Dropshipping Market to Grow at a CAGR of 18.3% to reach US$ 591.77 Billion from 2020 to 2027

The dropshipping market was valued at US$ 162.44 billion in 2019 and is expected to grow at a CAGR of 18.3% during the forecast period to reach US$ 591.77 billion by 2027.

The e-commerce sector offers a huge platform for shopping, which is increasing at an unprecedented rate across the world. Nowadays, consumers prefer online shopping, as a considerable number of websites are available to choose products from. Moreover, e-commerce platforms also help numerous businesses reach easily to customers, and hence necessary exposure to business is achieved. The sector is propelled by a growing emphasis on online marketing tools, including Google ads and Facebook ads. E-commerce is one of the mature industries in the US, where consumers are highly inclined toward online shopping. According to the Census Bureau of the Department of Commerce, US retail e-commerce sales were US$ 160.3 billion for the first quarter of 2020, an increase of 2.4% from the fourth quarter of 2019. The industry is also popular amongst consumers of all ages in developing countries of APAC, such as India and China. Thus, rising e-commerce industries in North America and APAC are flourishing in the business for dropshipping. Dropshipping is a profitable business model for e-commerce companies that do not need much capital to start with. According to the 2018 State of the Merchant eCommerce Report, out of 450 online stores, ~16.4% are using dropshipping and it is likely to surge in the coming years. The growing popularity of leading dropshipping stores, such as Home Depot and Macy’s, have adopted this business model to broaden their online reach.

The growing e-commerce industry offers several opportunities for selling various quality products such as electronics, food, and personal care and appliances since customers can compare a broad product portfolio, get discounts, and request easy returns. Various e-commerce platforms are acquiring dropshipping service providers to extend their presence in dropshipping business. For instance, Shopify, Inc., an e-commerce company, has acquired Oberlo, a dropshipping service provider. The acquisition allowed Shopify to enhance its position in the dropshipping market. Further, the various e-commerce businesses are expanding their product portfolio in order to offer dropshipping services to wholesalers. Thus, growth of e-commerce industry is boosting the demand for dropshipping.

Impact of COVID-19 Pandemic on Dropshipping Market

The COVID-19 outbreak has had an adverse impact on the dropshipping market in the North American region. Manufacturers, suppliers, and logistics companies are experiencing disruptions to their operations, which is delaying the products' deliveries. The continuously spreading virus-infected patients in the US has restricted numerous logistics companies to operate normally. The US accounts for the highest number of dropshipping market players in the region, and slower than usual growth during COVID-19 crisis is reflecting downfall in the dropshipping market valuation in 2020.

Lucrative Regions for Dropshipping Market

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Market Insights

Surging Growth Opportunities in APAC

Demand for dropshipping business model is increasing immensely in various APAC countries, such as India and China. It is one of the cost-effective models for entrepreneurs to start an e-commerce business. It enables an entrepreneur to sell products online without having to carry inventory. E-commerce sales in APAC countries are growing at a rapid pace making it one of the largest industries. For instance, as per IBEF, in 2017, e-commerce sales grew at an annual rate of 51%, making it the biggest opportunity for online retailers.

Additionally, as per China Internet Information Center, China's online retail sales surpassed US$ 1.29 trillion in 2018. Several smart products such as smart speakers and smartwatches are favored by consumers of this region, with sales upsurge of ~80% year-on-year. Sales of cosmetics and furniture also achieved swift growth in China.

In India, wholesale might cost businesses more money via the cost of goods and shipping charges. The shipping cost is high since individual entrepreneurs do not have access to government deals. However, dropshipping enables businesses to automate their business in order to focus on tasks that produce revenue. It also saves the cost of goods. With dropshipping, shipping goods can cost less and can sometimes even be free. The platform enables dropshippers in India to sell their products across the globe to grow their businesses quickly. Thus, the growing demand for dropshipping services offers an opportunity for various entrepreneurs in Asian countries to start their business with fewer capital investments in inventory.

Product Type Market Insights

Due to the growing penetration of e-commerce platforms, various retailers are opting for dropshipping services in order to reduce capital costs of inventory purchases. The rising demand for numerous products, such as electronics and fashion, opens up several avenues for dropshipping in retailers. Less overhead costs and broad product portfolio are some of the factors projected to fuel market growth. Based on product type, the dropshipping market is segmented into toys, hobby and DIY, furniture and appliances, food and personal care, electronics and media, fashion, and others.

Dropshipping Market, by Product Type– 2019 and 2027

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Organization Size Market Insight

The dropshipping market is segmented into small and medium enterprises and large enterprises based on the organization size. Dropshipping helps businesses of all sizes cut costs based on warehouse rent, insurance, inventory, and other expenses. It also enables to reach customers irrespective of geography without the requirement to build brick and mortar stores.

Strategic Insights

The players operating in the enterprise content management market focus on strategies such as mergers, acquisitions, and market initiatives to maintain their positions in the market. A few developments by key players are listed below:

• In August 2020, Inventory Source announced new dropship suppliers for the month of August including HomeSnob, UFM Men’s Underwear, Direct Dropship UK, U Suck, ALLNET, RakADX, and ZFI Inc.

• In March 2020, Alidropship.com introduced Sellika, a new plugin for WordPress that automates product information editing.

Global Dropshipping Segments:

Dropshipping Market – By Product Type

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

Dropshipping Market – By Organization Size

• Small and Medium-Size Enterprises
• Large Enterprises

Dropshipping Market – By Geography

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • Germany
  • Italy
  • Spain
  • UK
  • Rest of Europe

• Asia Pacific (APAC)
  • Australia
  • China
  • India
  • Japan
  • Rest of APAC
• Middle East & Africa (MEA)
  • Saudi Arabia
  • UAE
  • South Africa
  • Rest of MEA
• South America (SAM)
  • Brazil
  • Rest of SAM

Companies

• alidropship.com.
• Doba Inc.
• DropshipZone
• Inventory Source
• Megagoods, Inc.
• MODALYST, INC.
• Orderhive
• Printify, Inc.
• SaleHoo Group Limited
• Sunrise Wholesale Merchandise LLC