Dropshipping offers a low-risk way to start a business because you don't have to spend money on stock upfront. However, while many new dropshippers often target the US market, the European Union (EU) offers exciting opportunities as well.
In this guide, we'll explore the details of dropshipping in the EU. We'll look at how the market works, what makes it different from other regions, and provide practical tips to help you succeed in this space. Whether you're new to dropshipping or looking to expand into the EU, this guide will give you the insights you need.
The EU e-commerce market space
The European Union (EU) is a big and complex market that offers both chances and challenges for dropshippers. With 27 countries and over 440 million people, there’s a huge potential customer base. However, to succeed here, you need to understand the different languages, cultures, and shopping habits of the people in the region.
One of the most significant factors to consider when dropshipping in the EU is the prevalence of Klarna, a payment provider that offers a Buy Now, Pay Later (BNPL) service. Klarna has become a must-have for long-term success in e-commerce across almost all EU countries. This service allows customers to purchase products and pay for them in installments, which can significantly boost conversion rates.
Offering Klarna as a payment option can increase conversion rates by up to 4x. This is because Klarna provides customers with flexibility and convenience, making them more likely to complete their purchases. Additionally, Klarna assumes the risk of non-payment, which further benefits dropshippers.
However, not offering Klarna in these countries can put dropshippers at a significant disadvantage. Customers have come to expect this payment option, and failing to provide it may lead them to choose competitors who do. As a result, dropshippers must prioritize integrating Klarna into their payment systems to remain competitive in the EU market.
While Klarna is widely popular across the EU, it's essential to recognize that some countries have their own preferred payment methods. For example, in the Netherlands, iDEAL is the most popular payment system. This online banking method allows customers to make direct payments from their bank accounts, providing a reliable and secure alternative to credit cards. By offering iDEAL, dropshippers can cater to the preferences of Dutch consumers and reduce the risk of chargebacks.
Similarly, in Belgium, Bancontact is the preferred payment option. This debit card system directly links to a customer's bank account, making it a convenient and trustworthy choice for Belgian shoppers. Dropshippers who offer Bancontact can demonstrate their understanding of the local market and build trust with their Belgian customers.
One of the key advantages of dropshipping in the EU is the lower risk of chargebacks compared to the United States. In the US, credit cards are the primary payment method, which can lead to a higher number of chargebacks. These chargebacks can be detrimental to dropshippers, especially those in the early stages of their business. In contrast, the popularity of alternative payment methods like Klarna, iDEAL, and Bancontact in the EU creates a more forgiving environment for dropshippers, reducing the likelihood of fraudulent transactions and chargebacks.
However, the EU market's diversity extends beyond payment preferences. Each country has its own language, cultural norms, and consumer behaviors. For example, what may be considered a best-selling product in France may not have the same appeal in Germany. Dropshippers must invest time and resources into understanding these nuances and tailoring their products, marketing strategies, and customer support to each specific market.
This may involve partnering with local suppliers, hiring multilingual customer support teams, and creating targeted marketing campaigns that resonate with each country's unique cultural context.
Dropshippers who take a one-size-fits-all approach to the EU market may struggle to gain traction and build a loyal customer base.
Best EU countries for starting a dropshipping business
When considering dropshipping in the EU, some countries stand out for their unique opportunities. Here’s a closer look at these key markets:
The number of e-commerce users in selected European countries from 2019 to 2029 (in millions.) Source: Statista
Germany is the largest economy in the EU, with a population of over 83 million, making it a prime market for dropshipping. In 2022, the e-commerce sector was valued at around €104.57 billion and is projected to grow to about €319.6 billion by 2032. With 80% of the population shopping online, there’s a strong demand for products, especially in categories like fashion, electronics, and groceries.
German consumers are known for their high purchasing power and preference for quality, often making purchases via smartphones. Key online marketplaces include Amazon, Otto, and Zalando, and payment methods are diverse, featuring credit cards, PayPal, and invoice options. Overall, Germany offers big opportunities for people looking to establish online stores.
As the second-largest economy in the EU, France has a mature e-commerce market valued at approximately €159.9 billion in 2023. This market is the third-largest in Europe, following Germany and the UK, and saw 2.35 billion online transactions in 2023, reflecting strong consumer engagement.
Key growth drivers include improved digital infrastructure and a tech-savvy population. Fashion is particularly popular, generating around $30 billion in revenue. Major players include Amazon, Fnac, and Cdiscount, while debit cards dominate payment preferences. France's market is attractive for both local and international sellers. So there is an opportunity here for dropshippers.
