Drop servicing: the new moneymaker for digital entrepreneurs

Darius Gaynor entered the world of “drop servicing” just over a decade ago, when he was looking to make money online so he could leave his “cubicle” job at a casino resort in Pennsylvania. Having achieved that, two years later he says he then made a six-figure exit from the business he had built on this little-known practice.

Drop servicing involves the reselling of digital services, such as marketing, copywriting and creative work. Individuals act as internet “middlemen”, outsourcing clients’ projects to online freelancers and making their profits on the mark-up. Over time, these digital entrepreneurs can become the face of agency-style set ups, use independent contractors, partner with white-label providers (companies who sell services or software that can be rebranded) and eventually hire employees.

The term’s name is a play on an ecommerce trend called “drop shipping”, in which online shopfronts don’t hold stock themselves, but order products from third parties to be sent directly to customers.

Gaynor started off by helping crowdfunding campaigns with marketing and PR, finding freelancers on Fiverr, an online services marketplace, and a platform now called Upwork. “In the beginning, the struggle was just getting clients. Then I learned how to build a rapport with people. I learned how to nail those sales opportunities, ”he says.

The 34-year-old has since moved to Florida to spend more time with his parents and says he makes an average of $ 22,000 net profit a month from his latest drop servicing venture SumoGrowth, which specializes in search engine optimization and finding prospective clients. “I just love digital services because there is more of a race to the top than the bottom.” He believes the more you charge, the more your services are perceived to be premium value.

Gaynor says drop servicing has enabled him to work remotely and transformed his future prospects. “Financially, it allows me to have more income to invest in wealth building.”

Yassine Harouchi has run at least 10 drop servicing businesses over the past four years, ranging from reselling logo designs to Instagram growth management services

Mary L. Gray, co-author of Ghost Work: How to Stop Silicon Valley from Building a New Global Underclass, says drop servicing is not as new as it might seem. “[It] is the digital refresh of the age-old practice of subcontracting. . . the understandable extension of what happens when we create platforms and technologies to divvy up work. ” She expects the trend to grow over the coming years with the expansion of the hybrid work model.

Yassine Harouchi, a drop servicing entrepreneur from Morocco, agrees. When the pandemic hit, the 30-year-old says he started to be approached by more people asking about the practice – many of whom had lost their jobs or sources of income. “Now with Covid and the emergence of remote work, I believe drop servicing is going to start being exposed more and more. But I’m telling you, up to this day very few people know about it. ”

Harouchi estimates he has run at least 10 drop servicing businesses over the past four years, ranging from reselling logo designs to Instagram growth management services. Despite this, he does not like or find drop servicing fulfilling: “I do it for the money,” he says.

Finding qualified freelancers to outsource and delegate to has been difficult. When recruiting, Harouchi has experienced multiple applicants sending exactly the same portfolio. Time and energy spent managing revisions or fixing problems for clients can also add up.

In terms of drop servicing, Harouchi now focuses on email marketing, which he claims makes a net profit of $ 5,000 a month. He says resellers can make a margin of more than 1,000 percent on “high-ticket” services, such as lead generation for locally-owned businesses. Harouchi has used the practice to finance other businesses, including his dream of building an “Airbnb for internships”.

Professor Adrian Palmer, head of the marketing and reputation department at Henley Business School, sees the benefits from buyers’ prospects as greater flexibility and cost savings, with potentially fewer tax liabilities. “As in many sectors of the service economy, we are seeing local markets replaced by global markets.” Palmer also notes that the culture of outsourcing that has developed in western economies – traditionally transactions between large companies – is now filtering down to individuals.

However, he believes corporations’ concerns could include whether those fulfilling the services are being paid a fair wage or may be based in countries with little regulation. “Then it gets a lot more murky,” Palmer adds. In fact, in some cases companies and freelancers could be none the wiser about who is truly selling or purchasing the service in these transactions.

Like some of her peers, Faizah Mohammed Aruwa, 26, a freelancer from Nigeria who offers a range of writing, audio and design services on Fiverr, has mixed views on the practice. She appreciates what she describes as the “small” proportion of resellers who are up front about outsourcing, but claims cancellations can result from miscommunication on client expectations. “Someone else profiting off my hard work by doing literally nothing but reselling it leaves a very bitter taste in my mouth,” Mohammed Aruwa adds. While some other freelancers say they accept they set, and could increase, their own prices, she says raising rates is not viable for new freelancers trying to establish themselves. Gigs on such platforms are often priced very low because of the competitive nature of the market.

Lazaros, a freelance artist on Fiverr from Greece, is also largely opposed to drop servicing. Not knowing who he is working for is one of the main problems. “It downgrades the quality of the end service because of [the] communication gap, direct contact with the customer is key. ” In addition, Lazaros believes the original sellers, particularly in his field, should earn a percentage of the (re) selling price every time a transaction is made. “When [drop servicing] happens without the creator being aware, it is unethical. ”

Drop servicers argue that they add value through expertise and experience, building relationships with clients and offering quality control. Professor Louis Hyman, a member of the Gig Economy Data Hub, believes they also face a risk that companies increasingly find out about such platforms and hire freelancers directly themselves.

However, the drop servicing business model does appear to be growing. A meta industry to teach and facilitate prospective newcomers has proliferated during the pandemic. Gaynor promotes a virtual course and paid mentorship via a separate business website. Some like Harouchi sell set up services on Fiverr. The money transfer group Wise even published an article on “how to start a drop servicing business” on its website.

Dylan Sigley, who runs several drop servicing businesses, launched a drop servicing training program in 2019

Drop servicing proponents have also turned to social media in an effort to become content creators and spread the word. Hyman cites a history of “you too can be rich doing this thing” -type schemes. He asks: “If they could scale up so easily, why wouldn’t they just make the money and not sell how to do it?”

Dylan Sigley, 29, runs Drop Drop Service Blueprint, a six-week program currently priced at $ 997. He says it has had more than 1,200 participants since its launch in 2019. According to Sigley, about three people are joining per day and students have ranged from a 16-year-old from Finland to a 70-year-old from the US.

Sigley got into drop servicing in 2015 after taking a $ 5,000 course while working at a call center in New Zealand. These days, he primarily concentrates on his training program, but also has three drop servicing businesses focusing on animated videos, Facebook advertising and graphic design, respectively. He claims that one business generates low seven-figures per year in revenue and the other two make high six-figures.

Sigley now lives as a digital nomad. Previously based in Australia, Thailand, Poland and Hungary, he is at present in the UK. “These [drop servicing] businesses are fully automated for me at this point, ”he says. “The most important thing for me is the freedom to travel. It’s changed my life in every way possible. ”

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