by Lu Wee Tang
March 7, 2021

0 Comments

While the dust is settles on the drop shipping trend, a new type of drop-related business is gaining popularity: drop servicing.

As the name implies, in a drop servicing business, you're not delivering physical products to your customers, but digital services instead.

It's hot, it's trendy - but should you jump on the drop servicing bandwagon, and make yourself filthy rich... 

Or is it just another hype you should just let fizzle out?

What's drop servicing?

;tldr

Most people are familiar with drop shipping, but what is drop servicing?

While "drop servicing" is a new buzzword, the idea behind it isn't. In fact, it's been around for a long time. 

It is just a new way of describing a business model that has been around for a long time: outsourcing.

Outsourcing? What's that?

Outsourcing simply means: you get the clients, and pass the work to someone else.

Like drop shipping, you or your brand will be the one your client interacts with, while the person or team you outsource to does the work.

While you can outsource just about any type of service, in the context of drop servicing, it's usually a digital service.

This include work like Social Media Marketing (SMM), Search Engine Optimisation (SEO), Graphic Design, website design, copywriting and video editing, to name a few.

You make money through service arbitrage - charging clients a higher rate than what you pay the person or team you outsource the work to. 

Here's a nifty drawing to illustrate:

Pretty neat idea, right?

Let's dig a little deeper.

The advantage of drop servicing...

... is more money, less work for you. 

Instead of selling the service, AND doing all the work, you focus on closing the sales, sit back and let the money roll in.

(Or at least, that's how it will be when you've got every part of the process tinkered with - more on this later.)

Why drop servicing, why now?

The world is changing. To be exact - it's going digital (cliché, but true). With the pandemic keeping people indoors and borders closed for an indefinite period of time, buying things online has exploded.

The hair salon around the corner from where you live? They might have to keep their doors physical doors closed, but they could open a Shopify store, and sell hair styling things online.

If they've been a hairdresser all their life, guess what - they're going to need some help opening an online store, doing their marketing, and configure their store to fit their business model.

Check out this Google Trends graph for "digital marketing" - showing an all-time high in the last 5 years:

It's not hard to see that digital marketing has grown exponentially since COVID-19 hit, and is only going to get bigger.

What's the catch?

Of course, there is a catch. I'm gonna be completely honest with you - 99% of people who try drop servicing will probably fail (sorry to break it to you).

Here's why:

To succeed in this business, you need to be good at a whole bunch of things - knowing what services people need, getting clients, keeping client accounts, working with freelancers, and project management.

That was quite a chunk.

If you've never run an agency before, you'll need to invest some time and money to learn the ropes before you start seeing a steady stream of income from this business model.

Drop servicing vs drop shipping

How they are similar

In both cases, you are at the forefront of the business. It's you, your brand and your support staff your customers will talk to.

You focus on marketing and selling and leave the fulfilment to someone else.

How they differ

When you drop ship, you sell physical products, but when you drop service, you sell a digital service. This is the main difference.

Drop servicing vs Affiliate marketing

How they are similar

With drop servicing and affiliate marketing, you market a service to potential customers, and leave the fulfilment to someone else.

How they differ

With affiliate marketing, you earn a commission when you sell someone else's service. Once the customer signs up with the company you are marketing for, they take care of everything from onboarding and client management to job performance and project management.

Drop servicing is where you make money through service arbitrage. While you have someone else to do the work, you still have to handle onboarding, client management, work delivery and project managent.

Frequently asked questions about drop servicing

How much do you need to start a drop service business?

That depends on how you decide to run your agency, and can vary from as little as the cost of a premium LinkedIn account to a few thousand dollars per month if paid ads are the primary medium for lead acquisition.

Should I buy the Drop Servicing Blueprint course?

I haven't personally purchased the Drop Servicing Blueprint course, so I can't offer any advice.

Bottom line: Drop servicing is legit (but not easy)

Drop servicing is definitely legit.

With an ever growing interest in digital marketing services around the world, there's no doubt that there's a lot of money to be made in drop servicing.

But it's not as easy as it looks. If you're starting from the bottom, without any experience in the service business, you have to be willing to learn.

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About the author 

Lu Wee Tang

Lu Wee is the founder and writer of Entrepreneur Campfire. She started her journey in e-commerce and SEO after leaving her engineering career behind. Now, she consults small and medium businesses in Malaysia and Singapore on how to digitise and grow their business.

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