Italy is also an important player in the e-commerce market, valued at about €76 billion in 2022 and projected to grow to around €80.55 billion in 2023. About 85% of the population are internet users, with nearly 40 million people shopping online.
Key growth factors include better digital infrastructure, a tech-savvy population, and the convenience of online shopping, especially in fashion, which makes up over one-fifth of online sales. Mobile shopping is on the rise, particularly among younger consumers aged 35 to 44. Major players include Amazon, eBay, and Zalando, with a preference for debit cards and e-wallets for online payments as well as Cash-on-Delivery payments.
However, Italy's e-commerce market faces challenges, including a digital divide that affects some regions, especially in the South and Islands. Inflation has also impacted retailers differently based on their products and practices. To succeed in this changing environment, businesses must adapt to consumer preferences and provide secure payment options along with quality products and good customer support.
The Netherlands is another leading e-commerce market, with about 84% of internet users shopping online, contributing to sales of approximately €33.3 billion in 2022. The market is expected to grow to around €52.16 billion by 2029.
Key categories include travel, electronics, and fashion, with major platforms like Bol.com and Amazon inspiring the growth. The country’s high internet penetration rate of 96% supports a strong consumer base, and popular payment methods include iDeal. The e-commerce space is evolving, with more consumers shifting towards mobile and digital payments.
Spain's e-commerce sector is rapidly expanding, generating around €30.34 billion in revenue in 2022. The market is projected to grow at a rate of 14.7% annually, potentially reaching about €56.36 billion by 2027.
Factors driving this growth include increased internet access, smartphone usage, and a growing trend of online shopping. Major categories include fashion and electronics, with key players like Amazon and El Corte Inglés. The rise of mobile commerce and various payment options enhance the shopping experience, making Spain a promising market for dropshippers.
Belgium has a strong e-commerce market, with approximately 80% of internet users shopping online in 2022. The sector generated around €14.7 billion in online sales, reflecting a remarkable growth of 22% from the previous year.
Key drivers include increased internet access and a shift towards online shopping during the pandemic. Popular categories include fashion, electronics, and travel services. Major retailers like Bol.com and Zalando lead the market, while local payment methods like Bancontact are favored among consumers. This growing market presents significant opportunities for newcomers.
When talking about dropshipping or e-commerce in the EU, you can’t go without mention Sweden. With estimated revenues of about $13.31 billion in 2023, the Swedish e-commerce market is expected to grow steadily at a rate of 12.9% through 2027.
Drivers of this growth include a strong economy, high internet penetration, and a tech-savvy consumer base, with 77% of people shopping online. Key product categories include fashion and home electronics. Major retailers include Apotea and Zalando, and despite some economic challenges, sectors like clothing/ fashion are still thriving. Sweden's evolving payment methods, including mobile payments, also increase its attractiveness for dropshipping.
Considerations for choosing a country
When deciding which country to target for your dropshipping business, consider:
- Market size and e-commerce activity: Look for countries with large populations and high online shopping rates.
- Consumer preferences: Understand what products are in demand and how consumers prefer to shop.
- Language barriers: Be prepared for localization needs depending on the country.
- Shipping costs and logistics: Consider the logistics of shipping products efficiently.
- Competition: Analyze the competitive space in your chosen niche.
While these countries show great potential, success in dropshipping also relies on factors like product selection, marketing strategies, and customer service. It’s often wise to start with one or two countries and expand as you gain experience and understand the market better.
The fashion niche is the most popular in Europe, but it has a catch
When it comes to product selection, many dropshippers have found that fashion products are the best niche to sell throughout European geos. This can even be backed up by the statistics we shared above. The most interesting thing is that fashion items often have a similar appeal across multiple EU countries, making it easier for dropshippers to target a wide audience with a single product line. This cross-border appeal can help streamline inventory management and marketing efforts, as dropshippers can focus on promoting a consistent set of products across different markets.
However, selling fashion products in the EU comes with a catch. Many so-called "gurus" have found success in this space, but the reality is often less glamorous than it appears.
They rely on sourcing their products from suppliers in countries like China, where manufacturing costs are lower. While this can help maintain profitability, it also comes with the risk of longer shipping times and potential quality control issues.
A significant portion of EU fashion dropshippers are selling low-quality, cheaply made garments. While they may showcase impressive sales figures, a closer look at their customer reviews reveals a different story. Complaints about poor fabric quality and unwearable items are all too common.
This presents a dilemma for aspiring dropshippers. On one hand, the EU market seems more forgiving, allowing these sellers to scale without the threat of chargebacks. On the other hand, building a sustainable, reputable brand requires offering high-quality products that meet customer expectations.
