Dropshipping Market Size & Share, Market Research and Industry Forecast Report, 2019-2025 (Includes Business Impact of COVID-19)

                                          
Industry Insights, Market Size, CAGR, High-Level Analysis: Dropshipping Market


The global dropshipping market size was valued at USD 102.2 billion in 2018 and is expected to register a CAGR of 28.8% from 2019 to 2025. The market is anticipated to witness significant growth owing to an increase in preference for online shopping, coupled with the rising trend of cross-border e-commerce trade. Hence, the rise in demand for dropshipping services is predominantly influenced by the growth of the e-commerce industry. Dropshipping involves selling of products through online stores where the retailers do not keep a stock of goods. The retailer transfers the customer orders and shipment details to either the manufacturer or wholesaler, who then ships the goods directly to the customer.

Smartphones have revolutionized online shopping with numerous mobile applications to make the experience easy and convenient for consumers. Rising smartphone penetration, coupled with increasing consumer disposable income, is contributing toward the growth of the e-commerce market, thereby driving the demand for dropshipping services. There has been a notable increase in investments by the key players in the e-commerce industry owing to the number of shoppers inclined toward online shopping platforms. For instance, according to United Nations Conference on Trade and Development (UNCTAD), the number of global online shoppers accounted for 1,078 million in 2015 and reached 1,342 million in 2017.

The Asia Pacific e-commerce market has witnessed strong growth over the last few years, owing to increasing disposable income and rising preference for online shopping. This growth across the e-commerce sector is further expected to favor the practice of dropshipping. According to the Ministry of Commerce & Industry, Government of India, the Indian e-commerce market was valued at USD 38.5 billion in 2017 and is expected to reach USD 200.0 billion by 2026, at a CAGR of 51.0%.

Traditional distribution channels require retailers to make massive investments for inventory management. However, with the growing penetration of e-commerce platforms, retailers are opting for dropshipping services so as to reduce capital expenditure for inventory purchase/ management. Moreover, fewer capital investments in inventory and logistics have resulted in an increased demand for dropshipping among retailers. Fewer overhead costs and wide product portfolio are other factors projected to fuel market growth.

Fraudulent or unauthorized transactions are anticipated to hamper the market growth. Security in terms of payment is one of the key concerns faced in the industry since dropshipping mainly involves online transactions. Payment gateways are susceptible to security breaches/cyberattacks, which is expected to act as a challenge for the market. Dropshipping services require a delivery infrastructure in place to avoid late deliveries, damage, or loss of parcels. Hence, complexities in shipping and logistics of products could restrain the market growth.

Product Insights of Dropshipping Market

On the basis of product, the market has been classified into toys, hobby and DIY; furniture and appliances; food and personal care; electronics and media; and fashion. The electronics segment accounted for the largest market share, accounting for over 30.0% in 2018 owing to the growing demand for electronic products. The e-commerce platform opens several avenues for the sale of electronic products as customers can compare an extensive portfolio of products, avail discounts, and apply for easy returns.

The fashion segment is anticipated to witness positive growth in the dropshipping market from 2019 to 2025 owing to rapid globalization and changes in consumer spending behavior. Growing consumer preference for branded products and availability of several brands on a common platform are further anticipated to drive the fashion segment over the forecast period.

The food and personal care segment is estimated to register a CAGR exceeding 30.0% over the forecast period. Increasing consumer spending on skincare products, perfumes, cosmetics, and other personal care products is anticipated to drive the food and personal care segment growth. Moreover, increasing expenditure on domestic furniture products has influenced the demand for luxury furniture products, thus driving the furniture and appliances segment growth.

Regional Insights of Dropshipping Market

The Asia Pacific market accounted for more than 25.0% of the overall revenue in 2018. The regional market growth is accredited to the increasing number of e-commerce companies in the region, which subsequently drives the demand for dropshipping services. Growth of online retailers throughout the Asia Pacific region is attributed to the expansion of internet connectivity through the adoption of smartphones. According to the Global System for Mobile Communications Association (GSMA), it is estimated that the number of smartphone devices in the Asia Pacific region is expected to reach 3,900 million by 2025. The Indian e-commerce market has witnessed significant growth over the past few years, which has resulted in a rise in the number of startups catering to this marketplace. This is further expected to favor the demand for dropshipping services in Asia Pacific over the forecast period. Dropshipping services help these startups focus on key marketing activities or competencies as well as reducing inventory costs. Dropshippers enable such startups with limited resources to compete with well-established giants in the market. Thus, the aforementioned benefits have resulted in the adoption of dropshipping services among e-commerce startups, thereby driving the market growth.

The North America market is expected to witness considerable growth owing to the evolving consumer behavior and market trends such as mobile e-commerce and voice-enabled virtual assistants and chatbots. Furthermore, benefits such as easy ordering process and returns is attracting consumers toward online shopping platforms. According to the UNCTAD, e-commerce sales in U.S. accounted for USD 753.0 billion in 2017. Thus, sales in the e-commerce industry in the region are expected to generate avenues for dropshipping companies, thereby driving the market growth.

Market Share Insights of Dropshipping Market

The market is highly fragmented owing to the presence of several small- and medium-sized organizations operating globally. The major global players operating in the market include AliDropship; Doba, Inc.; SaleHoo Group Limited; and Oberlo. Companies are particularly focusing on mergers and acquisitions as part of their growth strategy to hold a competitive position in the market. For instance, in 2017, Shopify Inc., an e-commerce platform, acquired Oberlo, a provider of dropshipping services. This acquisition enabled Shopify to enter the market and improve their market position. Moreover, major e-commerce companies are expanding their portfolio to provide dropshipping services to manufacturers and wholesalers.

Segmentations, Sub Segmentations, CAGR, & High-Level Analysis overview of Dropshipping Market Research Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of latest industry trends from 2015 to 2025 in each of the sub-segments. For the purpose of this study, this market research report has segmented the global dropshipping market report based on product and region:

Product Outlook (Revenue, USD Billion, 2019 - 2030)

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