Global Dropshipping Market Size (2023 - 2030)

As per our research report, the global dropshipping market size was values at USD 190 billion in 2023 and is projected to reach USD 1096.5 billion by 2030. This market is anticipated to witness a CAGR of 24.5% from 2023 to 2030. The rise in the proliferation of smartphones, integration of artificial intelligence in dropshipping, increasing penetration of e-commerce around the world, and advantages such as lower capital investment in logistics and inventory are some factors majorly driving the market growth.

Industry Overview

Dropshipping is the practice of selling products through internet stores without keeping a stock of goods. The merchant sends the customer's orders and shipping information to the manufacturer or wholesaler, who then ships the items to the customer directly. Traditional distribution routes necessitate significant inventory management efforts on the part of retailers. The growing popularity of online shopping and the growing tendency of cross-border e-commerce trade are likely to drive market growth. As a result, the surge in demand for dropshipping services is mostly impacted by the e-commerce industry's expansion. Artificial intelligence has allowed dropshipping organizations to increase their lead generation speed without sacrificing quality. Smartphones have changed internet shopping by providing consumers with a plethora of mobile applications that make the process simple and convenient. Rising smartphone adoption, combined with rising consumer disposable income, is boosting the e-commerce business and, as a result, fuelling demand for dropshipping services. The number of shoppers who choose to purchase online has resulted in a significant increase in investments by the major participants in the e-commerce business. A greater reliance on online marketing techniques, such as Google AdWords and Facebook ads, is propelling the industry forward. Customers can evaluate a vast product portfolio, request quick returns, and get discounts,  in the booming e-commerce market, which offers multiple options for selling various high-quality products such as electronics, personal care, food, and appliances

MARKET DRIVERS

The rise in the proliferation of smartphones and increasing penetration of e-commerce around the world is likely to support the growth of the dropshipping market

The continued spread of smartphones has provided a substantial growth opportunity for market participants. With the advent of numerous mobile applications to create a quick and easy experience for consumers, the market need for smartphones has changed online shopping. As a result, the steady rise in smartphone penetration, combined with rising consumer buying power, is paving the way for the growth of the e-commerce business, which in turn is fueling demand for dropshipping services. Traditional distribution systems require merchants to put a lot of time and effort into inventory management. The global dropshipping market is predicted to increase rapidly as a result of the growing trend of cross-border e-commerce trade and the growing demand for online purchasing.

Advantages such as lower capital investment in logistics and inventory have led to increased demand for dropshipping in retailers

Dropshipping is becoming increasingly popular as it is cost-effective in terms of business setup and maintenance. As a result, various organizations are heavily utilizing dropshipping services. It improves business operations while also providing clients with superior cost-saving options. By connecting with suppliers and customers, a dropshipping business may be conducted from almost anywhere with an Internet connection. Merchants are turning to drop shipping services to save money on inventory purchases and maintenance as e-commerce platforms become more commonly used.

Integration of artificial intelligence in dropshipping is driving the market growth

Artificial intelligence has been employed by online firms to automate parts of their client interactions, and this trend is likely to continue in the future years. Artificial intelligence advancements have allowed dropshipping organizations to increase their lead generation speed without sacrificing quality. The capacity to automate e-commerce procedures has been available for a while, but as artificial intelligence advances, it is anticipated to become more commonplace and personalized. Several dropshipping organizations that have implemented artificial intelligence sales assistant solutions can use the technology to engage potential consumers in genuine discussions via chat functionalities on their websites, as well as reach out to every possible lead.

MARKET RESTRAINTS

Inventory issues, shipping complexities, and supplier errors are some factors that may act as a challenge in the global dropshipping market

When sourcing from various warehouses that are also fulfilling orders for other merchants, inventory can fluctuate daily. Typically, drop shippers collaborate with several suppliers, and the products in the online store come from a variety of drop shippers. This adds to the cost of shipping. For example, suppose a consumer orders three things, each of which is only accessible from a different source. For each item sent to the customer, there will be three different shipping charges. Furthermore, low-quality suppliers can generate an unending amount of annoyance with missing items, poor packing, and botched shipping,  all of which can harm a company's reputation.

Low margins can be a disadvantage to operating in dropshipping vertical

Low margins are the most significant disadvantage of operating in a highly competitive dropshipping vertical. It is so simple to get started and the overhead costs are so low, that numerous rival stores can open shop and sell things at rock-bottom rates to increase revenue. There are no entrance hurdles with dropshipping. These retailers usually have low-quality websites and little customer support. The potential profit margins in a niche are likely to be declined as a result of the increasingly tough competition.