The silver lining is that this creates an opportunity for dropshippers who prioritize quality. By sourcing superior products and focusing on customer satisfaction, you can differentiate yourself from the low-quality sellers and build a loyal customer base.
Dropshippers who prioritize quality in the EU market end up creating brands that are very successful. Take a look at Gymshark by Ben Francis or Nude Project brand by Bruno Casanovas.
Fashion brands that prioritize quality in Europe tend to get the best reward, love, and usually grow into big global brands due to customer loyalty. When EU customers receive products that meet or exceed their expectations, they are more likely to become repeat customers and recommend the brand to others. This word-of-mouth marketing can be incredibly powerful, as it helps to establish trust and credibility in the brand.
However, this doesn't mean that you won't make money by dropshipping lower-quality fashion products, but the long-term customer loyalty and opportunity to build a major brand is what you’ll be missing. Ultimately, the decision to prioritize quality over quick profits will depend on your long-term business goals.
Scaling your EU dropshipping store
As you start to scale your dropshipping store in the EU, you may encounter some growing pains. Shopify, for example, may initiate a manual review and hold a portion of your funds once you hit certain sales thresholds. This is to protect against potential refunds and chargebacks.
To minimize the impact of these holds, it's important to be proactive and prepared. Have your documentation ready, including your passport and any other requested information. When asked about your inventory, emphasize that your main stock is located in the country you're selling to, with backup stock in China for overflow.
Maintain a professional and calm demeanor throughout the process. Avoid any language that suggests desperation or frustration, as this may raise red flags. Instead, acknowledge that holds are a normal part of the scaling process and that you understand Shopify is just doing its due diligence.
To further defend your case, consider providing photos of your stock on industrial pallets, clearly showing the products you're selling. Ask your supplier to include a paper in the photo with your store name, your name, and the date you're submitting the proof. Ensure there are no visible signs of Chinese origin in these images.
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The truth about product saturation and ad creatives in EU
One of the most pervasive myths in EU dropshipping is the idea of market saturation. Many newcomers worry that a product is saturated when their ads don't immediately perform. In reality, saturation is often a scapegoat for poor ad creative.
The truth is, only the biggest DTC brands have the capability to truly saturate a market. They have the resources to target every stage of the funnel, engage in product seeding, and maintain a ubiquitous presence. As a dropshipper, it's highly unlikely that you'll single-handedly saturate a product.
More often than not, the issue lies with generic, ripped ad creatives. If your ads blend in with hundreds of others, you'll struggle to capture your audience's attention. The key is to invest in custom content that sets you apart.
If you're testing a product with limited existing content, it may be an untapped opportunity. Consider ordering the product and creating your own user-generated content (UGC). If you do have access to decent product images, get creative with them. Repurpose and modify them to create unique ads that stand out.
Image ads still work
While video ads tend to dominate the dropshipping space, don't underestimate the potential of image ads. They're often cheaper than videos and can deliver comparable click-through rates (CTR). With the right approach, image ads can be a powerful tool in your marketing arsenal.
When creating image ads, focus on clean, eye-catching designs. Use tools like Canva to remove backgrounds, find niche-specific templates, and experiment with different layouts. Don't be afraid to draw inspiration from your competitors' ads.
One good tactic is to download a competitor's image ad and use Canva Pro's "separate elements" feature to isolate their product. This gives you a ready-made template to work with. You can also use Canva AI's text recognition tool to remove their copy and replace it with your own.
By using these techniques, you can quickly create custom image ads that resonate with your target audience. Add scarcity elements like "50% OFF" badges, compelling copy, and strong calls-to-action. Some of the most successful brands rely heavily on image ads, rapidly iterating and testing new variations.
Conclusion
Dropshipping in the EU geos presents a unique blend of opportunities and challenges. While the market may be more forgiving than the US in terms of chargebacks, you still need to be careful and focus on quality.
Before you start your dropshipping business in the EU, keep these tips in mind:
- Learn about the different EU countries and adjust your approach for each one.
- Make sure your products are high quality and keep customers happy, especially in fashion.
- Be ready for challenges when scaling your business and stay professional with payment processors.
- Create unique, high-quality ads to stand out from the competition.
- Use image ads to quickly test and improve your marketing efforts.
- Remember, dropshipping in the EU can be tough, and success takes hard work. Don’t be misled by success stories from "experts" that make it seem easy. Your path may have ups and downs, but you can still build a successful dropshipping business.
For more tips on setting up ads and targeting different EU countries for e-commerce, check out this article.
