Also known as service arbitrage or outsourcing, drop servicing simply involves selling digital services while outsourcing the actual work to a third party. The principle is straightforward: service-based businesses find clients and delegate the project to a service provider who completes the work.

In this setup, the drop servicing business profits from the price difference between what clients pay and what is paid to the service providers.

Dropshipping, in contrast, is a business model that revolves around selling physical products without owning inventory. For every order received from a customer, you pay a warehouse or supplier to ship the product directly to the customer. The product reaches the customer without ever passing through your hands.

Drop servicing, on the other hand, involves selling services rather than products. The process is simple: list a service for sale, and once a customer purchases it, find a company or individual capable of providing that service to meet the customer’s needs.

You then collect payment, pay the service provider, and keep a profit margin. While it is not exactly the same as dropshipping, the concept of acting as an intermediary remains similar.

Now, let’s explore how drop servicing operates.