In current times, more and more people are thinking about starting an online business.
However, with so many business models to choose from, it’s easy to get discouraged. Most likely you’ve heard the word ‘dropshipping’ a million times and even considered it a good option. Likewise, you might have heard of something called ‘drop servicing’ (chances are, much fewer than a million times).
Drop servicing as a business model is steadily gaining popularity, but many entrepreneurs are still unsure what it means and involves.
This article is the only introduction to drop servicing you need. It will guide you through all the peculiarities of this business model and answer any questions you might have.
What is drop servicing?
Today, all models of online business are on the rise. It feels safer, more secure, and more convenient for customers to buy products and services online. Business owners are constantly searching for opportunities to win over the heated competition and bring unique value to their customers. One of the recently trending business models is drop servicing.
Essentially, drop servicing is a business model that involves selling a service carried out by someone else. In other words, you sell a service that you outsource to a freelancer or an agency rather than complete yourself. You are in charge of the sale, and your hired freelancers are in charge of delivering a quality service to your client.
Here is a simple definition provided by Farzad Rashidi, lead innovator at Respona: “Drop servicing is essentially like being a middleman. A client needs a service done for a certain price. A person is willing to provide said service for a lower price. You take the order, pay the service provider their wage, and the difference goes straight into your pocket.”
You might be thinking that it sounds too much like dropshipping. Well, you’re not wrong. Drop servicing is basically the same as dropshipping with one crucial difference: instead of products, you sell services. The way you make a profit is similar: you buy a service for less and sell it for more. In both cases, you play the role of a middleman at the forefront of the sale, while the actual project execution is done behind the scenes.
Let’s take a look at some drop servicing examples to better understand how it works:
- A client asks you to design a visual identity for their business. You go on one of the freelance aggregators and look for someone who knows how to make a logo, design typography, work with fonts and images, etc. You agree on the price with both sides and request a freelancer to deliver their work for a lower price than you sell it to the client. That is drop servicing.
It should also be mentioned that drop servicing works not only with online services but also in real-life situations with tangible results. Here is an example:
- You bring your coat to the dry cleaner for a deep clean. Instead of fulfilling the service themselves, they send it to their partner company. Then, you pick it up from the same store. This is drop servicing, too.
Such examples show that this particular business model exists everywhere around us. Most likely you have already bought a drop service before without even realizing it or paying too much attention to it.
Let’s explore what happens behind the scenes and how drop servicing functions as a business model.
How does drop servicing work?
As mentioned above, drop servicing is very similar to dropshipping in the sense that you sell something not created by yourself from scratch. Some drop service companies are very open about it; some do not put any emphasis on it. The same goes for dropshipping: in fact, you can think of drop servicing as a branch of dropshipping. The critical difference always remains: dropshipping deals with physical products, drop servicing deals in services.
Starting a drop servicing business is quite a simple task for anyone interested. Basically, the two most essential steps are setting up a website to advertise the services you sell and finding someone who will actually provide these services. The ideal set of steps looks like this:
If you follow this plan, you can drop service no matter your background, budget, and service of interest. You also have quite a few options to choose from when it comes to your initial website. It’s a safe choice to use the same e-commerce platforms you would for dropshipping or an online store of any kind.
For instance, Shopify dropshipping is very common, simple, and intuitive. Well, the same goes for drop servicing! The algorithm is nearly identical: you register and buy a Shopify plan, do a basic setup, choose your payment options, add your services, and start taking care of your customers’ orders. Platforms like WordPress, Wix, or WooCommerce can be good choices, too.
Why is drop servicing useful?
There are many advantages to drop servicing. Let’s take a look at it from several perspectives.
From a business owner's perspective
The main advantage of drop servicing for a business owner is that the entry requirements are super low - you can start your dropshipping business in one day with zero initial investment. However, it could also be a disadvantage: the lower the entry requirements are, the more saturated the competition can become.
More and more people today are realizing the appeal of drop servicing and starting their own business. The only skills you need to begin are basic knowledge of marketing and sales and, of course, familiarity with the services you are planning to sell. It should also be mentioned that drop servicing is less risky than drop shipping since you do not need to think about potential returns and refunds of physical products.
