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After dropshipping: Now online adventurers are trying "drop servicing"

It is a dream that many still want to live: to earn good money on the Internet independently and without great effort. Now it seems like a new trend is emerging for one-man businesses looking for big profits: drop servicing. We show what is behind the arbitrage model and whether the strategy can really lead to big money.

Dropshipping is now known to many: building a shop, presenting China products in a slightly more “valuable environment”, customers shopping on Instagram or other platforms and when they order something, simply pass the order with the customer's address to the China shop. Here the product is of course much cheaper than in your own shop. The Chinese platforms such as Aliexpress then send the goods directly to the customer. With this method, individual dropshippers are said to have made a profit of 10,000 euros per month without ever having held any goods in their own hands. In the past few years, an extremely lively scene of “get rich quick” coaches has emerged around dropshipping. A new arbitrage model is now in the starting blocks in the USA that promises even less effort: drop servicing.

The monthly search volume for the keyword "drop servicing" and the growth in the past year (source: Exploding Topics)

This is what lies behind the service arbitrage

As the name suggests, the principles of dropshipping and drop servicing are similar. Both revolve around arbitrage, i.e. taking advantage of price differences. When it comes to drop servicing, one-man companies usually offer a digital service - this ranges from logo design to SEO advice and website design. If a customer books one of the offers, the provider goes to a freelancer who offers the complete service at a significantly lower price and forwards the order there (which the actual customer naturally does not know anything about). The freelancer principle of many agencies or the outsourcing of large companies is thus also available for Internet adventurers.

The big advantage over dropshipping: Since everything is digital and no goods have to be sent, there cannot be long delivery times (unlike physical goods from China) that could annoy customers. There is also no risk of suddenly sold out goods at the Chinese retailer with drop servicing. And: It opens up the opportunity to retain clients in the long term and to be repeatedly commissioned by them to provide services - without having to repeatedly acquire new customers and thus incur marketing costs. "I liked the idea of ​​selling high-priced services and dealing with few people," says self-titled drop servicing expert Darius Gaynor. “It's best never to be the smartest person in the room and do everything yourself. It's best to have a team - even if they work remotely. "

According to his own statements, he generates over 4,000 US dollars in sales in one month with drop servicing. Dylan Sigley, who also works in drop servicing, speaks in a YouTube video of a 12,000 US dollar order that he bagged just six days after the start of his project.

These platforms make it easy

As with dropshipping, various tools should be able to help platforms get started with drop servicing relatively quickly and easily. On the one hand there is the shop software to present the services offered. Many simply use Shopify here too. Instead of products, the shop software can simply be used to sell a service, such as a cover design for an e-book.

Tools like Kartra and Clickfunnels can relieve the lucky knights of even more work. Such platforms are marketed as an all-in-one solution to easily set up a landing page and directly build a "marketing funnel" to get visitors to a mailing list (e.g. if the shopping cart is canceled) or upsells to generate. Anyone who starts in drop servicing usually sells a service in various stages of expansion (for example social media advice for one platform each, or for two, three or six networks). The sales funnel platforms seem to be even more suitable than Shopify for such models.

For drop service entrepreneurs, the shop is only half the battle. You also need cheap freelancers. And you can find them on platforms such as Fiverr, Upwork, People per Hour & Co. Above all, Fiverr is now active and known worldwide. There are logo designs for under ten euros or the setup of a Facebook campaign for under five euros.

Extremely cheap offers for a logo design on Fiverr

Finding the right niche

Platforms like Fiverr and Upwork also directly help entrepreneurs find their niche. In various YouTube videos, drop servicing makers show how they first scour the Fiverr categories for services that are cheap to have there. Then they use Google's Keyword Planner to test whether their niche has an acceptable search volume and how strong the competition is for the most important keywords. In contrast to dropshipping, where China products are mostly advertised via social ads on Facebook, Instagram & Co. or influencers, Google is the most important platform in drop servicing. High-priced services are not bought impulsively (unlike fidget spinners and other popular dropshipping products).

Upwork is a freelancer platform from the USA, which also offers companies the opportunity to advertise their jobs and obtain offers from agencies. Anyone who wants to get their feet on the ground in drop servicing can research the areas in which there are many high-priced tenders and apply directly with their "freelancer team". This is how one-man entrepreneurs avoid the tough battle for rankings on Google and save Adwords ads on their keywords.

Drop servicing entrepreneurs can apply for jobs on Upwork - and then pass the tasks on to freelancers.

Do the soldiers of fortune have the right nose?

But is drop servicing really as lucrative and easy as it might seem at first glance? That is at least doubtful. Although the margins are higher than with dropshipping, at the same time the volume is much lower - also because the services are often much more niche than a Chinese product could ever be. How many buyers can you find for an e-book cover design or even classic marketing services such as SEO consulting or the design and placement of social ads? In addition, many potential customers compare prices online and in the end often prefer the cheapest offer - so in case of doubt the margin hoped for at the beginning crumbles. This could even be further depressed if drop servicing entrepreneurs have to spend a lot of money on user acquisition via Google ads. Another problem: Platforms like Fiverr have become better known and more trustworthy at the same time. So why shouldn't customers place their order right there?

And even with a successful order, doubts arise as to whether drop servicing is as easy to implement as expected. Since many services are personalized, the business is much more difficult to scale than is the case with dropshipping with products from China. Customer briefings must be obtained and passed on to the freelancers. If the customer is dissatisfied, the money will be returned in case of doubt - but the remote workers still have to be paid. "I only teamed up with people who had shown me their portfolio beforehand," says drop servicing maker Darius Gaynor in a Reddit post. "I was then even able to use their portfolios and case studios to convince potential customers."

The gurus are already coming out of their holes

Despite all the problems of the business model, many self-proclaimed drop servicing experts are already occupying the trend topic. A Google search only provides instructions on how to get started in the business. At the end of every text? The link to the whitepaper or an e-book on the topic. Many “gurus” also present themselves on YouTube, who show in videos how they set up a drop servicing business themselves - of course, in order to then refer to their online course, for example. So maybe we're seeing a trend here that will ultimately produce more online coaches than actually successful entrepreneurs.

Despite all this, the topic seems to be attracting the interest of many online gamblers. On Reddit, over 2,400 users have come together in the subreddit (subforum) "dropservicing" to exchange ideas about the best strategies. Dylan Sigley's Facebook group, who teaches an online course on the subject and claims to have made $ 12,000 in sales with just one job, has over 7,000 members. So the whole area is in the making - it will be difficult to determine from the outside, even in the long term, whether there is really an agency behind certain offers, or just a sole proprietorship who is outsourcing all tasks to Fiverr freelancers.