If you are not sure whether to dropship or not, then maybe you should consider an alternative.
What if I tell you that there is a business model that is really similar to dropshipping, but you will not sell physical products?
The new trend in the online business world today is called drop servicing. No, this is not dropshipping, but they are like twins.
Drop servicing is a business model where you sell services. However, you are not the one who will do the service. You have to find people who will do it for you. Your job is to market these services, and earn a profit from the orders.
As you know, the internet cannot happen without people. A photo or video will not magically create itself. A website will not launch itself. For every thing you see on a website, from vides to blog content to SEO techniques, someone did it.
Today, I will show you how drop servicing works, and provide you the blueprint you need to get started.
What is drop servicing?
Drop servicing is also called service arbitrage. What this means that you find clients who need a service, but these clients do not know that you are hiring, or outsourcing, the services they asked you to do.
In the physical world, it is similar to sub-contracting. Sometimes, there are contractors who will show you the blueprint of a house you want, and they will speak to you about the cost of the project plus the timelines.
The thing is, these contractors do not have their own carpenters or architects. They sub-contract this deal, but they are still legally answerable to you should anything happen, like a delay.
In the online world, you can find clients who need graphic art, or probably clients who need blog content. Once these clients order from you, you place the order to someone you know who does that job. These people are called freelancers, and you can find them in freelance market websites.
Now, before you do this, you have to know the price of the seller, or the freelancer. This way, you can mark-up on that price. The price difference between what you charged your client and what the freelancer is asking for is your profit.
What can you drop service?
You can drop service anything. The thing is, you should not drop service something that you do not understand, or you will fail.
For example, you should not sell SEO or PBN services if you have no clue as to what those services really are. You do not need to be an expert about a particular service, but you need to understand how it works.
For example, you can easily sell blog posts, then hire writers. This should be easy to do, as you do not need to be an editor yourself to know high-quality content from bad ones.
Here are some examples of services that you can sell:
- Web building
- Guest posts
- Blog posts
- Social media management
- Graphic arts
- Ad copywriting
- Video creation or animation
- Video editing
The list is really endless. It is you who will put a limitation to what you can offer.
As always, you need to study what service is in demand. Since this is a new concept, you will not find resources that can show you data about this. In this case, your best option is to use Google Trend.
Take a look at the screenshot below. We searched for the term “freelance writer” for the last five years worldwide. We can see that there is a strong demand for this.
With this data, you are sure that there are people looking for the services of a freelance writer. Now, the next step is to find a good one whose price is affordable.
The next step is to market that service.
What do you need to get started?
The first thing you need to get started is a list of services, and a list of service providers. As shown on the example earlier, we know that there is a demand for, a freelance writer globally.
Now, our next step is to find a writer who can meet our standards. This step is critical. You have to spend money to test the quality of work of several writers. Once you have found one, you now have a provider.
The next thing you need is a platform. The most ideal in drop servicing is a website. While you can use social media to market your services, very few people on social media will trust you if you do not have a website.
The best web builder you can use are the same platforms that dropshippers use, like Shopify.
What is Shopify? It is an online e-commerce tool that allows you to create a store.
In that store, you will get the following:
- Payment processing system
- Marketing tools
- Social media integration
- Email subscription
Even if Shopify was built for physical products, all you need to do is to replace the product pages with services. In the platform, you have areas where you can type the service details, price, and you can also add other variants.
Each Shopify store already has a built-in Add to Cart button. What this means is that your customers can now order directly from their devices.
The last thing you need to get started is a marketing strategy. Looking for a service provider and building a website are the first steps to getting started. The hard part is marketing it.
Where can you find drop services?
The best place to find drop service is a freelance marketplace. In these places, freelancers post their profiles for clients to see. On the other hand, you can also post a job and then freelancers will bid.
Examples of these marketplaces where you can register and hire freelancers are:
- People Per Hour
- HubStaff Talent
You can take any of the two approach. Before you hire someone for your test, take the time to review their profile, feedback rating, length of years in the industry, and how much they are charging.
From there, you can create a list of these freelancers, and pick the top three that you like. Order their service, and see who performs the best.
You should also take the time to study the rules of the freelance marketplace. Some do not offer a payment system, which means you can get burned, and you have no way of getting a refund if the service provider did a bad job,
The best ones must have a Resolution Policy where you can file a complaint if the service provided was bad. In this case, the company will refund you your money, and then you can use that money to hire another one.
You should also check how much the freelance market place charges the freelancers, as this has an impact with how they price their goods. Fiverr charges 20% of the cost from the freelancer. If a freelancer charges $100 for the service, he will only get $80.
In that case, the service providers here will certainly not charge you $100, but at least $120, so they can cover this fee. Fiverr also charges clients around $1 to $2 per project. This is on top of the 20% fee that the freelancer pays.
These are the reasons why you need to spend money before you can start this business. You need to take into account the time it takes to complete the project, the price, and the quality of the service, and the fees.
What are the limitations of drop servicing?
The main limitation of this business is your own expertise. While you can price the services as much as you want, you cannot sell all sorts of services.
For example, you cannot offer a medical transcription service if you do not know what it is. Same thing with data entry, lead generation, and other services where you have no background.
Another limitation is your level of control. Not all freelancers can deliver at the time you expect them to, and you cannot do anything about it. Most of these are just part-timers. If a freelancer will take three days to write an article, you need to add at least two days to that.
Because you have to prepare for some unknown emergencies, like if the freelancer did a bad job and you need to ask for a revision. Or worse, if you need to look for a new freelancer.
Again, you should not start this business if you have not tried the service provider yourself. The client does not know that you are outsourcing, and you cannot make excuses if you fail to deliver.
How much will it cost to do drop servicing?
The cost really varies, but the smallest you should prepare is $29 per month for your Shopify store. The other cost is going to be your domain name, which can be free for the first year if you happen to receive a promotion.
The other cost, which will seriously vary, is the trial for your freelancers. If you need a writer, and you can find them for $30 per article on Fiverr, you will need to spend $90 for three freelancers to take your test.
Once these three are done and they have submitted the sample article to you, you now found a writer you can work with. But what if you also want to offer SEO, or graphic arts? You need to spend money on these two services again to find the right provider.
Should I take a course to do drop servicing?
Yes, you should take a course in drop servicing. The problem is that there are no courses for this as of this time. What you can do is to take an e-commerce course for dropshipping, as the approach and business style are the same.
The only difference is that you will not sell physical products, so you do not need a supplier. However, the skill you need the most is marketing, and using social media to your advantage as you sell your services.
You will find it really difficult to make this business work if you do not have marketing skills. To begin with, why would a client order from you if they can easily go to Fiverr? It is all in the packaging. You can charge more if you know how to market your services.
Drop servicing may be the next big thing. It is easy to implement, and it is easy to earn. The thing with drop servicing is that no physical goods are involved.
You are not going to lose money on shipping costs, and you will not have a lot of customer complaints for bad products because each completed service will pass through you.