What is drop servicing business?

 by Lisa W. - November 4th, 2020 | Last Updated on October 2nd, 2020

Drop servicing, also known as service arbitrage is a business model that allows you to sell services to your clients. However, you do not provide the services yourself. You hire a third-party service provider to provide the services.

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How is drop servicing done?

If you compare this business model to the real world, it is like a contractor hiring a sub-contractor for the architect of a building. Even if you are hiring another service provider, you are still legally responsible if anything bad happens.

How does it work?

In the online world, you’d find millions of clients need guest posts, blog posts, video editing, etc. The clients reach out to you for the services and you provide them the services through outsourcing. You can find hundreds of freelancers on the freelance market website to do the work for you. 

The difference between what you pay the freelancer and what you charge your client is the profit you make through drop servicing business. That’s why it is best to be aware of the service provider’s charges.

How to get started?

When starting your drop servicing business, the first thing you should have is the list of service providers and info about the services that have high demand.

For instance, if SEO services are in demand, you can hire someone who has command over this service. But you’d be the one to scrutinize the task at the end. Simply put, you would have to be the editor yourself. This means that you must choose the service you have knowledge of.

The next step is to find a platform to promote and sell your services. An ideal platform is a website as it shows professionalism and the strength of your newly started business. However, you can also use platforms like Shopify to host your store.

Although Shopify is used majorly for dropshipping, you can also replace the physical products with services. 

The last but the most important step is to promote your services by establishing a marketing strategy. Make sure that your strategy is solid as you’d be building lifetime ties with the clients.

Benefits of drop servicing 

• In the Drop servicing vs. dropshipping complain, drop servicing proved to be less risky as you won’t have any worries about exchanges or refunds
• You do not need great skills to start
• It does not require a lot of money to commence

A drop servicing business is a lucrative business model if done right. Therefore, you need to spend a lot of time researching the services you’d be providing. Delivering high-quality services is the key to success.