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For example, sellers participating in auction sites often will bid an item as new and ship the item directly from the wholesaler to the highest bidder.
The seller profits from the difference between the winning bid and the wholesale price, minus any selling fees from the auction service. While it is true that the profits can be immense, the seller effectively has to rely on the goodwill and professionalism of the dropshipper (which is, more often than not, a company that the a seller knows only through the Internet).
Goods ordered through book and CD clubs, called prenotification negative option plans, are not covered (these are governed by a different Federal Trade Commission statute).
Internet businesses selling goods covered by the Mail Order Rule are required to ship the goods within the time stated on their website, or, if no time is stated, within 30 days.
For that reason, dealing with unverified dropshippers is highly dangerous and therefore not recommended.
Another complication involved in using dropshippers lies in the fact that reliable dropshippers may already be affiliated with many competing sellers.
Therefore, someone just looking to get involved in selling dropshipped products is likely to discover that there are already thousands of people out there, selling the same product and seeking to capitalise on below-retail prices offered by the dropshipper.
What this means for everyone else involved is that the competition will drive the e Bay price of the product down, thus reducing the profit margins that one would hope to gain by using a dropshipper in the first place.
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