Question
Today I had to cancel close to 70 auctions. I had an arrangement with a supplier to drop ship items on my behalf. The company sent me a catalog and a letter stating the terms would be 50%/50%, and the catalog showed suggested retail. I filled out a credit application form and submitted it to them. The items were attractive, and I was excited about this new venture. I spoke with three people from the company and discussed some concerns about minimum orders (they said no order was too small; that I could phone in the buyer's information) and availability of stock (and was told since we were both on the East coast, my customers should receive their items within three days). I stated that I wanted to develop a website devoted to their line and that I would be selling on Ebay. The application asked for a Federal ID number, and I wrote on the form and told the representative on the phone, that I didn't have one, that I have been doing business on Ebay under my own name since 1998. It is a legitimate business, and I file taxes. They told me, a few days later, that I could start selling their line now, if I didn't mind paying by credit card. After credit approval, the arrrangement would be net 30. This was fine. I didn't mind paying by credit card as we went along. Everything sounded fine. After phoning in a few $5.00 orders, I was told that there would be a $2.00 drop ship fee in addition to postage. After paying Ebay and Pay Pal fees, I would be losing about 70 cents per item. I spoke with an officer of the company, and told her that I wasn't informed about this fee. She agreed to adjust the fee for these small items (small picture cards that can be placed in a First Class envelope) and I thought this was a fair compromise. She faxed me the new drop fee rate and, I was also given a customer number. Later I phoned in a few larger orders and was told they were out of stock! I expressed my disappointment about this problem, and I told them that I would have to explain to my bidders and hope they understand. I also told her that I would place a large order to be sent to me so that I could wouldn't have to worry about their being out of stock on items. She stated that it is common business practice for companies to be out of stock on items approximately 10% of the time. I told her that for someone selling on Ebay, that is unacceptable and proceeded to place an order for about $600 worth of merchandise. Later today I received a call from the officer I had spoken with. She said that since I didn't have a Federal ID number, she has to stop doing business with me. I stated that they had made a commitment, and should not have accepted me in the first place if that were their policy. Secondly, they should at least honor the fifteen or so drop-ship calls I had placed. She put the owner on the phone, and he was extremely rude. He basically hung up on me stating it is his business if he doesn't want to do business with me. He stated that, "When you call, everybody shudders." I don't understand and am extremely upset! I have just lost a lot of money on listing fees, gallery fees, reserve fees, not to mention the time it took me to convert the pictures in the catalog into attractive scans...hours and days wasted! And I do not know for sure if the items will be sent to my buyers as promised or if my large order will be sent to me or be cancelled. I phoned the company to ask these questions, and the representative immediately transferred me to the same officer who rudely hung up on me, stating they are too busy to deal with me, that I was causing a lot of trouble.
One reason I am posting this is to warn others who may be thinking of a similar arrangement not to get into a similar mess! Also, can anyome tell me if it is true that a Federal ID number is necessary to buy wholesale and resell?
I would appreciate any advice or comments. Thank you!
Joan
Answer
A wholesale company can make any rules that it wants to. However, those rules should be clear upfront.
Most wholesale companies that I have dealt with do not require a federal id number...one's SS number is sufficient.
However, these companies do require state sales tax ids most of the time.
I am afraid that you have little recourse and that you will have to chalk this up as a lesson learned. I am really sorry that you have found yourself having to deal with such a mess.
Drop shipping can be a real boon to eBayers but often there are strings attached and it doesn't always work the way it is supposed to.
Again, I am sorry that you have had this experience.
Sincerely,
Ardee-ann
http://www.sagemoon-cottage.com
Answer
See if you can get a friend with a federal id number to place an initial order for you so you can fill any orders of items you have already sold.
Sounds like a real bad company so it may have been cheap to get out early. You may be better off this way than if you had really gone in deep.
Answer
Sole proprietors do not need a federal tax ID number - they use their social security number. Unless the application asked for a state tax ID number, then you were fine to use what you did.
Can you report them to the Better Business Bureau for their state?
If you have not already done so, alert your credit card company that you will not accept any charges from this company. Close it if you have to.
Commentary has a good idea about having somebody else try to get the items from them that you have already sold.
Sounds like you found out early enough to avoid some really huge problems with these people.
Do your auctions indicate anything about drop-ship? It was always my understanding that the seller had to be in possession of the items they sell, but that could be from the old days.
Jolly Girl
My SYI Auctions
Cross Stitch Only Auctions
My Club99 Stuff
Answer
Thank you Sagemoon, Commentary and Jolly Girl for your replies. It means a great deal to be able to come to this board and find real help. I didn't know that Ebay might not allow drop-shipping. I called them, and the person I spoke with didn't seem to sure of himself, but said no.
Joan
Answer
I am pretty sure eBay allows for drop shipping. I remember reading where eBay allows drop shipping and number of days to deliver. Where I read this I cannot tell you. It was one of those passing threads.
Answer
My understanding is that dropshipping is permited. But the auction must state it will be shipped from the manufacturer, and as commentary stated, within a certain time limit.
Answer
My sister once got her account suspended because she sold Tupperware as a fundraiser at her church but didn't have the item in hand. She was banking on being able to get the product to ship to the customer in plenty of time. This was in the days prior to PayPal and instant payment was unheard of. When the order got screwed up, she had to explain to buyers that she didn't have the product in hand. eBay suspended her account because she didn't mention it in her auctions. Pretty much the same thing as drop shipping.
Answer
If you value your feedback, I would steer clear of dropshipping. You are placing your customers satisfaction into someone elses hands, and things beyond your control can snowball.
"We don't like their sound, and guitar music is on the way out."
-- Decca Recording Co. (Rejecting the Beatles - 1962)
Answer
I was just ripped off by a seller who appears to have been drop-shipping. The auction did not say so, or else I would not have bid. In short, they have been suspended with many negs for non-delivery of merchandise. Their response to one of the negs was that they are "just the middleman"...hence they did not have the products in hand they were selling.
My email to the seller (after several weeks had passed since I'd paid) asking about the status of my order went unanswered. So, I consider myself fortunate that I am only out $10.00.
So, there is a dissatisfied customers POV of drop-shipping.