According to The Insight Partners new research report titled “The global Dropshipping Market Forecast to 2027 – COVID-19 Impact and Global Analysis,” published by The Insight Partners, the global dropshipping market is expected to reach US$ 591.77 billion by 2027, registering a CAGR of 18.3% during 2020–2027, the forecast period considered in the report. The scope of study involves understanding the factors contributing to the growth of the dropshipping market; it also includes estimation and forecast of the revenues as well as market size analysis, along with spotting significant market players and their key developments.
The dropshipping market is likely to experience substantial growth rate owing to a surge in online shopping and the growing trend of cross-border e-commerce trade. Thus, the demand for dropshipping services is principally influenced by the growth of the e-commerce platforms. The rising penetration of smartphones and rising disposable income in emerging markets are also driving the demand for dropshipping services. Dropshipping is implemented in numerous industries to offer various types of products, such as electronics, personal care, and toys; it also ensures the smooth delivery of goods to consumers. Introduction of advanced technologies has offered new opportunities to dropshipping model providers to move from traditional to online business mode.
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.
The major stakeholders in the dropshipping ecosystem comprise manufacturers, wholesalers, suppliers, dropshipping companies, and end-user/customers. Manufacturers are the companies that produce products. Some of them would have a dropship program that enables other wholesalers to partner directly with them to retail their products. The wholesalers can sell the manufacturer’s products on their website and make a sale. They will forward the information to the manufacturer, and the manufacturer will pick, package, and ship the product to the end user/customer on behalf of the wholesalers. If a manufacturer does not have a dropshipping program, then they might choose to work with a wholesaler to provide their goods directly to end users.
The dropshipping market is most mature in the APAC region. The growth of the dropshipping market in the region is majorly due to tremendous growth in ecommerce industry. The region comprises several well-established ecommerce companies, which have attracted a significant percentage of the region’s population from the majority of the countries. The growth in ecommerce business has been shaping the revenue generation trends in the dropshipping market. High disposable income and penetration of smartphones among all age groups generate significant growth in demand for dropshipping services in the region, owing to the fact that dropshipping services help in saving time and money. This factor has attracted a huge percentage of the APAC population.
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China-based AliExpress is among the leaders and forerunners in the ecommerce industry and dropshipping market. Majority of the manufacturing sectors across the globe rely on Chinese manufactured parts or components, and AliExpress is one of the key dropshippers that facilitate the B2B dropshipping services. Apart from AliExpress, numerous dropshipping market players exist in India, Hong Kong, and Japan as well as countries in Southeast Asia. The presence of a large number of dropshipping market players in the region is attributable to the growth of the dropshipping market in the APAC region.
The dropshipping market is expected to grow during the forecast period due to the rise in demand for B2B and B2C products among online shoppers. Increase in awareness about the advantages of dropshipping among the merchandises and customers is boosting the demand for dropshipping services, thereby driving the dropshipping market. In addition, rise of online retailers across APAC has pertained to the development of internet connectivity through the penetration of smartphones. According to the Global System for Mobile Communications Association (GSMA), the count of smartphones in the APAC region is expected to reach 3.9 billion by 2025. This figure reflects the upward trend in upcoming demand for ecommerce and the dropshipping market.
Since the outbreak of COVID-19 in 2019 in China, manufacturers, retailers, wholesalers, and online retailers are experiencing a downfall in their respective businesses due to disruption in supply chain management. This has had a negative impact on the dropshipping market players’ businesses, owing to delay in manufacturing and delivering the products to customers. India is currently one of the worst-hit countries in the APAC region, with huge disruption in the supply chain business. India is among the key countries in the APAC dropshipping market. Pertaining to the disruption in the supply chain as a result of extended lockdown measures and restriction in manufacturing facility operation, the dropshipping market in the country has been experiencing a negative impact.
The APAC region houses a number of dropshipping market players, which include AliExpress (China), Wiio (China), Baggood (China), CjDropshipping.com (Yiwu Cute Jewelry Co., Ltd.) (China), Dropship China Pro. (China), Dropshipzone.In (WOW Enterprises) (India), Bafulia (India), Shopperr (India), and Shopkyo (Japan).
Impact of COVID-19 Pandemic on Dropshipping Market
According to the latest report from the World Health Organization (WHO), the US, Spain, Italy, France, Germany, UK, Russia, Turkey, Brazil, Iran, and China are some of the worst affected countries due to COVID-19 outbreak. The outbreak first began in Wuhan, China, during December 2019, and since then, it has spread at a fast pace across the globe. As of August 12, 2020, there are around 20,162,474 confirmed COVID-19 cases globally, with ~737,417 total deaths, and the number is growing at varying rates in different countries. The COVID-19 crisis is affecting the industries worldwide, and the global economy is anticipated to take the worst hit in 2020, which is likely to have impact on 2021 as well. The pandemic has disturbed dropshipping businesses and suppliers around the globe. Warehouses, suppliers, and delivery companies are not operating at their full capacity. This might cause some order delays. The factory shutdowns, travel bans, trade bans, and border lockdowns to combat and contain the outbreak have adversely affected the dropshipping industry.
Key Findings of Study:
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 the 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, growing demand for dropshipping services offers an opportunity for various entrepreneurs in Asian countries to start their business with fewer capital investments in inventory.
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