Dropshipping is a viable way to start and grow a business in Southern Europe. This part of the continent in particular offers many benefits to ecommerce entrepreneurs that are looking for untapped potential. Increasing internet and smartphone penetration, a rising number of online shoppers and low competition make Southern Europe an inviting location for dropshipping.
The south of Europe includes a large number of countries with a total population of around 152 million, as per the United Nations in 2023.
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According to Statista in 2022, the forecast number of internet users for Southern Europe is set to grow at a higher rate than Central, Western, and Eastern Europe. Statista predicts web users will increase by 9.2% between 2022 and 2028. This compares with an increase of 6.9% in Eastern Europe and 4.9% in Central & Western Europe.Here are some figures for the internet penetration rate in certain countries, as per Data Reportal, 2022..
An article published by PYMNTS reported that Spain and Italy were the leading Southern European countries for smartphone use in September 2022. Their statistics showed that Italy had a smartphone penetration rate of 90.1% and Spain 93.2% compared to the UK, which had 88.1%.
However, it's interesting to note that even though the smartphone penetration rate is high in Italy, this doesn't mean a high level of digital engagement. Spain has been marked as having the highest level of "digital transformation" in Europe. This equates to a rise in the number of digital activities (including digital payments) performed by the population on a regular basis.
Gen Z and Millennials are the age groups that use smartphones for digital activities the most in both Spain and Italy. The older generations, particularly in Italy, drag the overall rate of the population engaged with digital technologies down.
The highest growth in ecommerce is in Spain. This Mediterranean country has grown leaps and bounds in the last few years. The 2022 European Ecommerce Report reported that Southern Europe was the second-strongest region for B2C ecommerce behind Western Europe. It accounted for 16% of total ecommerce turnover in 2021.
According to Statistan , Spain's ecommerce market is expected to reach €42 billion in 2023 and €63 billion in 2027. That's an annual growth rate of 10.62%.
Italy's ecommerce is also thriving. Statista suggests that Italy's ecommerce market is projected to be worth €55 billion in 2023 and €89 billion by 2027. This is an annual growth rate of 12.63%.
Meanwhile, in Portugal, Statista predicts the ecommerce market to be worth €6.1 billion in 2023 and €9.8 billion by 2027. The annual growth rate should be 12.52%.
Since the rate of digital transformation has been relatively slow in South Europe compared to other countries, there is tremendous room in the market for online retailers.
For most Southern European countries, cross-border ecommerce is king. Possibly due to tight budgets in response to Covid-19 and rising inflation in recent years, online purchases from China are the most popular. This is particularly true for Spain and Italy, says Statista. Online retailers in the UK and then Germany are the next most popular among shoppers.
It's likely that the modern ecommerce websites offered by East Asian and North European countries appeal to online consumers. These websites and shopping apps are easy to use and have a range of trending products.
Domestically-owned online retailers in Southern Europe, however, are still behind in technology. With the exception of large businesses such as Inditex (Zara, Pull & Bear, Stradivarius) and global marketplaces such as Amazon, websites aren't as modern, there isn't a wide range of products, and shopping apps are mostly unavailable.
South European countries with larger populations offer more potential for ecommerce sales. Overall, 67% of South Europeans shopped online in 2021, says the 2022 European Ecommerce Report , and this figure is increasing year by year. The data points to South Europe being an extremely inviting ecommerce venture, with Spain and Italy leading the way.