In this post, we’ll look at how to start a drop-servicing business. 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 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 service 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 it 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, a lead innovator at Response: “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.”
Why should you start a drop-servicing business?
Here are several reasons to start a drop servicing business
Low Start-Up Cost
You don’t have to invest in any service skills; everything can be outsourced to a third-party service provider that can get the job done easily.
Your only start-up cost should be for creating your single-page website where you display the service you’re providing.
High Ticket Sales
This is one of the beauties of starting this online business. One single sale can make you up to $2000 in total profits.
While compared to dropshipping you’ll have to sell hundreds of products to make that single sale.
Recurring Income
Another interesting part about this is the recurring income. You get to make money online every month at no additional cost.
Some clients can decide to place you on a monthly payroll for providing a service for them.
And all you do is outsourced it to a third party and get paid per month while doing the same thing over and over again.
No Skill Required
You’re practically doing nothing in this business because every single process can be outsourced and completely automated.
You don’t even have to find clients yourself; you can outsource that to someone else.
Is there any difference between dropshipping and drop servicing?
When it comes to starting an online business, there are many options out there. Two of the most popular choices are dropshipping and drop service.
Dropshipping is a business model where eCommerce entrepreneurs sell products without having to carry any inventory.
When a store owner receives an order from a customer, they simply contact the supplier, who will then ship the products directly to the customer’s door.
Drop servicing is similar to drop shipping, but instead of selling physical products, you’re selling services. Drop servicing works like this: clients come to your website and browse through the various service packages you offer.
They pick what they want and submit an order form with their details (i.e., the service they want, when it should start, how long it will last, and so on). You then contact them to confirm everything and get started.
So what’s the difference?
The main difference between dropshipping and drop servicing is that you’re selling physical products with dropshipping, whereas, with drop servicing, you’re selling services.
Other than that, there aren’t many differences. Drop servicing is just like dropshipping and works in the same way; you receive an order from a customer and then contact your supplier to fulfill it.
Drop servicing apps let you add services from various suppliers into your drop service store in just a few clicks.
How does drop servicing work?
As mentioned above, drop service 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.
How it works
Client (needs a service, ready to pay for the service)
Drop servicing business (serves the service to a client, hires a service provider for less money, and makes a profit from it)
Service provider (provides the service, and makes a profit from your payment)
What products can you drop service?
Digital Marketing
- Lead generation
- YouTube Marketing
- Facebook Advertising
- Pinterest Marketing
- Search Engine Optimization (SEO)
- Google ads
- Social Media Marketing
- LinkedIn Ads
- Content marketing
- Instagram Ads
- Instagram Influencer
- Video Marketing
Programming
- WooCommerce Customization
- Plugin Creation
- Chatbots
- App Development
- WordPress Development
- Shopify Customization
- Web programming
- SaaS Development
Writing
- Sales copy
- Copywriting
- Translation
- Creative writing
- Product Description
- Email copywriting
- Proofreading
- Technical writing
- Ghostwriting
- Guest post
- Ad copywriting
- Blog post
Other General Services Include
- Order Fulfillment
- Packaging & Labels
- Pinterest Ads
- Podcast Editing
- Presentation Design Templates
- Product Mockups
- Proposal Creation
- Scriptwriting
- Snapchat Ads
- Webinar Creation
- Website Optimization
- YouTube Editing
How much does it cost to start a drop-servicing business?
The key to a successful business is preparation, and understanding your expenses will help you succeed with what you do! So, how much does it cost to start a drop-servicing business? Let’s figure this out together!
For Starting A Drop Servicing Business, You Would Need:
A Unique Domain name
A domain name is an actual URL that will represent your online business.
Appropriate brand identity building
Brand identity is the visible elements of a brand, such as color, design, and logo, that identify and distinguish the brand in consumers’ minds.
They say a picture is worth a thousand words, but a logo is worth an entire novel. Fine – that may be a slight exaggeration, but the principle holds.
The logo is a serious investment for your business, it’s a brand asset that has high potential value for your company, so it’s smart to hire a professional logo designer from the start.
Email marketing toolkit & autoresponder
Do you know that the average ROI (return on investment) is $42 for each $1 you spend on email?
What differentiates veteran marketers from those newbies is that they use email marketing toolkits that allow them to create email sequences to follow up and engage with their audience.
According to Econsultancy, email marketing accounts for approximately 23% of online sales… Making it one of the most effective marketing channels at your disposal!
A functional and responsive Online storefront
An online storefront is the cornerstone foundation of your online business, and it’s obvious that every online business needs a website and domain to get noticed.
The 5 must-have elements of a successful drop servicing website
Responsive and visually appealing design.
Payment gateway integration.
Email marketing integration.
Social media integrations.
Facebook Pixel and Google Analytics integrations.
