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With tons of options nowadays, picking the right business model is crucial, yet can be intimidating for beginners sometimes!
So, drop servicing or dropshipping? Which business model should you be going after as a beginner?
Dropshipping is the act of selling third parties’ products without worrying about inventory, shipping, and delivery (the supplier will usually handle all of this). Drop servicing, on the other hand, has the same approach, but it’s the act of selling others’ services instead of selling physical products, and it’s also called drop surfing!
Are you excited? Let’s dive in…
What Is Dropshipping
Dropshipping is a retail fulfillment business model in which you don’t need to have products to sell.
It’s basically a partnership agreement but without contracts between parties.
The way it works is simple!
After determining your niche, you would find suppliers in your niche and pick products to sell.
You will take the products’ images and place them in your store! This will give you the ability to write an appealling description for each product, adjust prices and set your own margins!
This is mostly a hands-off process for the seller (the site owner). The supplier usually handles everything, starting with the order fulfillment to delivering the order to the customer’s door.
The dropshipping business model is not new, it has been around since the 1950s. Ever since it has been evolving and becoming more popular as time passed by.
Entrepreneurs have been crushing it with dropshipping and making 7/8-figure a year selling online. The thing that has exploded is the competition which makes it hard for beginners to compete with big guys.
From there, the drop servicing idea was born! So, what is drop servicing? And what does make it a superb alternative for the dropshipping business model?
What Is Drop Servicing
Drop servicing is like the “new baby” born business for dropshipping, and they have the same concept and approach.
However, unlike the dropshipping business model, in drop servicing, you would be selling digital services instead of physical products.
The thing that makes the latter business model more flexible and feasible, especially for beginners.
Being said, drop servicing is the act of reselling others’ services and being a middleman between people who need and want a service to buy and people who are offering their services online.
Here comes the time to point out both business models’ pros and cons to better help you decide which business would be a good fit for your skills and capabilities.
The dropshipping business has been killing the traditional retail industry hard in the recent couple of years.
Below are some pros and advantages of the dropshipping business model:
- For sure, no need to stock any inventory
- A dropshipping business can be all automated by leveraging some tools and softwares, which makes your life easier as a drop shipper.
- It can get super-profitable and fruitful!
Dropshipper’s most significant advantage is that they don’t need to stock any inventory or buy any products in advance.
Unlike the brick and mortar business, you don’t need to buy products that won’t sell! The thing that will cut off your overhead and expenses.
Additionally, dropshipping is a severe business model that can change your life and replace your sucky job with a 7-figure stream of income!
Although the dropshipping has solved serious issues for online sellers, like any other business (or actually like anything in life), dropshipping does also have some cons and disadvantages.
Below are some of the dropshipping cons:
- It may take customers an eternity to receive their orders.
- You will be competing with the big guys!
- The product’s quality can not be guaranteed!
- Refunds & returns can literally ruin your business and reputation!
- Profit margins are being killed!
Shipping periods play a big role in entrepreneurs’ business success.
When starting out as a drop shipper, most people tend to go with the traditional Aliexpress dropshipping.
Aliexpress is a great place for sourcing products and finding suppliers, but most suppliers ship from China.
The thing that will make shipping a nightmare for both seller and customer. Shipping from China to the US, for instance, may take an eternity sometimes, yet prevent you from achieving customer satisfaction.
And obviously, people are more likely to cancel their order and ask for a refund, which means a lost potential client!
Additionally, you have no control over the quality of the products since it’s shipped from China for very cheap prices!
Don’t get me wrong; I’m not trying to say that China’s products are harmful! However, the price can indeed be an excellent factor for determining the quality of the product!
Above all, there’s relatively massive competition in the dropshipping industry nowadays, and you would be competing with big guys!
With that being said, the competition can determine your prices and profit margins as a beginner. You’d need to stick to a specific pricing range.
