When it comes to starting an online business, there are many options out there. Two of the most popular choices are dropshipping and drop servicing.
But what's the difference? And which one is right for you? In this article, we will break down the differences between dropshipping and drop servicing, so you can decide which option is best for you!
What is dropshipping?
Dropshipping is a business model where you sell products without carrying any inventory. When someone places an order, you simply contact the dropshipping supplier, who will ship the product directly to the customer's door.
Dropshipping is a great option for new entrepreneurs, as it requires very little startup capital, and there are no ongoing costs. You also don't need to worry about shipping or handling products yourself; the supplier takes care of that!
Pros of dropshipping
- Easy to get started. Dropshipping is a relatively simple business model to start up, and you don't need to have any experience in the industry to begin.
- You're not responsible for shipping and fulfillment. This can be a major advantage if you don't have any experience or skills in this area. All of the logistics is taken care of by the supplier, which also saves you time and money.
- Low overhead costs. Dropshipping doesn't require you to have an inventory, so you don't need to worry about storage or order fulfillment costs.
- A wide selection of products to choose from. Dropshipping allows you to offer a wide range of product categories, so it's easy for you to find an area that matches your interests and skillsets.
Cons of dropshipping
- You don't have direct control over your inventory. When you dropship, you rely on your supplier to send you the products that you have sold. This means that if they do not have enough stock, or if they decide to stop selling a particular product, you may be unable to fill any orders that come through.
- You're not in control of your shipping. Dropshippers are responsible for the cost and timeframe of delivery. Some dropshipping companies offer free shipping, but there will always be a price to pay at one end or another. If you have customers expecting their orders by next Wednesday and they don't arrive until Friday, this is likely to upset them.
- You're at the mercy of your supplier's reputation. Dropshippers rely on their suppliers to ensure that their goods arrive in a timely manner and are of good quality. If the supplier is unreliable, this will reflect poorly on your shop. Don't forget to ask good questions before working with someone.
- Competition is high. With millions of online stores, competition for sales can be fierce. This means that it can be difficult to make a profit, especially if you compete against big brands with a larger budget for marketing and advertising.
How do you build a dropshipping business?
If you're interested in starting a dropshipping business, here are a few steps to follow:
- Choose a niche. When it comes to choosing a niche for your store, the sky is the limit! But make sure to choose something you're passionate about, as this will make running your store much more fun.
- Do research on your competition. Keep track of your top competitors' information, especially their websites and pricing. Keep a notebook with you to take notes on the go. Make a spreadsheet so you can easily refer to it when making decisions for your store.
- Process orders and ship products. When you dropship, you process orders and ship products from your warehouse. You partner with a supplier who manufactures or distributes the products you sell, and they ship those products directly to your customers’ doors.
- Find a supplier. Once you've chosen a niche, it's time to find a supplier. The best way to do this is by looking at our list of the best dropshipping suppliers worldwide! Make sure to compare prices and terms between different suppliers before making a decision.
- Set up your store. Once you've found a supplier, it's time to set up your store. This can be done in a few minutes using ecommerce platforms like Shopify or WooCommerce.
- Start marketing. Once your store is set up, it's time to start marketing! The best way to do this is by creating content and driving traffic to your store.
If you're interested in starting a dropshipping business, check out our step-by-step dropshipping checklist here!
What is drop servicing?
Drop servicing is a business model which can be seen as an alternative to dropshipping, where you sell services without doing the work yourself.
When a customer places an order, you simply contact the service provider (or contractor), who will then perform that service for your client.
Drop servicing has become increasingly popular in recent years, thanks to top free platforms like YouTube to learn from, which make it easy for anyone to start their own online store selling services rather than products.
You can also offer services such as social media management or SEO optimization on your drop servicing website!
One of the advantages of drop servicing is that it can be completely automated, so you don't have to worry about anything. The only expenses are up-front payments when clients place orders on your site, then payments every week or month.
Pros of drop servicing
- Broad services. Drop servicing offers a much wider range of services that you can offer to customers, making it easier for you to find an area of expertise with significant demand.
- No previous experience is required to start drop servicing. Dropshipping requires you to have a good amount of knowledge about the products you're selling so that you can answer inquiries from your customers and provide them with adequate information regarding their orders.
- Drop servicing can be started with little to no money upfront. Dropshipping requires you to have a small amount of capital to purchase the products that you'll sell and pay for your business' setup costs and advertising expenses. Drop servicing does not require this level of investment because all it involves is marketing your services.
- A low-maintenance budget. Drop servicing also has lower running costs than dropshipping because you don't need to maintain an inventory of products that other people are selling, and your main expenses will be marketing, buying the product, and advertising.
Cons of drop servicing
- Quality control. The major disadvantage of drop service is the lack of quality control. You don't have any say in the quality of your order since you aren't performing it yourself.
- Morality issues. There's always a moral question surrounding drop service. This is due to some that do not disclose their outsourcing or employment of third parties. As a result, the client assumes that the individual they're dealing with is actually responsible for the work.
One approach to work around it is to be upfront and honest about the job procedure. Tell the customer that you are in charge of a team of competent freelancers who will accomplish the work and deliver the outcomes.
How to build a drop servicing business?
If you're interested in starting a drop servicing business, there are a few things you need to do first:
- Choose a niche. This is important because it will help you focus your efforts and make it easier to find service providers who can help you meet your customer's needs.
- Create a website. This is where you'll be listing services for sale. Now that you have a website, it's time to start filling it with your services. This is going to be your primary means of selling your services, so make sure it's well-organized and easy to navigate.
- Find service providers. It's important your service provider has experience in the service you're selling to your customers. Examples of service providers are Fiverr or Upwork.
Dropshipping vs. drop servicing: What's the difference?
