Dropshipping Market

The global dropshipping market was valued at $155.6 billion in 2021, and is projected to reach $1670.1 billion by 2031, growing at a CAGR of 27.1% from 2022 to 2031.

Dropshipping is a type of retail fulfillment method for online stores, where retailers sell products to customers, then pass on the sales order to a third-party supplier, who then ships the order directly to customers on behalf of the retailer. In addition, there is a fast-growing trend of online middlemen that keeps change between wholesale and retail price and cost extra money. Retailers that use dropshipping forfeit some control over customer experience; therefore, having exceptional customer support is critical for buyer retention. Factors such as increase in smartphone penetration, coupled with rise in consumer disposable income contribute toward growth of the e-commerce market, which propels demand for dropshipping services.

In addition, lower capital investments in inventory and logistics has led to increased demand for dropshipping in retailers. However, fraudulent or illegal transactions are the factors that hinder growth of the dropshipping market. Security in terms of payment is one of the key concerns faced in the industry as dropshipping mainly involves online transactions. Payment gateways are liable to cyberattacks or security breaches, which are anticipated to act as a challenge for the market. To minimize loss of goods, damage, and late deliveries, dropshipping services need a proper delivery infrastructure. As a result, difficulties in product shipping and logistics are expected to limit expansion of the global dropshipping market in the years to come. Moreover, growing e-commerce industry offers several opportunities for selling various quality products such as electronics, food, and personal care & appliances as customers can compare a broad product portfolio, get discounts, and request easy returns.

The dropshipping market is segmented into product, destination and region. On the basis of product, it is divided into electronics, fashion, toys, hobby, and DIY, furniture, beauty, health, personal, and household care and others. On the basis of destination, it is segmented into domestic and international. Region wise, this market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Key players operating in this dropshipping market include AliDropship, Doba Inc., Inventory Source, Megagoods, Inc, Modalyst, Inc, SaleHoo Group Limited, Shopify Inc., Sunrise Wholesale Merchandise, LLC, Printify, Cin7 Orderhive Inc., and Wholesale2b.

Growth in e-commerce industry

In the current scenario, the e-commerce industry is growing rapidly, owing to increase in penetration of the internet. People can buy and sell virtually everything such as books, electronics, clothing, software, and furniture with the help of the internet. For instance, in May 2021, according to the United Nations Conference on Trade and Development (UNCTAD), share of the global e-commerce sector's retail sales increased dramatically from 16% to 19% in 2020. Similarly, according to the IBEF (India Brand Equity Foundation) organization, India's e-commerce is expected to reach $99 billion by 2024, growing 27% from 2019–2024, with food and fashion apparel likely to be major products in it.

According to the Organization for Economic Co-operation and Development (OECD), Austria, Belgium, Chile, Ireland, Israel, and the UK all expanded their fiber connections by more than 50% in 2020. Similarly, according to the World Bank organization, by 2022, total annual Internet usage is expected to increase by approximately 50% from 2020 levels to reach 4.8 zettabytes, equivalent to 150,000 GB per second. Thus, as a result of growth of the e-commerce industry, infrastructure of the shipping industry is improving, owing to rise in internet penetration globally, which helps consumers to shop through online platforms. Hence, these factors are expected to propel the dropshipping market growth during the forecast period.

Increase in demand for fast delivery of packages

With the advent of online shopping along with inclination of customers toward buying products through an online source, demand for better and more efficient delivery service for products has increased. With the advent of the COVID-19 pandemic, preference of customers for online shipping of daily necessities has increased, which has supplemented growth of the dropshipping market. For instance, there has been a spike in e-grocery orders in China, owing to inclination to consumers toward e-commerce companies such as JD.com, Alibaba Group, and MTDP to shop virtually for their household needs. In addition, to curb need to avoid direct contact among individuals, JD.com in China has offered a platform for customers to deal with directly to manufacturers in Wuhan to handle grocery and medical package deliveries. Thus, increase in demand for fast delivery of packages further boosts growth of the dropshipping industry across the globe.

Security concerns regarding online payments

Increase in online frauds globally has led to increase in awareness regarding security pertaining to online payments, which is expected to hamper growth of the global dropshipping market during the forecast period. For instance, in May 2021, cybercrime department of the government of India mentioned that the department received more than 61,100 complaints regarding digital frauds. In addition, 50% of these complaints were related to UPI frauds. Similarly, in 2019, the Merchant Risk Council organization mentioned in a report that 6.2% of total revenue lost in payment frauds globally. Furthermore, increase in number of scams regarding fake dropshipping stores on e-commerce platforms are being witnessed throughout the world. Thus, rise in number of payment frauds globally and increase in number of fake dropshipping stores on e-commerce platforms are anticipated to restraint the market growth during the forecast period.

Consumer inclination toward online shopping

In the past few years, the consumers have shown increased inclination towards online shopping due the high convenience offered by online shopping platforms, increased adoption of smartphones/tablets, and rising penetration of internet globally. For instance, in 2022, the global internet penetration is around 69%, and the total internet users are about 5,473 million.

In all the regions the Asia-Pacific region is the leading region with highest internet user 2,934 million, and North America region is the leading region in terms of internet penetration with 93.4%. The rapid adoption of internet in all over the world support the dropshipping market during the forecast period.

The lockdown has significantly boosted adoption of dropshipping among consumers for buying medicines and other essentials products online. For instance, according to the United Nations Conference on Trade and Development (UNCTAD), average share of internet users who made purchases online increased from 53% before the pandemic (2019) to 60% following the onset of the pandemic (2020/21), across 66 countries. In addition, the U.S. and China, which contribute toward growth of dropshipping, have been hit hardest by the COVID-19 pandemic. The economic uncertainty, partial shutdown of businesses and low consumer confidence impacted demand for numerous products. The supply chain got hampered during the pandemic along with delayed logistics activities. The dropshipping market is expected to regain its pace during the post pandemic scenario, owing to ease in restrictions and increase in number of e-commerce platforms. For instance, according to Shopify, in 2020, only 17.8% of sales were made from online purchases. This number is expected to reach 21% in 2022, a 17.9% increase in the e-commerce market share over two years.

Key Benefits For Stakeholders

• This study presents analytical depiction of the global dropshipping market analysis along with current trends and future estimations to depict imminent investment pockets.

• The overall dropshipping market opportunity is determined by understanding profitable trends to gain a stronger foothold.

• The report presents information related to the key drivers, restraints, and opportunities of the global dropshipping market with a detailed impact analysis.

• The current dropshipping market is quantitatively analyzed from 2022 to 2031 to benchmark the financial competency.

• Porter’s five forces analysis illustrates the potency of the buyers and suppliers in the industry

 Dropshipping Market Report Highlights