Drop Servicing Pros
It’s commonly known now that the drop servicing business model has some cool advantages over dropshipping. Below are some of the drop servicing pros and advantages:
- Less overhead
- More flexibility
- There are no long shipping periods
- No order fulfillment involved
- Returns & refunds are eliminated
- Can be a “set & leave” type of business
Various aspects make drop servicing a more relaxed business for beginners.
It doesn’t cost as much as the dropshipping business. You don’t need to get fancy or overwhelmed with a bunch of apps and features.
All that you may need is a domain name and a storefront to showcase your services, so people can come by and buy!
Aren’t you sure what website builder should you be going after when starting a drop servicing business? I’ve written this article ‘11 most crucial drop servicing tips‘ precisely for you! (You can find your answer in Tip #2 – Pick the right platform)
Although dropshipping can be completely automated, it’s an active job that requires a good portion of time and effort to keep monitoring what products are out of stock.
If you’re selling women’s apparel, for instance, the chances are that are some variants run out of stock.
So, you’d need to go and remove them from your storefront and keep adding new products for different occasions and seasons.
That’s not the case with drop servicing! It’s more flexible and requires less effort regarding adding, removing, or adjusting things in the store.
Additionally, since you are selling digital services, you’re way far away from the headache of shipping!
The delivery of services can sometimes be instant, depending on the freelancer you’re dealing with and the type of service you’re selling.
Unless the client is 100% convinced of your service, they won’t bother taking action!
So, if you commit to what you promise and deliver the service on time, you will leave no room for a refund or order cancelation!
Unlike dropshipping! If your supplier didn’t commit to the delivery time, customers are more likely to cancel their order and ask for a refund.
The thing that can harm your business!
Overall, a drop servicing business can be more flexible and a “set and leave” type of business.
You can create a professional sale funnel and use it for years to collect leads and sell them at ease!
Pro Tip: Here’s exactly why you should be building your business mailing list!
Drop Servicing Cons
So, what are the disadvantages of the drop servicing business model? Here are some of them:
- You cannot just sell all sorts of services.
- You can’t control the delivery time of service.
- An inexperienced freelancer can literally ruin your business.
In drop servicing, you can literally sell any service you want online, without being an expert in that particular service or niche!
However, you can’t just sell all sorts of services! You would need basic knowledge and understanding of what it’s about and how it actually works.
When building a drop servicing brand, people don’t know that you’re selling a third-party’s service. Otherwise, they would go and directly buy from them!
In addition to that, you can’t just rely on one freelancer only to accomplish your work.
You would need to back yourself up with a couple of experienced freelancers.
Sometimes, freelancers may not commit to their order delivery promised timeframe; therefore, since you’re not the one who’s doing the actual job, you will need to delay your client’s order, which leads to a bad customer experience.
However, there’s a fix for such a problem. Pick multiple freelancers and run some test orders to see their outcomes and communication. Simple, right?
Drop Servicing Vs Dropshipping
At long last, a neutral and rational comparison between both the drop servicing and the dropshipping business models.
I’m not here to judge which business model is better. Both businesses are serious, legit, and have the power to change your life, forever dramatically!
However, the sole purpose of this blog post is to help you better understand both businesses and see the differences between them so you can determine which one you should be going after.
You’re the only one who can decide which is the best business for you; we are just helping you to make up your mind and determine your new business 🙂
Drop servicing is like the new “Baby Born” of the dropshipping business model!
|Drop servicing is more flexible, easier, and straight forward||Highly protifable||Drop shipping may require more time in the future|
|Profitability||Highly profitable||It depends on the destination & the supplier|
|Shipping||No shipping involved||Sometimes it takes an eternity|
|Overhead||Less overhead required||It requires more to guarantee customer satisfaction|
|Scalability||Both are scalable businesses||Both are scalable businesses|
|Competition||Less competition||Competition is tough|
|Order Delivery||Order delivery can be from as low as 24 hours||It depends on the destination & the supplier|
|Risk Involved||Drop servicing is a lot less risky||Dropshipping is a bit riskier|
|Customer Support||No need for customer support||Solid customer support needed|
– While running a dropshipping business can be an easy job, it could get tough yet an active duty in the long run.
