Have you ever heard of the term called “drop servicing”?
If so, you may be wondering what this is about. Drop servicing is an emerging field of business. You may want to know what this drop servicing is, how does it work, and how you can earn from it. If so, this is the perfect place for you.
What is Drop Servicing?
Drop servicing is a business model that is also known by the term “service arbitrage”. This is basically like being a contract person between the product owner and the buyer. If you are the drop service provider, you take the order from the client and make the service provider provide it to the client. You act as the link between those two people.
Consider a situation where you act as the contractor in a construction field. You don’t have to have the blueprints or the carpenters or the necessary products. The client gives you all the information on how they want their building constructed and the cost and the time too. He gives you all the necessary information regarding the construction process. The contractor then handovers the project over to the necessary people of the field. They then handle their parts separately and the contractor acts as the link between all those people.
How Drop Servicing works?
As above, the drop service provider does not have to have the required products or resources with himself. Neither the client nor the product owner or service provider knows about this. But in case anything goes wrong, the drop service provider has a binding to solve it out. And the benefit of this is, you can buy products at a lower rate and sells it at a reasonably higher rate keeping a commission for yourself. Drop servicing is the exact same as drop shipping, but here you sell services instead of products.
These days you can find many clients who have the need to obtain different products and services. For example, there is a high demand for blog content, logo designs, and pencil art, etc. The drop service provider finds such clients and contacts a few experts who excel in that field. Then he places the order to a selected service provider and then makes the service provider supply that service to the client. And he obtains the payment from the client and pays the service provider keeping a reasonable commission for himself. Most of the time the supplier is a freelancer and you can find plenty of them on such websites.
What You Can Drop Service
Anything. But anything that you understand of. Do not try selling something you are not aware of. Otherwise, it may lead to sales issues that give you a bad reputation. Reputation is really important in business. You don’t want to know everything about the services or products you intend to supply. But you have got to have a proper understanding of how it is done, what are the current rates, and so on. If not, you may get easily deceived and may even face troubles when a client asks about certain products. And you have to have an overall knowledge of the quality of the product you buy for the client. For example, drop servicers can sell blog content, websites, computer graphics, etc. Always opt for the high demand but rare to find items.
Advantages and Disadvantages of drop servicing
There are many advantages a person can receive from drop shipping. The first advantage is, you can start your business at almost no cost. You don’t have to have products or any raw material with you. And the next thing is you can maintain a high quality in the services you sell. Here you can review and make amendments to the services you buy before supplying them to the client. So you can maintain the quality. It has less competition compared to drop shipping. So, there is a high chance of earning compared to such other business models. Another advantage is you don’t need to have particular expertise and skill in what you sell. This is really helpful. You don’t have to worry about the returns or refunds here.
If we consider the disadvantages, the low profits can be one major issue. Only the price difference you receive from the client to what you give to the service provider comes as your income. So, you should sell a lot of products to achieve a higher income. Another disadvantage is that the freelancers may delay their work. And also, maintaining customer satisfaction is also a huge issue. You have to check each item before approving it.
Drop servicing platforms
Go for a freelancing website. There are many such platforms on the internet. Make sure you select freelancers with good reputations. Otherwise, you may encounter issues with product quality. Consider their ratings and check their profiles before hiring.
Drop Servicing vs Dropshipping
Drop servicing is almost the same as drop shipping. The same procedure is allowed. The major difference is dropshipping contains physically available products and involves logistics. But drop servicing does not require any of these. It sells services. And if we consider the profit rates, it is much higher in drop servicing rather than in dropshipping.
In dropshipping, the client purchases something from your shop at a retail price and you send the order to a supplier to whom you pay at the wholesale price. But you don’t have to have a physically available inventory. When the order is processed and your payment is done, the product owner sends the product directly to the client under your business brand name.
The same procedure is in drop servicing. Not with physical products but with services. The major disadvantage of dropshipping is it having high competition. This business model has become quite popular and a lot are out there trying it. Drop servicing on the other hand is new and has a lesser demand in the market.