By 2027, it is believed that the drop-shipping market is set to be worth £415bn globally 

Lloyd’s broker and insurtech Superscript yesterday (18 January 2023) announced the launch of its new insurance product for online retailers, e-commerce and drop-shipping businesses.

The broker’s entry to the market follows a growth of around 53% in drop-shipping’s global value since 2020 – currently is it estimated to be worth £165bn, according to Statista data published in September 2021.

Statista also predicted that, by 2027, the drop-shipping market would be worth up to £415bn.

Drop-shipping refers to businesses that accept customer orders while they do not keep products in stock – instead, the seller purchases inventory as needed from a third party, such as a wholesaler or manufacturer, to be shipped to a customer directly.

Therefore, the merchant does not stock or own inventory – they merely act as a middleman.

Because of this, several online retailers are struggling to find adequate cover from insurers because they largely exclude businesses that do not store their own inventory.

Ben Rose, co-founder and chief underwriting officer at Superscript, said: “It makes no sense to exclude non-UK and Europe manufacturers from policies, as these account form a significant proportion of all online retailers.

”Platforms like Shopify, Alibaba, Etsy and Amazon have enabled more ecommerce startups to set up and thrive, minimising the friction of national borders when fulfilling orders.

“With the explosion in popularity of drop-shipping and the number of online retailers manufacturing and shipping via third parties abroad, insurers have to keep pace with how the industry is evolving.”

Inclusive product

Superscript has tailored its product to online retailers – it extends cover to international imports and exports that includes goods manufactured in Asia and products shipped to North America.

The new insurance product is both customisable and flexible – it can be paid for via a monthly subscription.

It offers some special covers such as manufacturing, importing and white or private labelling, contents and stock at a pop-up-shop, stock in third party logistics fulfilment centres and products out for delivery with a postal or courier service.