doesn’t require spending money on advertising. Unlike building your own private label brand on Amazon, it doesn’t require setting up a business entity or investing in purchasing and shipping inventory to the Amazon fulfillment centers. eBay dropshipping is still the most simple model to get started with and the best way to take the first step towards owning an online eCommerce business.
Until today eBay dropshipping is a growing topic if you analyze it with Google Trends, especially these days following the Covid-19 pandemic more and more people are looking to generate a new channel of income from home and eBay dropshipping is the least risky and most easy way to get started.
Honestly, Dropshipping Arbitrage Is Still Here
Yes, I know, all of this talk about how illegitimate it has become to dropship retailers, and in the end, part the conclusion is that you can still dropship from them. How come?
Here is the thing, apparently, many drop shippers still prefer to use the eBay dropshipping methodology to run their eBay stores. Yes, their stores might be getting flagged which means that in comparison to other eBay sellers that don’t source products from retailers they might get less traffic (fewer views) to their products. Yet, they are still making profits. eBay just seems to limit the number of potential buyers you can get to your store when you dropship from retailers, but as long as you provide an excellent service, and as long as you source great products it seems like you can still dropship from those websites and your account won’t get suspended.
Source Unique Products From Unique Dropshipping Suppliers
If you are planning to dropship from retailers on your eBay dropshipping business, my recommendation to you is to learn how to source products from more than just the 3 biggest retailers, the more websites you get to know the more chance you have to find unique products to sell on your dropshipping store. I believe that back in 2016, and the years before that when dropshipping arbitrage was within the eBay terms of service, part of the reason eBay allowed drop shippers to sell products from Amazon was that the Amazon catalog was bigger than eBay’s.
By sourcing products different websites you can bring value to the eBay marketplace in one of two ways: First, you might find the same products that are already sold on eBay for much cheaper which will reduce the price of what is sold on eBay, which is a great value by itself. Second, one of the most popular drop shipping technique is sourcing products that are similar to the eBay best sellers, but that are not exactly the same, which expands the eBay catalog and once again, brings value to the marketplace.
The Biggest Risk of eBay Drop Shipping Is The Illegal Path
Maybe the most important thing we can conclude from this article is the discussion about the difference between working against eBay’s policies and working illegally. When you start an online business such as eBay dropshipping, the fact that it’s a low-risk business model and the fact that it’s so easy to get started with also has a downside, and the downside is the ability to scale your eBay business.
Just like I mentioned above, if you are planning to source from retailers, no matter if you work manually, with Non-API or with Yes-API software – your eBay store is at risk of getting flagged and therefore getting fewer views and no one, no matter what they tell you, can remove the risk completely. Having that said, you can still make nice profits, especially as a beginner, and you can still grow your online business – all the way up to the scale you are limited to when sourcing from retailers and sell on eBay.
One thing I am avoiding myself, and I am trying to stay politically correct and not tell others what to do or not to do here, but there are drop shippers who do manage to scale their eBay dropshipping business using retailers only, not just any retailers – the big 3. They do it by buying fake-identity stealth accounts and duplicating their stores again and again… By the time the store is being detected, they already open 2-3 new stores.
It takes a lot of work to operate such a stealth fake-identity network of eBay accounts, no matter how automated is the software you are using, so if you are being offered to build a two-hours-per-day empire, make a conscious decision if that is the path you want your online business to go towards. Because by working with so many fake identities you are taking the risk of building a network of illegal eBay accounts, most of them you will build using fake names with real mailing addresses of real people. Does it worth the risk? I think you’ve got better alternatives.
I personally can’t and will never promote this type of business scaling, instead, I think you should get started with eBay dropshipping, make some initial profits and learn how to sell online and then start developing new channels of income – start selling on Amazon, write a blog and use affiliate marketing techniques in it, start a Youtube channel yourself, learn wholesale dropshipping on eBay or start your own Shopify store.
All of those other more risky business models you might prefer to avoid today are easier to get started with once you have the knowledge, experience, and income you generated from your eBay dropshipping business.