Through a virtual storefront, you would be able to list and offer your services, talk about yourself, get orders, and take payments from your customers!
Promoting your business and finding your dream customers – If you don’t have a consistent stream of traffic or new people coming into your business… Do you even call it a business?
It doesn’t matter how optimized and well-looking your website is… If it’s not noticed by real humans, you won’t get profitable at all!
So, at this phase, you have claimed your unique desired brand name, created a great online storefront that you’re proud to own and promote, and built up your email flow. Generating targeted traffic and customers is what you should be concerned about next…
Well, marketing could be overwhelming and complicated if you don’t know exactly what you’re doing.
Easy guide to starting a drop servicing business.
Here is a step-by-step guide that can help you start a drop servicing business
Step (1.) Brain dump drop servicing business ideas
Your first step is deciding which service you’re going to offer, and who you’re going to offer it.
Start by brain-dumping.
Grab a sheet of paper and start writing out
- The skills you already know how to do
- Every skill you’re interested in learning
- Skills that have high demand (check freelance job boards and Google Trends)
- Every skill that has potentially high margins or wide pay ranges among freelancers
Try to turn off your filter during this exercise. There are no right or wrong answers. Just get all your ideas out on paper.
After your brain has finished its dump, go back and circle your top three choices.
You might be tempted to offer many services (whatever your clients need to be done). But I’d advise against this for now. It will make the next step overly complicated.
Step (2.) Build your team
Your next step is to find the people who you’ll outsource the work. To keep things simple, start with one service provider. (Or if you don’t know how to do the skill yourself, you might also want to find a “backup” provider).
When sifting through candidates, keep a lookout for stay-at-home moms and housewives. If you find someone whose partner carries the financial load, they might not care about earning low wages. They just want something flexible that keeps them busy and feeling productive. Wherever you look, narrow your candidates down to your top 5-10 favorites, and then offer each of them a paid practice assignment.
Yes, it’s an upfront investment. But choosing the right service provider now will save you headaches down the line.
When running the trial assignments, pay attention to:
- Response time
- Who follows directions
- Who has the most talent
- Who seems like they’d be a pleasure to work with
Remember, skills are usually much easier to train than reliability, attention to detail, and attitude.
Lastly, to keep things simple, you’re going to want to find a service provider that charges per project. If they charge per hour, you’re in for a headache.
Step (3.) Train your team
As I mentioned, you might end up choosing a freelancer based on their work ethic, even if they aren’t the most skilled.
But if you’re going to be charging clients top dollar for your services, you need to make sure your service provider can deliver. If you’re an expert in the skill, you can teach them yourself.
But if not, you might want to consider investing in a training program. Yes, it’ll be an upfront investment.
But if you think of it in terms of how much time you’ll save editing every week or the extra referrals you’ll get from helping clients achieve awesome results, it’s a small price to pay. (Plus, you can train yourself as well!)
Step (4.) Find high-paying clients:
Now for the fun part. This is easier said than done. Let’s look at the best way to build up your drop-servicing client roster. Remember, your profit will be:
drop servicing formula that says your profit equals what you charge clients minus what your freelancer charges you minus your marketing costs
That means you have to find clients with the budget to afford your marked-up prices.
Odds are, they won’t be solopreneurs and startups just getting off the ground. You’ll need to target established companies (or well-funded startups) with giant marketing budgets.
Step (5.) Get paid
The idea is to keep things as simple as possible when just starting. There’s no point in setting up elaborate payment systems and checkout carts when you don’t even have any clients.
Frequently Asked Questions on How to start a drop servicing business
Is drop servicing legal?
Yes, drop service is perfectly legal. It’s just like any other business model involving subcontractors or “middlemen”. Just make sure to properly document everything for tax time. 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 worth it?
If you’re confident in your ability to sell your services to companies who can afford them, it’s worth it. If you hate selling and would rather have jobs handed to you on a silver platter, it’s probably not worth it. (In which case, you may be better off working as the freelancer on a drop servicing team).
How is drop servicing different from dropshipping?
With drop shipping, you act as the middleman between a physical product manufacturer and the end consumer. With drop servicing, you act as the middleman between a digital service provider and the clients who purchase those services.
Is drop servicing better than dropshipping?
Whether you’re better suited to drop servicing or dropshipping depends on your experience. If you’re used to buying and selling products (dropshipping) then stick with what you know. But, if you’re a people person and have experience working as a freelancer then drop servicing is a great option.
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
Programming
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:
Upwork
Freelancer.com
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.
Final Thoughts on How to Start a drop servicing business
By now, you would have gotten a detailed guide on how to start a drop-servicing business. It is not just enough to start, ensure to start with a good first impression. The moment customers enjoy your services and process, they will leave good reviews for you. That will in turn attract other potential customers.
Therefore, if you are wondering what business to venture into with little capital, you can begin with a drop-servicing business.