E-commerce opens up online businesses to new sales methods that will help them reach untapped markets.

Unlike brick-and-mortar stores that only rely on customers for their revenue, online stores generate sales in multiple ways, whether it’s on their website or in marketplaces.

Some internet sellers source their products from product label providers, others produce their own, while there are also those who ship directly.

Of all the selling practices available these days, arbitrage exhibits a double standard that the big markets don’t appreciate.

Call it a one way street where only the seller benefits while consumers and other retailers are disadvantaged.

Although historically identified with brick-and-mortar stores, where arbitrageurs would buy items for a song and then sell them at a higher price, retail arbitrage has inevitably become an online scheme from which many businesses profit.

The doctored arbitration scheme

Forcing consumers to spend more than necessary is totally fine, as long as they have the choice not to.

What poses a problem with online retail arbitrage, specifically in marketplaces, is the willful failure to order.

In other words, a marketplace arbitrageur makes the retailer from whom you bought a very cheap item fulfill your customer’s order. If the item turns out to be defective and the customer wishes to return it, the customer will contact the original source and not the arbitrage seller.

bad effects

Marketplace sellers using arbitrage are beginning to lose sales specifically on the eBay platform.

Gone are the days when you could make easy money by copying listings from another website like Amazon and relisting them on eBay at higher prices.

It costs nothing except a software to obtain products from other markets, also it does not imply responsibilities.

However, eBay will not tolerate such a scheme, thus preventing sellers who practice it from making more sales.

That’s according to SaleFreaks, an Israeli company that offers an all-in-one online retail arbitrage tool from Amazon to eBay, which has joined forces with its clients to file a legal case against the renowned marketplace.

They said their clients’ eBay listings have not appeared in Best Match search results, resulting in lower sales.

The company’s CEO, Adi Reiss, accused eBay of manipulating the results of Best Match, stating on Facebook:

“eBay admitted that they did, in fact, rig the “best match” search results against “dropshippers” in relation to sellers who do not “dropship” from online sites to “preserve the integrity of eBay” and “protect buyers”.

It may seem like eBay doesn’t support dropshippers, but their website says otherwise. In fact, they explicitly define drop shipping as:

“It’s typically used by sellers who buy wholesale stock from their supplier. After the seller receives an order from eBay, they work with the supplier to ship the item directly to the buyer. If you use drop shipping, it’s still responsible for the safe delivery of the item within the timeframe you indicated in your listing and the buyer’s overall satisfaction with their purchase.”

There you have it, straight from the horse’s mouth.

It is now clear that direct submission from other websites is allowed, but any other method, especially one without customer liability, should be thought twice.