As the core center of the global supply chain, China with its mature China dropshipping market provides low-cost and high-efficiency options for small and medium retailers. According to data that Statista has made available, in 2023 China’s cross-border e-commerce market reached a size of 2.3 trillion US dollars. Out of them, close to 68% were shipped through the dropshipping model, and the logistics charge was on an average 40% to 50% lower compared to local European and American warehousing. Take, for instance, 1688 International Station. Here, over 5 million Chinese manufacturers are linked. Businessmen are able to purchase 3C peripherals, domestic products and other goods at a price as low as 0.5 US dollars per unit. Moreover, it supports immediate shipping from Shenzhen, Yiwu and other bonded storages to any global destination in just 48 hours, reducing the transportation cycle by 60% compared with conventional sea shipping.
It concerns the warehousing network structure, and the China dropshipping service provider makes the most of the delivery efficiency with the “forward warehouse + overseas warehouse” model. For instance, Cainiao Network has constructed intelligent warehousing centers in 20 countries. At the cost of 15 US dollars per cubic meter per month, a storage fee, traders could have 3-day delivery for the markets in Europe and North America, reducing the return rate by 70% compared to the pure cross-border direct mail mode. In 2022, Shein, a fast fashion business, by collaborating with Chinese dropshipping suppliers reduced the price of order fulfillment in the US market to an average of $1.2 per order, driving its GMV to increase by 150% year-over-year, which confirmed the scalability of such a model.
Data-driven product selection strategies reduce business risks even more. According to SimilarWeb analytics, the screening precision rate of the China dropshipping niche has been improved by 35% with the use of tools such as Google Trends and Jungle Scout. The inventory turnover has increased from an average of 4 times per year to 7 times. Let’s examine Temu as a case in point. It uses AI algorithms to obtain the Amazon best-seller list in real time, displays best-sellers within 72 hours, and brings the price down to 30%-50% that of its competitors by making use of the Chinese supply chain. Its visits a month were more than 120 million times.
Compliance and after-sales are the keys to long-term operation. Research shows that for the merchants who aggregate Chinese suppliers through ERP platforms (such as Shopify+Oberlo), the tariff calculation error rate has gone down from 12% to 3%, and the rate of return has been capped at 5%. In 2023, Shenzhen dropshipping service provider DSers launched an “AI customer service + local return and exchange center” solution, reducing customer complaint response time to 2 hours. It helped 30,000 small and medium-sized retailers achieve a repurchase rate of 28% and enhanced the average transaction value by 19 US dollars.
The model has been proven to be economically viable by the marketplace: Sellers can invest as little as 500 US dollars (adding the platform fee of one year along with sample buy). As the gross profit margin of product option reaches 45%, 30 orders per day on average can make a 180% ROI within six months. With the RCEP agreement reducing tariffs across the Asia-Pacific (the average dropping from 5.8% to 0.8%), Chinese dropshipping is now the lowest cost of entry into global retail.