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Luxembourg is famous for being a wealthy country, which automatically makes it a place of interest for business. It ranks as one of the nations with the highest standard of living and per capita income in the world.
This article looks at an economic and ecommerce overview of Luxembourg that may be beneficial when deciding if dropshipping in such a small country is a good idea.
Country information
Location
Luxembourg, officially known as the Grand Duchy of Luxembourg, is one of the smallest countries in Europe. It is landlocked in the northwest of Europe by France, Germany, and Belgium. The capital is Luxembourg City.
Population
Statistiques estimates a national population of 643,941 as per the census in January 2021. A large portion (38.2%) of the population is made up of migrants from Portugal (14.5%), France (7.6%), Belgium (3.1%), and Germany (2%). The Department of Economic and Social Affairs at the United Nations reports that Luxembourg ranks 168 for its population compared with the rest of the world in 2022.
Wealth
Luxembourgers have an average household net wealth of USD 941,162 per annum, according to the Organisation for Economic Cooperation and Development (OECD). This is substantially higher than the worldwide average of USD 323,960. Luxembourg has an above-average employment rate of 67% and an above-average household disposable income of USD 44,773 per annum.
Language
The people of Luxembourg are trilingual in Luxembourgish, French, and German.
Dropshipping in Luxembourg
The ecommerce market
- Luxembourg's ecommerce market is estimated to be worth USD 1,146.00 million by 2023 (Statistia, 2023).
- The ecommerce market has been growing steadily and is expected to see a compound growth rate of 7.2% between 2023 and 2027 (Global Data, 2022).
- Online shopping has a 13.6% share of Luxembourg's retail market and will increase by an average of 6.9% to 17.8% by 2027 (eCommerceDB, 2023).
- 60% of Luxembourgers prefer to make an online purchase from Germany if buying cross-border (Statista, 2022).
- Only 19% would buy online products from France (Statista, 2022).
The online behaviour of Luxembourgers is difficult to measure due to the small size of the country. Unfortunately, this nation is rarely included in European ecommerce reports or surveys. The large portion of immigrants from other European nations may also be the reason that cross-border online shopping is so popular in Luxembourg.
Product categories with high sales
Luxembourg's most popular categories of consumer goods as per ecommerceDB, 2023:
- Fashion (34.2%)
- Food and personal care (25.6%)
- Toys, hobby, DIY (14.3%)
- Furniture and appliances (13.2%)
- Electronics and media (12.8%)
Rising number of internet users
According to Data Reportal, 2023, almost every citizen of Luxembourg has an internet connection. The national usage rate is 98.7%, compared to the global average of 64.4%.
Statistique reports that in 2021, these were the types of devices used to access the internet:
- 90% smartphone
- 62% laptop
- 45% tablet
- 41% PC
- 38% other devices (e.g. games console or TV)
In 2022, the vast majority of Luxembourgers accessed the internet once a week, including every day (95%), with nearly all surveyed saying they used it on a daily basis (92%), as per data from Statista, 2023.
Use of smartphones
The younger generations in Luxembourg prefer to access the internet via smartphone. Statistique found that in 2021, 97% of 16- to 24-year olds prefer to use their mobiles to use the internet, and 63% use their laptops. This compares with 73% of 65-74-year-olds using their mobiles for the internet and 52% using their tablets.
According to Post Luxembourg, smartphones in the Grand Duchy are mainly used for:
- Messaging apps (90.7%)
- Social media (88.4%)
- Online shopping (69.4%)
- Entertainment and video (67.2%)
- Other, including maps, video games, and financial services
Logistics
The logistics system in Luxembourg is substantial and efficient, says Britannica. The road network in Luxembourg is small but well-maintained. The railway lines with high-speed trains are a major transportation system for the population and provide postal service to neighbouring countries. Major players in Luxembourg's logistics and transportation industry:
- Post Luxembourg
- UPS
- DHL Express
- FedEx
- Kuehne + Nagel
- Deutsche Post
What is dropshipping?
Dropshipping is an online retail business model. It is an accessible and low-risk business strategy as it allows you to sell goods online without ever handling the warehousing, packaging, or shipping. A dropshipping supplier will store the goods in their warehouse, and once you have a sale on your ecommerce website, the order is sent directly to the supplier to pack and ship on your behalf.
To set up a dropshipping business, you need to use a supplier that has a dropshipping programme, such as dropshippingXL by vidaXL. This programme is beneficial for its flexible cancellation policy, zero joining fee, zero commission on your sales, and no contract.
Summary
Luxembourg has relatively low competition in the ecommerce market. The main rivals would be cross-border retailers in France and Germany. Although the population is small, there could be interesting potential to start a dropshipping business in Luxembourg when taking into account the high internet penetration rate, high numbers of smartphone users, and frequent online shoppers.
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