Fiverr Buys AutoDS As Major Marketplaces Crackdown On Dropshipping
Gig economy app Fiverr announced this week they have acquired dropshipping automation tool AutoDS in deal that could prove ill-timed for Fiverr as major ecommerce marketplaces crackdown on this type of online arbitrage.
NEW YORK, July 31, 2024 (GLOBE NEWSWIRE) -- Today, Fiverr, the company changing how the world works together, announced its acquisition of AutoDS, which provides a subscription-based end-to-end solution for dropshippers, including product research and sourcing, inventory management, and automated fulfillment.
With its expansive global reach and an omni-channel approach, it aggregates over 150 million products and serves tens of thousands of paying subscribers on its platform...
...AutoDS brings tens of thousands of dropshippers into the Fiverr ecosystem, adding to the existing dropshipping and e-commerce buyer base on Fiverr.
This acquisition expands Fiverr’s footprint in the value chain in categories with existing dominance and growth momentum, including dropshipping, website development, e-commerce management and social media marketing.
The global dropshipping market size was evaluated at USD 285 billion in 2023 and it is expected to hit over USD 2 trillion by 2033.
Dropshipping is a bit of a nebulous term that can cover several different business models, with varying degree of risks for sellers and consumers.
Some forms of dropshipping require sellers to set up business accounts with wholesale suppliers who ship to buyers on their behalf while others (like AutoDS) simply scrape or export product data from one online marketplace or website, list items on another site with a markup and then fulfill by placing the order with the original retailer at a cheaper price and pocketing the profit.
The press release says: "AutoDS was founded in 2018 and is managed by Lior Pozin, Michael Royf, and Ofir Bokobza, with the goal of automating the dropshipping process, to help source products from major channels like Amazon and eBay and to help every business scale easily. AutoDS provides a single dashboard where multiple stores can be monitored, and prices are automatically updated as they increase from suppliers."
What it doesn't say is that the service AutoDS provides and the type of "dropshipping" it enables is explicitly prohibited by the terms of service and user agreements of most of the major ecommerce marketplaces it uses for "sourcing."
eBay's Dropshipping and Source Policy:
Drop shipping, where you fulfill orders directly from a wholesale supplier, is allowed on eBay. Remember that if you use drop shipping, you’re still responsible for the safe delivery of the item within the time frame stated in your listing and for the buyer’s overall satisfaction with their purchase.
However, listing an item on eBay and then purchasing the item from another retailer or marketplace that ships directly to your customer is not allowed on eBay.
Drop shipping, or allowing a third-party to fulfill orders to customers on your behalf, is not acceptable unless it is clear to the customer that you are the seller of record.
The following examples of drop shipping are policy violations that may result in a restriction of your ability to sell using Amazon’s Merchant Fulfilled Network (MFN):
- Purchasing products from a third party, including Amazon or another seller in Amazon’s stores, and having that third party ship directly to customers, if the shipment does not identify you as the seller of record or if anyone other than you (including the third party) appears on packing slips, invoices, or external packaging, it is strictly prohibited without exception; or
- Shipping orders with packing slips, invoices, external packaging, or other information indicating a seller name or contact information other than your own is also strictly prohibited.
Walmart's Dropshipping Policy:
You may not purchase products from another retailer and have the order shipped directly to a Walmart customer...
...Walmart reserves the right in its sole discretion to suspend, terminate, and/or take other immediate action against sellers who purchase a product from another online retailer and have that other retailer ship the product directly to the customer (also known as Retail Arbitrage).
Even Etsy, which has recently loosened restrictions on some items that can be sold on the site, still explicitly prohibits dropshipping except for craft and party supplies.
Drop-shipping is not allowed on Etsy, with the limited exception of Craft and Party Supplies. Sellers may drop-ship craft and party supplies that support our creative community, enabling the creation of unique items and bringing personal touches to special events.
In fact, Etsy has recently taken direct action against AutoDS, ShineOn, CShip and other similar dropshipping automation tools by cutting off their access to the Etsy API.
Liz Morton
eBay hasn't named specific dropshipping companies, but they have also taken recent steps to curtail this type of arbitrage dropshipping with Bad Buyer Experience ratings for overseas sellers and blocking Aquiline and BlueCare Express shipping methods that are commonly used by policy-violating Amazon dropshippers.
Liz Morton
These crackdowns come at a time when marketplaces are facing increasing regulatory and legislative pressure to provide greater transparency to buyers about the source of goods sold on their platforms.
For example, the INFORM Consumers Act that went into effect last year specifically takes aim at this type of dropshipping with a provision that requires high-volume third party sellers to disclose if they "used a different seller to supply the product to the consumer upon purchase" and, if so, they must "supply information about the seller that supplied the product to the purchaser, if such seller is different than the high-volume third party seller listed on the product listing prior to purchase."
Will AutoDS thrive as part of Fiverr or is online arbitrage dropshipping dying out? Let us know what you think in the comments below!
