Drop service: the new money generator for digital entrepreneurs

Darius Gaynor entered the world of “direct service” a little 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 accomplished that, two years later he says he made a six-figure exit from the business he had built on this little-known practice.

Direct service involves the reselling of digital services, such as marketing, copywriting, and creative work. People act as internet “middlemen”, outsourcing client projects to online freelancers and earning their profits on the margin. Over time, these digital entrepreneurs can become the face of agency-style organizations, use independent contractors, partner with white-label vendors (companies that sell services or software that can rebrand), and eventually hire employees.

The name of the term is a play on an e-commerce trend called “drop shipping,” in which online storefronts don’t stock themselves, but order third-party products to ship directly to customers.

Gaynor started out helping crowdfunding campaigns with marketing and public relations, finding freelancers on Fiverr, an online services marketplace and platform now called Upwork. “In the beginning, the struggle was just to get clients. Then I learned to build a relationship with people. I learned to take advantage of those sales opportunities,” she says.

The 34-year-old has since moved to Florida to spend more time with his parents and says he earns an average net profit of $22,000 per month from his latest direct service company, SumoGrowth, which specializes in engine optimization. search and search for potential customers. “I love digital services because there is more of a race to the top than to the bottom.” He believes that the more he charges, the more his services are perceived to be of premium value.

Gaynor says that direct service has allowed her to work remotely and has transformed her prospects for the future. “Financially, it allows me to have more income to invest in creating wealth.”

Yassine Harouchi has run at least 10 direct service businesses in the past four years, from reselling logo designs to Instagram growth management services.

Mary L. Gray, co-author of Ghost Job: How to Stop Silicon Valley from Building a New Global Underclass, says that direct service is not as new as it might seem. “[It] it is the digital update of the old practice of outsourcing. . . the understandable extent of what happens when we create platforms and technologies to spread the work.” She expects the trend to grow in the coming years with the spread of the hybrid work model.

Yassine Harouchi, a delivery services entrepreneur from Morocco, agrees. When the pandemic hit, the 30-year-old says he began 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 advent of remote work, I think direct service will start to get more and more exposed. But I tell you that to this day very few people know about it.”

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

Finding qualified freelancers to outsource and delegate has been difficult. When recruiting, Harouchi has experienced multiple applicants submitting the exact same portfolio. The time and energy spent managing patches or troubleshooting for customers can also add up.

In terms of direct service, Harouchi now focuses on email marketing, which he claims generates a net profit of $5,000 per month. He says resellers can earn a margin of more than 1,000 percent on “high-priced” services, such as lead generation for locally owned businesses. Harouchi has used the practice to fund other businesses, including her 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 a buyers’ perspective as greater flexibility and cost savings, with potentially less tax liability. “As in many sectors of the service economy, we are seeing local markets being replaced by global markets.” Palmer also points out that the culture of outsourcing that has developed in Western economies (traditionally transactions between large companies) is now trickling down to individuals.

However, he believes corporate concerns could include whether those providing the services are paid a fair wage or may be located in countries with little regulation. “Then it gets much murkier,” adds Palmer. In fact, in some cases, companies and freelancers might not be aware of who is actually buying or selling the service in these transactions.

Like some of his peers, Faizah Mohammed Aruwa, 26, a freelancer from Nigeria who offers a variety of writing, audio and design services on Fiverr, has mixed views on the practice. He appreciates what he describes as the “small” proportion of resellers who are honest about outsourcing, but claim cancellations can be the result of miscommunication about customer expectations. “For someone else to benefit from my hard work literally doing nothing but reselling it leaves a very bitter taste in my mouth,” adds Mohammed Aruwa. While some other freelancers say they accept setting their own prices and might raise them, she says raising rates isn’t viable for new freelancers trying to get established. Gigs on such platforms are often very low priced due to the competitive nature of the market.

Lazaros, a freelance artist on Fiverr from Greece, is also strongly opposed to the direct service. Not knowing who you work for is one of the main problems. “It lowers the quality of the final service due to [the] communication gap, direct contact with the client is key.” Furthermore, Lazaros believes that original sellers, particularly in his camp, should earn a percentage of the (re)sale price each time a transaction is made. “When [drop servicing] it happens without the creator realizing it, it is not ethical”.

Direct managers argue that they add value through expertise and experience, building customer relationships, and providing quality control. Professor Louis Hyman, a member of the Gig Economy Data Hub, believes they are also at risk of companies increasingly discovering these platforms and hiring freelancers directly.

However, the direct service business model appears to be growing. A meta-industry to teach and facilitate potential newcomers has proliferated during the pandemic. Gaynor promotes a virtual course and paid tutoring through a separate business website. Some like Harouchi sell setup services on Fiverr. The Wise money transfer group even published an article on “how to start a direct service business” on their website.

Dylan Sigley, who runs several delivery service companies, launched a delivery services training program in 2019

Direct service advocates also turned to social media in an effort to become content creators and spread the word. Hyman cites a history of “you can be rich doing this too” schemes. He asks, “If they could scale so easily, why wouldn’t they make the money and sell how to do it?”

Dylan Sigley, 29, runs “Drop Servicing Blueprint,” a six-week program currently priced at $997. He says it has had more than 1,200 participants since it launched in 2019. According to Sigley, about three people join a day, and students range from a 16-year-old from Finland to a 70-year-old from the US.

Sigley got her start in direct service in 2015 after taking a $5,000 course while working in a call center in New Zealand. These days, she focuses primarily on her own training program, but also has three direct service businesses that focus on animated video, Facebook advertising, and graphic design, respectively. She claims that one business makes low seven-figure incomes per year and the other two make high six-figure incomes.

Sigley now lives as a digital nomad. Previously in Australia, Thailand, Poland and Hungary, he is currently in the UK. “These [drop servicing] business is totally automated for me right now,” he says. “The most important thing for me is the freedom to travel. It has changed my life in every way possible.”

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