– Drop servicing, on the other hand, tends to be more accessible, more flexible, and straightforward for both the short and long term.
– Over the years, entrepreneurs have been crushing it with dropshipping, and making 7-8 figures a year!
Dropshipping is a great business model, but most people don’t know how it does work!
– Drop servicing is the successor business of dropshipping. It’s a brand new business model that has substantial potential financial gain and could be highly fruitful and profitable!
– Shipping could be a conflict in dropshipping, especially when shipping from China to the US, for example.
Sometimes, it takes an eternity for customers to receive their orders!
Additionally, you need to keep following up with customers and provide tracking info. That would cost you both time and money!
– The coolest thing about drop servicing is that you’re selling intangible products, digital services.
Therefore, there’s no shipping involved in the process, and delivery time could be from as low as 24 hours!
– The dropshipping business model requires a little bit more overhead than the drop servicing one.
First of all, you need a functional professional theme and leverage some tools and apps to make the process smoother and licensed (which will add up to your overall costs).
– In drop servicing, your costs, and overheads are limited.
You don’t need to get fancy! All that you may need is a sale page where you showcase your service and promotion!
– There’s no scalability limitation when it comes to dropshipping!
If you were able to figure out what’s your winning product and targeted your ideal audience, there are no limitations on how much money you can make!
It’s like putting in a $100 and getting in return $200, for example! It’s like printing money! You just need to know what you’re doing!
– Tens of hundreds, if not thousands, of websites, are being created every single day.
People are in continuous need of services like content marketing, logo design, website design, eCommerce website setup, and more.
Also, if you were able to find a service that has a positive trend with a relatively low competition level, there’s no limit on your potential financial gain when running paid ads!
– While competition is an excellent indicator for marketers, it could be a massive blocker for getting some businesses profitable!
In dropshipping, be prepared to compete with big guys in the market, which is tough!
– As I’ve mentioned earlier in my blog post, thousands of websites are being created daily, so digital services are continuously needed as long as the internet exists.
If you’re able to make your site look legit and professional, you’re more likely to be able to attract clients and receive orders!
– Achieving a 4-7 shipping period is considered fast and satisfying for both businesses and customers!
– However, in drop servicing, the delivery time is insane! Order delivery is quite instant!
You can deliver orders in as low as 24 hours! It depends on the sort of service you’re selling and the freelancer you’re dealing with.
– It’s known that a dropshipping business is riskier than drop servicing since it requires a bit more resources, apps, overheads, and more!
Additionally, if you’re looking forward to building a reliable brand and business, you’d need to order a sample of the products you are willing to sell to make sure of the quality.
Also, you would need to leverage some paid tools and apps that make your business more accessible and better.
– On the other hand, a drop servicing business tends to be less risky since it doesn’t require as much as dropshipping!
– Customer support plays a significant role in any business’s life cycle.
As a drop shipper, you should invest in providing a superb customer support system to fulfill your dream customers’ queries and questions immediately!
– It can get simpler when selling online services!
If you’re able to provide enough info about your service and deliver what you promise, email support could be more than enough!
Unlike dropshipping, there’s no need to worry about shipping, tracking, or whatsoever!
Drop servicing/shipping Courses
Drop servicing is a brand new business model that you can barely find information for on the internet.
There are no drop servicing courses online at the moment. However, a dropshipping course would definitely do the job for you since they have the same approach!
I have created a free dropshipping course for EcomDimes’ readers, you just need to implement the same strategies, but you’d be selling services instead of physical products.
Nobody was born with knowledge! You should learn so you can look authoritative in your clients’ eyes, otherwise, they would just simply not buy from you!
Picking the right business could be tough and intimidating sometimes. So, have you ever wondered which is the right business for you?
In this post, we’ve aimed to help you decide which is the right business for you by comparing both the drop shipping and drop servicing business models!
So, what business are you considering starting with? Let me know if you need further assistance and I’d be more than happy to help 🙂
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