What Is Drop Servicing Business Model And How It Works – A Definitive Guide


What Is A Drop Servicing Business?

Drop servicing is a business model, where you deliver a service to the client, by outsourcing a project to the freelancer or third-party service providers and earns a commission as profit.

Drop servicing is also called service arbitrage – which means buying and selling a service for profit.

Here, you act as a middleman to the clients and the freelancers, where the client who needs the service doesn’t know that you will be outsourcing the project to the third party.

It is similar to drop shipping, but the only difference is you deliver a service instead of a product through various means.

Drop Servicing Business Model

Drop Servicing vs Dropshipping

Dropshipping is a business model that acts as a retail store without holding any inventory. It sells products to the customers by getting them from a third-party supplier without stocking the products.

It is a famous business model for entrepreneurs that uses online services and cuts down the cost of stocking the products, which gets more profit.

Drop servicing is a little different, which provides services to the client or customer instead of selling the product. The client asks for any services as if you own the services, but they don’t know that you will outsource the project.

To deal with the clients you can create your website for your business and start the marketing process.

Where to find drop services?

To find a service, there are more freelancing platforms available online, where you can hire a freelancer at a low cost in all the skill categories.

You can post a job in a specific category that you’re looking for a service. The freelancers bid on your project specifying the delivery time. You can select them according to your cost for the service.

Or you can directly select the experts in that particular category by knowing the rating given by the other employers to that freelancer.

Drop Servicing Websites

Some of the best freelancing websites you can search for the potential freelancers who are passionate about delivering the services are

  • Fiverr
  • Upwork
  • Freelancer
  • Guru
  • Toptal
  • 99Designs
  • Designhill
  • People Per Hour
  • ProBlogger
  • Hubstaff Talent
  • Dribbble
  • Behance
  • Simplyhired
  • LinkedIn Profinder

Best Drop Servicing Business Ideas

Choosing the best drop service is very crucial for new entrepreneurs, as you need to analyze and choose the best that will work for you. Since you will outsource a project in the niche you choose, it doesn’t mean that you can go blindly after the most successful idea.

Somehow the skill should be relevant to your interests and passion. At the same time, it should be trendy, demanding, and should have steady growth in the years to come.

Best Drop Servicing Niches To Consider

  • Search Engine Optimization (SEO)
  • Software & App Development
  • Animation
  • Graphic Design
  • Logo Design
  • YouTube Intro
  • Voiceover
  • Data Entry
  • Proof Reading
  • Content Writing
  • Social Media Management
  • Public Relations
  • Marketing
  • Engineering Design and Modelling

You can use google trends to analyze some of the best topics you’re interested in and choose the right one.

Here is an example of a topic search in google trends that shows graph over a period of 12 months. Likewise, you compare and choose the trendy topics that have a steady flow for a long time.

Drop Servicing Niche

How To Start A Drop Servicing Business

Select A Drop Service

Before selecting a service, as mentioned above research well on the topics you have planned. Use google trends to compare the topics and get to know which one is trending and has more growth prospects.

Choose the niche that you have good knowledge about it. No need to be an expert in that niche, but to have little knowledge about it. This will help to deal with the clients.

Another important thing you should keep in mind while choosing the niche is the competition. Search for the low competition niche for a drop service.

This ensures you to secure a strong position in the marketplace with speed growth.

Set Your Brand

  • Start your business with a brand name and logo that is reachable.
  • Register your business.
  • Create a website for your business, which will be helpful for promotion, generating leads, and showing testimonials.
  • Properly set your accounting system to manage finances.

Find The Freelancer To Outsource

As mentioned earlier there are many freelancing websites available to outsource your project.

But, you cannot find all the services from all these freelancing websites. Some of the websites are limited to only a few services.

For example, if you’re choosing the designing niche you can find the related services on the websites like 99designs.com and designhill.com

Therefore choose the right website that is reliable for you providing good service and support, as you rely upon them.

Before selecting the freelancer study their description, rating, and reviews. This will let you know about their skill proficiency, quality, and delivery frequency. Have a look at their sample project and get the best out of them at an affordable cost.

Try to engage with the right freelancer who serves with good quality and maintain a long-term relationship with them.

Marketing Your Business

The next big thing to look for drop servicing is to market your business. Brand marketing could be done through different marketing channels. When it comes to marketing, you should not leave any single medium that could create an opportunity to drive sales.

At the very initial stages of your business don’t spend too much on marketing. Rather go for free promotional activities like

  • Social media marketing: It doesn’t require money, but you’ll need to post regularly until you reach the client. Creating separate pages would be helpful to form a community in that niche.
  • Content marketing: Content marketing is essential for any startup business that drives organic traffic to your website. Writing blogs for your website related to the niche create domain authority thus it builds trust and attracts clients for your business.
  • Search Engine Optimization (SEO): SEO is a technique used to rank your website higher in search engine pages for a particular keyword. It cost you only less amount of money to research a keyword in your niche.

Besides all these methods you can opt for paid search method if needed, to get more traffic to your website. Use Google ads and keyword planner to get good results.

Reaching The Drop Servicing Client

Once you’re done with the marketing process, the final step in drop servicing is to convert your visitors to clients who buy your service. Here are some steps to follow that could possibly convert your visitors to buyers.

  • Create a beautiful landing page on your website with good copywriting techniques.
  • Create a chatbot to answer the queries of the clients.
  • Use pop-up subscription boxes in all the posts, pages, and wherever necessary, and make the visitors your subscriber of the newsletter and feeds.
  • Offer good prices to new clients for your services.
  • Use email marketing for promotional activities and retain your existing clients.

Advantages

  • The initial setup cost is low in drop servicing.
  • It provides stable income continuously when you put in your maximum effort.
  • It doesn’t require any specific skill to operate the business, as you act as a middleman, it is quite good to have a little knowledge about the service.
  • Drop servicing is more reliable and flexible.
  • Service delivery is easy, unlike drop shipping.
  • It would be easy to start for newbie entrepreneurs and it will be more suitable for them. Because it is cost-effective and the failure rate is low. Even if it doesn’t work for you, it will not incur a big loss.
  • Highly profitable and scalable. When you are successful in a particular niche, you can expand your business by delivering other services also.

Disadvantages

  • As you outsource the service, you cannot fix the delivery time. It totally depends on the freelancer whom you hire for the job.
  • Not assured quality. If the freelancer did any mistake, you are responsible to answer the client even if the mistake is not yours.
  • Drop servicing is limited to certain services only, especially at the starting stage.

Frequently Asked Questions

Is Drop Servicing Profitable?

Drop servicing is definitely a profitable business. It depends on how well you research and choose the right niche. It would have a good margin when you sell the services with quality and timely delivery.

Is Drop Servicing Legal?

Absolutely yes! Any business model that is registered as per your government policy, is legal. It is like the other business that earns a commission as profit. Ensure you pay the taxes at the right time without fail.

What Skill Is Needed For Drop Servicing?

Drop servicing does not require any specific skills. It is not a big deal even if you lack any knowledge and skills in the niche you choose. Yet it requires some basic skills to operate your business. They are marketing, sales, advertising managing, and organizing skills.

Is Drop Servicing Better Than Dropshipping?

Both of the business has its own advantages. Since there is no need for any inventory for drop servicing business, it is better to manage when compared with dropshipping. Whatever the business model is, you will get benefits according to the input and hard work you will give.

Reader’s Insight

Let us know if we missed out on anything in this article What Is Drop Servicing Business Model And How It Works and share your thoughts in the comment section.


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