If you do it right, it will be worth the effort. The number of drop servicing niches is high, so many services are in constant demand, and there are numerous highly skilled service providers who will ensure your clients get high quality and timely service.
From a freelancing perspective
Drop servicing is an excellent business model from a freelancer’s perspective, too. The freelance aggregators have incredibly high competition when it comes to finding a client who would pay you directly. However, it gets easier with looking for drop servicing intermediaries who have orders from their clients. Of course, the price could be lower than you would set, but the options are so abundant that you should always have a couple of orders in the queue.
From a client's perspective
When it comes to clients, drop servicing is a very convenient alternative for them. They do not need to spend hours looking for the perfect freelancer, testing their skills, and explaining the order - the drop servicing company will do it all for them. It saves their time and effort while still ensuring that they get their high-quality service according to their requirements and deadlines.
What do you need to start drop servicing?
As mentioned before, drop servicing is a business with extremely low entry requirements. Of course, it’s great if you could invest a specific budget into your new business. However, even with zero initial capital, it’s highly possible to start a drop servicing company and begin profiting from the very beginning.
You also do not need to be an expert in the services yourself. Rather, it’s a good idea to have some basic knowledge to critically assess the freelancers’ skills and portfolio, as well as the finished orders.
Steps to begin drop servicing:
- Choose the service you want to drop service
- Create a website, adding your services there
- Potentially advertise the website
- Find someone to deliver the services for a lower price
- Provide the service to the client and make a profit
Of course, you also need to spend some time working on your website. As mentioned before, the competition in drop servicing can be fierce. Your website needs to stand out and leave a convincing impression with your potential clients.
For a perfect drop servicing website, you’ll need the following:
- A well-designed homepage displaying the services you offer
- Your value proposition that states clearly why the clients should choose you over your competitors
- Your accepted payment methods
- A few marketing strategies in place (e.g., an email newsletter and social media marketing)
- A customer support tool (e.g., a chatbot)
- Basic SEO optimization.
What products can you drop service?
There is a widespread opinion that absolutely any service can be drop serviced. But is it true?
In fact, yes! Anything that can be done by a service provider can be drop serviced by you. To choose your perfect set of services to sell, think about what you would like to purchase as a service for yourself or your business, put yourself in your customers’ shoes, and try to figure out what they need the most.
A great way to check what’s currently trending is to do a simple trends analysis. You could go on Google Trends and see what services are currently most searched for. The optimal choice is something that is in steady demand with a recent upward trend. All in all, drop servicing is possible with anything as long as two conditions are met:
- There is a person willing to deliver the service for a specific price.
- There is a client willing to pay more than this price.
Here are some cool drop servicing ideas that might give you the inspiration to start.
- Social media management. The truth is, not many people know how to deal with their business’s social media efficiently and consistently. Freelancer SMM managers are very experienced these days, and they will be happy to improve your client’s media presence.
- Website development. If there is one thing in constant demand this decade, it is fast, efficient, and well-coded websites. Businesses are always on the lookout for someone to create and optimize their websites, and you could really be the one to offer them this service.
- Graphic design. This is a very broad niche with dozens of different drop servicing possibilities. You could drop service logo design, advertisements design, customized graphics, visual brand identities, and more.
- Video creation. Similar to graphic design, it’s a niche full of cool possibilities for drop servicing. You can concentrate on short videos, video advertisements, animation, and more.
- Writing. Writing can be an actual drop servicing gold mine. There is always a demand for content of all kinds and in all languages. Writing blog articles, social media posts, press releases, advertisements, or even books - the list goes on.
- Search engine optimization (SEO). Good quality SEO is a crucial part of growing a business, and all kinds of SEO are in demand. By finding knowledgeable freelancers, you could drop service technical SEO, on-page and off-page SEO, link building, writing SEO-optimized articles, and more. Tip: New to SEO? Check out the basics on how SEO works.
All in all, you can drop service practically anything and everything. The key is finding the right niche that is both in demand and can become a passion of yours.
Limitations of drop servicing: challenges and risks
No business model is entirely perfect for everyone, and drop servicing is not an exception. What matters most is finding the best way for you to do it.
You might be wondering: “Is drop servicing even legal?” Yes, it is a completely legal business model that doesn’t involve doing anything contrary to law regulations. It works just like any other business model: you buy low and sell high. As long as you do not cheat either the client or the service provider, legal issues should not worry you.
