Dropshipping Market

The global dropshipping market was valued at USD 149.5 billion in 2020 and is projected to register a substantial CAGR during the forecast period, 2021 – 2028. The growth of the market is attributed to the increasing trend of cross border e-commerce trade along with the rising preference for online shopping.

Dropshipping involves a process of selling consumer items using online store without handling the products directly. It is a type of online retail service that acts as an intermediary between consumers and shipping agency.

Unlike traditional methods, a retailer or seller that sells using dropshipping method does not store the products in stock but buys the items from the third party at a wholesale price and is then shipped directly to the consumer.

In this retail fulfilment method, the manufacturer or wholesaler delivers the items to consumers’ doorsteps and the seller does not involve in the shipping process. The seller earns its profit from the difference between the sale price and the wholesale price offered from the manufacturers or suppliers. Some key advantages of the dropshipping method are that sellers do not need to spend on keeping stock of products, on opening a warehouse, and on packaging for shipping.

Wide use of smartphones present a vital factor that makes the experience of the online shopping easy and convenient for consumers, which in turn, have modernized the online shopping and rapid growth of e-commerce stores. Owing to the rising incidence of customers influenced towards online shopping platforms, there has been a significant growth in investments by several prominent players in the e-commerce industry.

For instance, the incidence of global online customers reported to have crossed over 1,078 million in 2015 and reached around 1342 million in 2017, says the report published by the United Nations Conference on Trade and Development (UNCTAD). With the increasing penetration of e-commerce platforms, the retailers are adopting dropshipping services to eliminate the capital expenditure for inventory management or purchase.

Market Trends, Drivers, Restraints, and Opportunities

• Growing capital investment from prominent players and expansion of the logistic sector for e-commerce retail are key factors boosting the market. .
• Increasing disposable income along with rising use of smartphone devices and high penetration of Internet of Things (IoT) are key drivers for the market growth.
• Rising demand for dropshipping service among retailers owing to the limited investment in logistics and inventory is expected to boost the market growth.
• Incidents of unauthorized or fraudulent online transactions or security violation concerns of consumers are major restraining factors that may hamper the market growth during forecast period.
• Ongoing R&D activities as well as the large investments by some market players in the e-commerce industry, due to the increasing number of online customers are presenting numerous opportunities for the expansion of the market.

Scope of Dropshipping Market Report

The report on the global dropshipping market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Global Dropshipping Market Segment Insights              

Electronics & media segment is anticipated to account for a large market share

Based on products, the market is divided into electronics & media, fashion, food & personal care, furniture & appliances, and toys, hobby, & DIY.

The electronics & media segment is anticipated to account for a large market share in the coming years due to the increasing demand for electronic and media products. To boost sale of electronic products, several e-commerce platforms offer various opportunities for customer to compare a wide collection of products, to avail heavy discounts, as well as to apply for easy returns service.

On the other hand, the fashion segment is expected to register a significant growth rate during the forecast period owing to the rising consumer preference for branded products as well as the easy accessibility of numerous brands of fashion items on a single platform. However, the food & personal care segment is projected to register a CAGR surpassing 30.2% in the coming years due to the expanding consumer expenditure on foods, perfumes, cosmetics, skin care, and other personal care products.

Asia Pacific is expected to constitute a large market share

In terms of regions, the global dropshipping market is categorized as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa.

Asia Pacific is expected to constitute a large market share during the analysis years owing to the growing establishment of several e-commerce companies in this region. The increasing internet connectivity due to the availability of low-price internet data scheme and the rising adoption of smart phones are key factors driving the expansion of online retailers in the region.

As per the report of Global System for Mobile Communications Association (GSMA), it is projected that the number of smartphones in Asia Pacific is estimated to reach 3,900 million by the year 2025. Over the last few years, the Indian e-commerce market has grown significantly due to wide establishment of various start-ups associated with retail online service. The dropshipping services have drastically supported these start-ups to eliminate their investment on inventory costs and other activities.

On the other hand, the market in North America is anticipated to expand at a substantial CAGR during the forecast period owing to the early adoption of advanced technologies in the market including mobile e-commerce, voice-enabled virtual assistants, and assistant chatbots to help boost the retail service.

Segments

The global dropshipping market has been segmented based on

Products

• Electronics & Media
• Fashion
• Food & Personal Care
• Furniture & Appliances
• Toys, Hobby, & DIY

Regions

• Asia Pacific
• North America
• Latin America
• Europe
• Middle East & Africa

Key Players

• Megagoods, Inc.
• Modalyst, Inc.
• Orderhive
• Printify, Inc.
• Dropshipzone
• Inventory Source
• Sunrise Wholesale Merchandise LLC
• SaleHoo Group Limited
• Oberlo, AliDropship
• Doba, Inc.

Competitive Landscape

Some of the major players competing in the global dropshipping market include Megagoods, Inc.; Modalyst, Inc.; Orderhive; Printify, Inc.; Dropshipzone; Inventory Source; Sunrise Wholesale Merchandise LLC, SaleHoo Group Limited; Oberlo, AliDropship; and Doba, Inc.

These leading market players are using strategies including merges, acquisition, new launches, and product development to build their strong position in the market. The R&D and innovation are the key strategies widely adopted by players to boost their market share and position of the market.

For instance, in May 16, 2016, Orderhive entered into a partnership with Rand Marketing to expand revenue growth for online sellers. Orderhive focuses on the same aim as Rand Marketing, which is providing advanced solutions and integrations to successfully run an online store. Additionally, the deal was aimed not only to fuel Orderhive’s operation for online sellers, but also to help overcome the struggling e-commerce owners to gain free consultation.

In May 11, 2017, Shopify Inc., an e-commerce platform acquired Oberlo, which is a provider of dropshipping services. This acquisition was aimed at helping Shopify to penetrate the market and enhance its market existence.