DropShipping vs DropServicing

The meaning behind The Term “Drop”

Dropshipping, dropservicing, and drop surfing. The online dictionary defines the term “drop” as letting or make something fall vertically. In times before the arrival of a lot of the technology we have today, people used the term “drop” to hand over something.

Perhaps you were going to a friend to drop off something you borrowed from them. You could’ve given someone a lift and dropped them off at their house. Today the term “drop” is used more in the cyber world.

Who knows where we’ll be 50 years from now? Perhaps this term will have evolved beyond technology and move onto something our minds cannot comprehend just yet.

Today we are going to look into two of the popular 'drop' phrases that have appeared, we will be pitting DropShipping Vs DropServicing to find out which one may be the best for you to peruse. 

What is DropShipping and is it worth it?

Simply put, dropshipping entails being the virtual middleman between the consumer and the supplier. You may have a website running that is more user-friendly for the client to navigate.

When the client places an order, you then send that order through to your supplier and they will ship whatever the customer has required to them. You, as the dropshipping middleman, do not keep any stock on hand.

How dropshipping works

The dropshipper makes the client's life easier in other ways too. These days with the market being more global than anything else, there are so many laws with import tax, customs clearance, and other headaches that come into play.

As a dropshipper, you can source local suppliers for your client, to get whatever they want a lot quicker and with ease. If nothing can be sourced locally in your client's country, it is on your shoulders to deal with all the legalities in international shipping.

Advantages to DropShipping

  • Minimal overhead costs - all you need is access to a computer, phone, and an internet connection
  • No capital required  The dropshipper does not buy stock for resale, they just make the transaction between seller and buyer more user-friendly.
  • No risk to bulk orders on faulty products  If a client comes back with a faulty product, it’s only the one. You don’t lose out on a whole bulk order you may have ordered.
  • You’ll never run out of stock – Because it’s your job to source the product for your client, you’ll never be disappointing your client by breaking bad news to them that you’re “out of stock” on the selected item.

Disadvantages to DropShipping

  • Low returns – Luckily, suppliers give dropshippers up to 20 % discount so they can make money for themselves. This cost, however, needs to be taken into consideration for marketing, site maintenance, managing sales orders, and being paid for your time. So, you’ll need to conduct a lot of business if you intend on making it your primary source of income
  • Competition – The dropshipping sector is a highly competitive market since very little is needed to start up a dropshipping company, and there is no risk associated with doing it part-time. This disadvantage hurts the most on people who are just starting out. With your limited network of suppliers, zero experience in dropshipping, and no brand recognition, it’s very difficult to start recruiting customers.
  • None of the control and all of the responsibilities - Part of the reason why suppliers choose people to dropship their products is that they focus solely on production and not so much on sales. If there is a holdup with the supplier, it is up to you to explain to the customer why there is a delay
  • Difficult to build your brand – One thing to note is that if customers are happy with their purchase and the turnaround time it takes to get their product, all the praise goes to the manufacturer of the item and to the supplier for shipping it so efficiently. You are barely recognized.

What is DropServicing and is it a worthwhile business to get into?

Whereas dropshipping more relates to the products of the online community, dropservicing relates to the services offered by individuals. These services are usually ones that can be done online, such as ghost-writing, advertising, or design.

The DropServicing Model

So how does someone make money off dropservicing? Well, you source clients who need certain services attended to, for example, article writing.

Say, the client needs 10 2000 word articles and is willing to pay $15 per article, you would then source the work of freelancers on sites such as Upwork or Fiverr. This gives the freelancer to focus on what they are good at, and in this case, it will be writing, without the worry of sourcing clients that need their services.

Advantages to Drop Servicing

  • No capital required – as it is with dropshipping, there is no capital required to start drop servicing
  • Lower risk than dropshipping – The risks are generally lower than dropshipping, as there is no added stress on returns.
  • Higher revenue on items – Your markup on dropshipping may not be as high; however, you can make a lot more on drop servicing. This is because you and the client agree on a price for the services needed, and there is a pool of thousands of freelancers to source through who will provide said service for a fraction of what the customer has agreed on.
  • No shipping – You do not need to worry about any legal issues of cross-border shipping. It’s just a matter of electronically sending what the client asked for over email, with no delays.

Disadvantages to Drop servicing

  • Freelancer quality – Because the information of outsourcing work agreed on by the client is very sensitive, you are at the mercy of the freelancer’s quality. You will inevitably receive bad feedback on someone else’s work.
  • No money back on returns – because this is a service platform, if the client is unhappy with the services and may be refusing to pay for services rendered, there is no way of getting the money back from the freelancer which you hired
  • Turnaround time – As it goes for dropshipping, you are at the mercy of the freelancer’s turnaround time on completing the task set out for them. As the outsourcing information is highly sensitive, the blame cannot be put on the freelancer for delays.

DropShipping vs DropServicing? Which one is more feasible? 

It ultimately boils down to your personal skills. It is also dependant on which risks you’d be more able to deal with, and which virtual fires will be easier for you to put out. You make more money at the start of drop services; however, it can be extremely volatile.

Dropshipping yields low returns and requires a lot of work, but is a lot more stable than drop servicing. Whichever one you choose, the bottom line is that you will essentially be the middleman and have to burden yourself with all the responsibility.

In conclusion

So to wrap up which may be a better choice for you, you need to take a look at yourself, the pros and cons, and a look at which will yield a better reward in your situation. If you’re one for the higher stressful situations and like the idea of high returns early into the business model, then drop servicing may be for you.

If you want to build something strong from the ground up and have the time, then dropshipping will be the best choice of action for you.

We live in a time of digital abundance and encouragement to work from home in any which way we can. The digital platform may be the way of the future, and it would be a smart idea to jump on board now, securing your place in the future of remote work.