What is dropshipping?
Dropshipping and drop servicing are both business models that follow the same concepts. Both of these concepts create an online store to provide products and services to customers. Dropshipping follows a very simple pathway. The drop shipper acts as the middle man between the product owner and the customer. An inventory or an actual physical store is not required in dropshipping. The seller creates an online shop and he takes orders from the customer. When an order is received, as he doesn’t possess the required products, he contacts a third party supplier and places the order.
Drop servicing and drop shipping trends here.
He receives the payment from the client and pays the product owner, keeping a profit for himself. Then he makes the product owner supply the products directly to the buyer. Dropshipping follows that procedure in its business model. Most of the time the seller sells those products at retail price but obtains the goods from the supplier at wholesale price. That is how he gains a profit through this concept of business. Dropshipping has become quite popular because it is really easy and profitable. Another difference between these two models is that in drop shipping, first, you check whether the products you are going to market are available with the product owners. But in drop servicing, you wait for a customer to place an order and then place the order to a service provider.
Main differences of drop shipping compared to drop servicing
On the other hand, the drop servicing model deals with services rather than physical products. This makes this model much easier and beneficial. Drop servicing also follows the same prototype as drop shipping. But instead of dealing with products, this sells services bought mostly from freelancers. For example, drop shipping may sell electronic items where drop servicing sells logo designs or blog content. This model is much easier as it does not involve any product. So you don’t have to worry about any returns or refunds.
Those are the major differences between the two different business models. Both are quite popular and have a high demand in the business field. But drop servicing is relatively new compared to dropshipping. This may be of lower profit than drop shipping. But it is much better than drop shipping in several aspects. They both have advantages and disadvantages on their own. Let’s see what they are.
Pros of drop shipping
The first thing is that this business model is very profitable. Compared to drop servicing, the profits are higher. The more sales you make and the higher the value of the items you sell, you can achieve a higher profit. But as drop servicing basically deals with freelance content like logo designs, blog content, video editing, you have to make a lot of sales to earn a higher profit.
Unlike drop servicing, drop shipping has already entered the market on large scale there are many facilities built for them. Drop servicing is a bit new and still not very popular among people. One can automate his business tool with templates and tools already available in drop shipping. They help a lot in handling and maintaining your business during your busy hours.
Another advantage of drop shipping over drop servicing is that there is a wide variety of products that you can sell. They can have a wide variety and a variety of prices and brands. They can be electronic items, or beauty products or sports equipment, and many more.
Cons of drop shipping
On the other hand, there are several disadvantages to drop shipping compared to drop servicing. The major point is a risk. As drop shipping involves physical products, sometimes of high value, there is a higher risk in it. As you don’t get to see the products that the product owner ships to the customer, there may be damages or even fake items. Many difficulties can arise in such situations as the seller is responsible even though the products were not his.
Another issue is the shipping may cost a longer time than expected. This may be a huge issue as the customers get impatient. But in drop servicing, there is no such issue as they sell services, which can be transferred in a matter of time. And there is an issue with the quality of the product. Most of the products sold are from China. So there is no guarantee about the quality of the products. There may be duplicates or broken items. So in drop shipping such problems can be abundant. But there is no such issue in drop servicing as the services can be checked for quality and other issues.
And there may be refunds and package returns too. These can be very problematic situations. You don’t have to worry about such situations when drop servicing. And also drop shipping has become too much popular over the years, so there is a huge competition there. But drop servicing opens up new opportunities for new sellers.
Why drop servicing is a better business model
As discussed above there are many advantages and disadvantages of both of these models. But when considered in general, drop servicing offers more benefits and is safer with lesser risk. And also you can create a brand for yourself and make connections with important customers. You can develop your brand with quality products and become recognized as a good brand name with time. There are no issues with damaged products and inventory issues when you are dealing with services rather than products.
Drop servicing requires no skills at all. And also it does not require an initial capital which is a really good opportunity for beginners. There are fewer chances of failing as this model of business is easy to understand is important. Even though both models are good, drop servicing can be considered the better option.