At the same time, there could be other risks involved. For instance, you need to be careful about ensuring that your service providers fulfill all your clients’ requirements and deliver the service according to your deadlines. There’s a chance the freelancer is unresponsive or you’ll need to find a new one last minute. A general rule of thumb is to give your service provider a shorter deadline than your client set so that you have some additional buffer time for emergencies.
One more thing you need to watch out for is customer satisfaction. If the clients are not happy with the service they get, you will be the one to get a negative review, which will obviously affect your reputation. Make sure you check your service providers’ reviews, portfolios and even test their skills before giving them the order to ensure that neither you nor your customers will be disappointed with the result.
Drop servicing FAQs
Still have questions around drop servicing? Check out the list of FAQs below.
Is drop servicing legal?
As mentioned before, drop servicing is an entirely legal business model. If you take both your clients and your service providers seriously, you shouldn’t have any problems regarding law requirements and legal issues. You should always be aware of what is happening, why you’re doing it that way, and who you are working with. In this case, if you are knowledgeable about every step of the journey, you will not have to question the legality of what you are doing.
Is drop servicing profitable?
Drop servicing can be a very profitable business model these days. Low-entry requirements and the possibility to start with zero budget make it accessible and promising. Your client pays you upfront, and you decide how much of that sum you want to allocate to your service provider.
Depending on the particular niche, type of work, and deadline, you make a profit in any case. While drop servicing definitely cannot be called a “money-making factory,” when done right, it will bring you the desired results.
What are the best drop servicing niches?
In 2021, the most promising drop servicing niches include the following:=
- Graphic design
- Content writing
- Marketing activities
And, as mentioned above, practically anything!
Can you start drop servicing with no budget?
Technically, yes. Practically everything you need can be found for free, including website themes, different plugins, email service providers, and looking for service providers. At the same time, you might want to invest in a domain name to set up a professional email address.
Later, you could dedicate a budget for paid tasks to test a freelancer’s skills, or training for the freelancers, before they work with actual clients. However, all in all, drop servicing proves to be one of the cheapest start-up models.
Where do you find service providers?
Generally, service providers are abundant in various freelance aggregators. The most popular ones include:
- People per Hour
- HubStaff Talent
- And many more!
What skills do you need for drop servicing?
To get started, all you need is basic marketing and sales skills. Otherwise, it would be complicated to promote your business, find the first clients, and communicate with your potential service providers.
Beyond that, a general rule of thumb is to possess at least the basic knowledge of the services you’re planning to offer. For instance, if you drop service SEO optimization, you should be at least a bit knowledgeable on the topic. Otherwise, you won’t know if your freelancers have completed quality work for your clients, and you risk getting a negative review and losing your reputation. It’s crucial to critically assess if the work is good or not and give the right directions to freelancers.
Drop servicing takeaways
Drop servicing is a promising business model that is becoming more and more of a big player in business. The rapid development of technology, the digitalization of society, and the convenience of this approach make it a very appealing solution for entrepreneurs, freelancers, and, most importantly, clients.
Let's summarize the key takeaways:
- Drop servicing is a business model that involves selling a service that is carried out by someone else. Essentially, you play the role of a middleman who takes care of the sale, not the service implementation.
- Drop servicing is a model similar to drop shipping in its essence. You sell something created by someone else - either your product or service provider. The primary difference between these two models is that drop shipping deals with physical products, while drop servicing is all about tangible or intangible services.
- It has plenty of advantages as a business model: very low entry requirements, the need to possess basic knowledge of the services you want to sell, and a massive demand for plenty of services. It’s an easy and convenient solution for clients and a reliable source of income for freelancers.
- To start a drop servicing business, you need to choose the service you want to provide, create a website for your business, advertise it, find your service providers, and make your clients happy.
- Another great thing about this business model is that you can drop service practically everything. Currently, the most popular niches include social media management, website development, writing of all kinds, search engine optimization, graphic design, video creation, and more.
- Drop servicing is a completely legal business model. If you take good care of customer satisfaction and communication with your service providers, you shouldn’t worry about encountering any serious problems.
Want to get started creating and designing your drop servicing website? Check out the best website design providers in the industry to make yours stand out above the competition.