What Is Drop Servicing?

If you’ve come across the term ‘drop servicing’ a lot lately and don’t really know what it means, you’re not alone. It’s a form of business that’s quickly gaining popularity among budding entrepreneurs but is not yet as popular as it could be. Rest assured, though: it's a relatively easy business to set up and is profitable too.

Drop servicing is a great alternative to drop shipping for those who haven’t found the latter very rewarding or simply want to begin with drop servicing first. With the unlimited power and potential of the internet, entrepreneurs worldwide have been able to successfully set up drop servicing businesses.

In the following sections, I'll take you through an introduction to drop shipping, what it means, and how it's grown over the years. Read on!

What Is Drop Servicing?

Drop servicing, also known as service arbitrage, allows you to link clients to the services they require. In other words, since drop shipping is for products, drop servicing is for services.

You'd want to note here that in drop servicing, your clients don't really know that you're outsourcing or hiring someone else to perform the service for them.

Basically, it's like sub-contracting. In a drop servicing business, you'd fulfil your client’s requirements using freelancers you know and trust. The services a client can demand in drop servicing are not limited to any one niche. You’ll find everything from demand for content writing and graphic designing to editing and proofreading here.

The catch here is pricing. How do you make a profit if you take on contracts from clients and outsource them to freelancers? You’ll need to decide on your target profit margin before you hire freelancers or you risk making an insignificant amount of profit. This margin would be easier to determine if you work with services you have expertise in.

How To Start A Drop Servicing Business

Choosing a service or service to work with is the most important decision you’ll have to make when you intend to set up a business. Your chosen niche can directly affect the amount of profit you stand to make. So how do you choose your niche?

If you've worked in a particular field before – say graphic designing, I'd advise you to take this on as your niche. As a former graphic designer, you're likely to know other people working in the field, the rates they charge, the delivery time, etc.

Now, this isn't to say that you should only work with services you have experience with; you can experiment with those you don't as well.

After all, drop servicing doesn't have a lot of overhead costs, so you're not risking all that much. Having said that, I'd strongly recommend you do adequate research before you start working with other services. Read up about it on the internet, talk to industry experts, and get a clear idea on pricing.

Next, either use your existing network of contacts or register on a freelancing website in order to find people to do the job. Don’t just opt for freelancers who work at the lowest rates though, choose the ones that have good ratings.

Once you've found the best freelancers, set up a team. You'll need marketers, etc. to help grow your business, so make sure you choose those that have adequate experience. Use training courses and guides to help your team stay abreast of the latest practices in online marketing as well.

Also, it’s important to note here that you needn’t necessarily hire long term freelancers for your drop servicing business. There are scores of them out there who'd be willing to work for you on a short term basis at competitive rates.

I'd recommend you opt for a short term freelancer, especially if you plan on taking up projects sporadically, such as writing guest articles for an established website.

You’ll also need to start a drop servicing store. Typically, you can use the same portals as drop shipping websites to establish your online presence. The process of setting up an account on such websites is pretty simple and straightforward, and you'll be able to manage this with little to no help. 

How Has Drop Servicing Grown?

Drop servicing was a virtually unknown concept a few years ago, but it's fairly popular now. It's being widely peddled online as a quick way to get rich but be warned that is not true. It takes hard work and acumen to become a successful drop servicer.

The growth in interest over drop servicing has increased exponentially in a very short span of time, with a whopping 337% in less than a year! So why this increased demand for drop servicing? The allure is obvious: you get to make a profit with minimal investment.

Also, there’s a good chance of long term customer retention with drop servicing as clients tend to favor the services of those they've previously worked with. Longer retention helps lower customer acquisition costs or eliminates them altogether.

Conclusion

Drop servicing seems to be gathering steam quickly and is on track to be the next big thing in online business. It's already a big hit among freelancers with the help of websites such as UpWork, Freelancer.com, and Fiverr. You’re sure to find a host of freelancers and drop services on these websites.

These portals have brought clients and freelancers together via drop servicers, and their success stories speak for themselves. The fact that drop servicing is so easy to learn and put into practice is one of the many reasons it's been growing so popular lately. This low risk, high return option is as rewarding as it is simple. 

One of the biggest advantages of drop services is that you can start small and work your way up. The barriers to entry in this trade are very few and mostly insignificant, even compared with drop shipping.

Sure, it's not all fun and games and requires a fair bit of hard work, research, and skill.

However, in the opinion of many, it’s an online business worth diving into regardless of whether you’ve ventured here before.