Dropshipping is a business model where ecommerce entrepreneurs sell products without having to carry any inventory.
When a store owner receives an order from a customer, they simply contact the supplier, who will then ship the products directly to the customer's door.
Drop servicing is similar to dropshipping, but instead of selling physical products, you're selling services. Drop servicing works like this: clients come to your website and browse through the various service packages you offer.
They pick what they want and submit an order form with their details (i.e., the service they want, when it should start, how long it will last, and so on). You then contact them to confirm everything and get started.
So what's the difference?
The main difference between dropshipping and drop servicing is that you're selling physical products with dropshipping, whereas, with drop servicing, you're selling services.
Other than that, there aren't many differences. Drop servicing is just like dropshipping and works in the same way; you receive an order from a customer and then contact your supplier to fulfill it.
Drop servicing apps let you add services from various suppliers into your drop service store in just a few clicks.
If you're looking to start a business, dropshipping or drop servicing are great options. They're both low-cost and relatively easy to set up, so you can get your business up and running in no time.
Which one you choose depends on what you want to sell. If you want to sell physical products, then dropshipping is the way to go.
If you want to sell services, then drop servicing is the way to go. Whichever route you decide to take, make sure you research your chosen industry thoroughly, so you know what you're getting into.
Which one is more profitable?
You might be wondering which is more profitable, drop servicing or dropshipping.
Let's try to find out!
Both drop servicing and dropshipping can be profitable businesses, but there are some key differences to consider.
When it comes to ease of the setup, dropshipping wins hands down. You can create an online store in a matter of minutes and start selling products without having to carry any inventory.
Drop servicing is a little more complicated to set up than dropshipping, but it can be profitable in the long run.
So, which is more profitable?
It really depends on what you are looking for in a business model. If you are looking for something that is easy to set up and requires little upfront investment, then dropshipping might be the right choice for you.
However, if you are looking for a business model that gives you more control over your products and inventory, then drop servicing might be the better option.
How much money can drop servicers make?
The amount of money that you can make in drop servicing varies depending on what services you offer, how many clients you have, and the rates you charge.
The idea that one model is superior to the other is a common mistake made by new dropshippers and drop service providers. Both business models have benefits and drawbacks, and both will present issues along the way.
It's also crucial to think about where your area of expertise lies. Some people may be able to use both models, while others may only be able to pick one or the other.
In any case, a thorough study is required, regardless of the business model chosen.
Online marketers are naturally eager to get started as quickly as possible, but rushing things can often be a waste of time and money.
There are a lot of ways for people to generate money via dropshipping and drop servicing; however, it's critical to offer a service that you're happy with. (And that your customers are happy with as well!)
Clients will still demand a rapid response to their inquiries, even though services and goods are provided by a third party.
Taking the time to examine trends, look for special deals, and figure out where you fit in may lead to new opportunities down the road.
Which business model is right for you: Dropshipping or drop servicing?
This depends on you! It all comes down to your goals, skills, and expertise.
Here are some things you should consider that will make the choice easier:
A few factors you should consider before getting started
- What services can I offer? Some of the most popular services that are offered through drop servicing include, web design, graphic design, data entry, copywriting, search engine optimization (SEO)
- Can I find a supplier for the products I want to sell? The best way to find suppliers is to use a directory like AliExpress, which allows you to search for products by keyword or category.
- Do I have any experience in this field? There are certain things you need to be aware of before starting out. For example, dropshipping is not a get-rich-quick scheme. It takes time, effort, and patience to build a successful dropshipping business.
- How much money do I need to get started? When it comes to starting a drop servicing or dropshipping business, you don't need a lot of money. In fact, you can start most online businesses with very little upfront investment.
However, you will need to invest in some essential tools, such as a computer, software, and internet connection. Additionally, you will need to purchase any inventory or services that you plan on selling.
You should also consider your budget and how much time you're willing to put into your business.
Dropshipping is a more hands-on approach, so if you're looking for something that doesn't require as much effort, drop servicing would be the better option.
However, keep in mind that quality control is not as stringent with drop servicing, so it's important to do your research before choosing a supplier.
Cost and time investment
Drop servicing can be less expensive. However, it does require more of an initial investment since you'll need to invest in tools and resources to find and vet freelancers.
As mentioned above, most of the time, dropshipping is faster to set up.
Drop servicing can be a great opportunity for both new and experienced entrepreneurs. But, there are certain skills you'll need to succeed. You'll need to be able to effectively manage your time, communicate with clients, and oversee the work of your team of freelancers.
Drop servicing allows you to focus on customer service and building relationships with clients. Drop servicing can be a great opportunity for both new and experienced entrepreneurs.
Shipping and fulfillment
Dropshipping is the process of taking orders for products from manufacturers and suppliers without having them in stock.
Conversely, merchants who utilize fulfillment companies contract with them to outsource the work of storing, processing, and transporting inventory that they already own.
Do you want to find your ideal dropshipping target audience? Check out this article here.
Compare other business models
Not sure yet if drop servicing or dropshipping is the right fit for you? Check out our other comparison articles below:
- Dropshipping vs. Affiliate Marketing
- Dropshipping vs. Print On Demand
- Dropshipping vs. Private Labeling
And to compare more business models, visit the comparison hub!
Dropshipping is an easy way to start your business without having to invest in inventory.
If you're looking for a less hands-on option, dropshipping may be the best choice for you! But if you're interested in selling services, then drop servicing might be for you!
The decision is up to you - but whatever route you choose, know that there's no wrong answer.
Just don't forget that whatever route you go, there are free resources for you to learn more! For example, check out these free dropshipping courses.
Which one of these options sounds like it could work out best for your company? Let us know in the comments below.