DROPSHIPPING MARKET REPORT COVERAGE:

Segmentation Analysis:

Dropshipping Market – By Product:

• Toys, Hobby and DIY

• Electronics and Media

• Furniture and Appliances

• Food and Personal Care

• Fashion

The Electronics and Media segment accounted for the largest market share owing to the increased demand for electronic products. Customers can evaluate a large portfolio of products, apply for quick returns on the e-commerce site, and get discounts which open many paths for the sale of electronic products.The Fashion segment is anticipated to grow rapidly during the forecast period owing to increased globalization and changes in consumer buying behavior. The fashion industry is likely to be driven by rising customer preference for branded products and the availability of multiple brands on a single platform.The Food and Personal care segment is anticipated to register considerable growth during the forecast period. The rising consumer expenditure on skincare, cosmetics, perfumes, and other personal care products is likely to drive market growth. Furthermore, rising spending on domestic furniture has influenced the demand for luxury furniture, resulting in the furniture and appliances segment's rise.

Dropshipping Market – By Organization Size:

• SMEs

• Large Enterprises

Dropshipping allows companies of all sizes to save money on warehouse rent, inventory, insurance, and other costs. It allows clients to be reached regardless of their location with no requirement for physical storefronts. Traditional distribution systems require retailers to invest heavily in inventory management. However, as e-commerce becomes more popular, merchants are turning to drop shipping services to save money on inventory management. The adoption of dropshipping has increased as a result of restricted investment in transportation and inventory.

Dropshipping Market - By Region:

• North America

• Europe

• Asia-Pacific

• Rest of the World

Geographically, the North American Dropshipping market is anticipated to gain the largest market share during the forecast period owing to the increasing adoption of dropshipping, as it saves cost. The evolving consumer behavior and rise in mobile e-commerce with voice-enabled virtual assistants are contributing to the market growth. Additionally, advantages such as a simple ordering process and returns are luring customers to online shopping platforms. Over the last years, a considerable number of dropshipping businesses have sprouted up in the United States and Canada. The presence of various industry players in the region is likely to help the market flourish.

Asia Pacific Dropshipping market accounted for the most considerable share of revenue and is anticipated to witness steady growth during the forecast period. The geographical expansion of the market is being fueled by the increasing market demand for a dropshipping business model in Asian countries, particularly India and China. It is thought to be one of the most cost-effective ways for entrepreneurs to start an e-commerce company. The expansion of the regional market can be attributed to the growing number of e-commerce businesses in the area, which boosts demand for dropshipping services. The increase of internet connectivity through the usage of smartphones is credited with the growth of online retailers throughout the Asia Pacific area. The number of smartphone devices in the Asia Pacific area is predicted to reach 3,900 million by 2025, according to the Global System for Mobile Communications Association (GSMA). Over the last several years, the Indian e-commerce business has grown significantly, increasing the number of startups catering to this market. Over the forecast period, this is expected to favor demand for dropshipping services in the Asia Pacific. Dropshipping services allow these businesses to concentrate on their core marketing activities or skills while also lowering inventory expenditures. Dropshippers make it possible for small businesses with minimal resources to compete with market giants.

Major Key Players in the Market

Some of the major players operating in the global dropshipping market are:

1. Doba Inc.

2. AliDropship

3. DropshipDirect

4. Megagoods, Inc.

5. Sumner Communications, Inc.

6. DobaInc

7. Modalyst, Inc.

8. Onlinestorebiz.com LLC

9. Oberlo

10. Inventory Source

11. SaleHoo Group Limited

12. Sunrise Wholesale Merchandise, LLC

The dropshipping market is quite competitive as various businesses operate globally. Companies are concentrating their growth strategies on mergers and acquisitions to maintain a competitive position in the market.

Notable happenings in the Global Dropshipping Market in the recent past:

• Partnership- In May 2022, DSers, a prominent e-commerce solutions provider, partnered with Oberlo to develop a new data migration solution that allows Shopify e-commerce merchants to benefit from an improved drop shipping experience with DSers in minutes.

• Acquisition- In June 2021, Wix, a leading global SaaS platform acquired  Modalyst, a leading dropshipping platform. The acquisition is intended to help Wix merchants connect to a vast supplier marketplace where they can build long-term, scalable relationships and source millions of high-quality products synced directly to their stores to sell and fulfill online, extending the Wix eCommerce platform and contributing to the success of Wix businesses.

• Product Launch- In March 2020, Alidropship.com unveiled Sellika, a new WordPress plugin that automates product information modification.

COVID-19 pandemic impact on Dropshipping Market

The COVID-19 outbreak has adversely affected the global dropshipping market. Dropshipping is a business strategy that relies on the efficient production, warehousing, and shipment of goods by its very nature. The constant proliferation of virus-infected individuals around the world had made it difficult for many logistics companies to operate smoothly. Manufacturers, suppliers, and logistics businesses were disrupted, causing product delivery to be delayed. E-commerce stores relying heavily on dropshipping providers faced many issues during the COVID-19 pandemic. China is a major industrial hub in the global economy, and factory closures have caused production interruptions for Chinese enterprises. The biggest number of market players was seen in the United States, despite slower-than-average development throughout the COVID-19 crisis, indicating a recent decline in the dropshipping market valuation. The industry anticipates a surge in demand and requirements following the pandemic owing to increasing urbanization and growing e-commerce.