Four Trends Driving Dropship and Curated Marketplace Growth In 2024
By Jager Robinson | January 30, 2024
If there is one thing that has remained true, and likely will remain true, in global commerce, it’s that customers desperately want the ability to buy their products online. And that isn’t just limited to consumers. Big box stores, Fred down the street, your grandmother, the pet shop on 5th Avenue, and more are all looking for ways to complete their transactions online and deliver the best possible customer experience.
There are currently four key trends that continue to influence the desire for dropship and marketplace solutions—the ever-increasing cost to do business, a shockingly small B2B eCommerce market, customer convenience, and, more generically, the increasing size of the dropshipping pool various organizations are looking to capitalize on.
These four trends serve as the backbone for continued eCommerce growth, and are the key reasons many organizations shouldn’t look away from a long-term plan that includes a comprehensive, curated eCommerce fulfillment strategy.
Why is the B2B eCommerce Market So Small?
U.S. B2B eCommerce sales grew by a healthy 11.2% in 2022, reaching $1.676 trillion.
Now, I know what you’re thinking… “Okay, so Logicbroker just said the market is small, but it hit $1.676 trillion in 2022 and (while the numbers aren’t in yet) most likely topped $2 trillion in 2023?
Yes, dear reader, that is a drop in the bucket for the incredibly large number I am about to give you. U.S. B2B Product Sales in the year 2022 hit a staggering $16.273 trillion. Doing some quick math, in 2022 B2B eCommerce accounted for just 10% of the total B2B product sales. That is a shockingly low number compared to, let’s say, the D2C eCommerce market, which accounts for roughly 30% of all product sales. In 2023, it’s expected that number to account for roughly 16% of all B2B Product Sales, still lower than our friends on the D2C side of commerce.
This opportunity for growth, and opportunity to build a robust, curated marketplace consisting of largely B2B items, is exactly what Logicbroker customers are jumping on. Logicbroker customers like MRCOOL and Ingram’s Water and Air have already built a comprehensive dropshipping solution tailor-made to sell directly to customers but also facilitate B2B sales.
For more niche situations like the folks at Zageno, Logicbroker helped provide the framework to support a comprehensive B2B marketplace designed specifically for the Life Sciences market to give B2B customers an Amazon-like experience when ordering lab equipment.
These situations boil down to the fundamental fact that B2B eCommerce sales will continue to grow, regardless of whether retailers and brands jump on the bandwagon. Customers, both D2C and B2B, expect to be able to buy their products online and that expectation will fuel B2B growth, especially as the average age of B2B ordering managers continues to slide more toward the younger millennial/gen-z side of the equation.
The Ever-Demanding Customer Experience
Dropshipping and marketplace success is largely based on convenience. Convenience for the retailer to be able to sell products through their suppliers, for the suppliers to expand their reach, and, most importantly, for the customer to be able to buy products where and when they want them.
Nine out of ten consumers are more likely to choose a retailer based on the convenience it offers. A third (33%) are significantly more likely to do so, showing that talking about convenient options throughout the customer journey is key.
But this convenience has come at the cost of true understanding. Retailers and brands are struggling to comprehend what customers want and how they want whatever “it” is. Discovering that answer, however, is the whole reason dropshipping and curated marketplaces continue to grow. Customers demand ease, simplicity, and speed—all of which really only reside if the customer doesn’t have to leave their home or business. With a solid tech partner supporting your data capture capabilities, understanding your customers becomes more about capitalizing on the correct information rather than fishing for it.
It starts with this—when shopping online, the extra levels of convenience customers demand are at the research stage, with 58% wanting it to be easier to find deals and promotions, 57% comparing prices or reviews, and 56% wanting it to be easy to find options. These demands for more convenient displays and digital storefronts would only be possible if you can harness customer data and visualize it. Getting set up with a tech partner who can help you is vital to capitalizing on this ever-increasing demand.
We All Know Costs Are Rising
The third reason for the rising demand for modern dropship and marketplace solutions boils down to cost reduction. It’s incredibly expensive to run a business. According to the “State of Logistics Report” released just last year, U.S. business logistics costs soared to $2.3 trillion over the course of 2022, growing 19.6% from 2021 and now representing 9.1% of the nation’s gross domestic product (GDP). That’s the highest percentage of cost compared with GDP in the deregulated era. It was 7.5% of GDP just a few years ago.
Plus, financial costs of business inventory climbed to $313 billion in 2022, up a whopping 123% from 2021. Product obsolescence and insurance costs more than doubled as well to hit $227 billion. Overall inventory costs were $759 billion, up nearly 400% from 2021 levels.
The drastic need to cut costs, save jobs in key positions, and reduce full-time employee (FTE) requirements remains vital to staying afloat. Enter the neat eCommerce fulfillment models dedicated to ensuring you don’t have to warehouse inventory or rely on FTEs to manually manage supply.
Dropshipping and curated marketplaces give retailers and brands the ability to grow their AOV and capture more sales. When an expanded assortment of goods gives their target customers access to everything they need on one site, larger shopping carts open the possibilities for more sales, higher customer satisfaction ratings, and more opportunities for additional shopping benefits.
It May Seem Obvious, but Dropshipping is Growing Because it’s… Growing
Fads are hard to quantify, but not this fad. Companies like Amazon, Walmart, and Target well and truly changed the game in eCommerce. While those “catch-all” marketplaces remain a typically poor investment, developing a curated marketplace or comprehensive dropship solution aimed at your target customers can piggyback off the skyrocketing demand for an easier customer experience.
The global dropshipping market size was valued at $225.99 billion in 2022 and is expected to register a compound annual growth rate (CAGR) of 23.4% from 2023 to 2030. While it’s too early to find the exact numbers for 2023, it’s expected to account for nearly $300 billion. This ever-increasing rise of dropshipping demand is, in and of itself, a demand driver for dropshipping and curated marketplaces.
Retailers and brands cannot afford to wait on the sidelines and appreciate what their competition is doing. The time is now to find your niche, explore the unique opportunities it provides, and expand your catalog of offered goods to capitalize on the growing market.
Learn More Through Logicbroker
This isn’t the end of your dropshipping or marketplace experience, and we’d love to continue your learning experience in this wonderful industry. To learn more about dropshipping versus marketplace, please visit our blog detailing every bit you need to know. To explore how Logicbroker helps its customers (Samsung, Victoria’s Secret, OrangeTheory Fitness, Walgreens, and more) through their commerce fulfillment strategies, visit our Success Stories page.
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