E-commerce growth is driving the Global Dropshipping market significantly: Cognitive Market Research

Dropshipping Market Overview

Product Overview and Scope of Dropshipping

Dropshipping is a popular e-commerce business model that allows entrepreneurs to start an online store without the need to invest in inventory upfront. It offers a way to sell products to customers directly, with the supplier or manufacturer handling the storage, packaging, and shipping of the products.
In traditional retail, the store owner purchases inventory from wholesalers or manufacturers, stores it in a warehouse, and ships products to customers upon receiving orders. Dropshipping, on the other hand, eliminates the need for inventory management and shipping logistics. Instead, the dropshippers focuses on marketing and sales while relying on a supplier to fulfill orders.
The process begins with the dropshippers setting up an online store or presence on a marketplace platform. They curate a selection of products from their chosen suppliers and list them in their store at a retail price higher than the wholesale price. When a customer places an order, the dropshipper forwards the order details to the supplier, who then packages and ships the product directly to the customer.

Dropshipping Market – Global Industry Analysis

Market Drivers

• E-commerce growth is a significant driver of the global dropshipping market

The rapid expansion of e-commerce has created a thriving environment for dropshipping businesses to flourish. The continuous growth of e-commerce has led to a substantial increase in online retail sales. Consumers are increasingly turning to online shopping due to its convenience, wider product selection, and competitive pricing. This surge in online retail sales creates more opportunities for dropshippers to tap into the market and cater to the growing demand. E-commerce has expanded the reach of businesses beyond geographical boundaries. Online stores can now target customers globally, regardless of their physical location. This expansion opens up opportunities for dropshippers to collaborate with suppliers and manufacturers from various countries, enabling them to source products from a wider range of options. E-commerce platforms offer consumers access to an extensive range of products and categories. Customers expect a diverse selection of products to choose from when shopping online. Dropshipping aligns well with this demand as it allows retailers to partner with multiple suppliers and offer a wide variety of products without the need for inventory management.

Global E-Commerce Market by Revenue in trillions of dollars

Source: Cognitive Market Research

• Benefits of dropshipping drive the market’s growth

Low Startup Costs:

Dropshipping enables entrepreneurs to launch an online operation with a cheap investment. Traditional retail organizations frequently need to make significant expenditures in logistics, warehousing, and inventory. Since the products are sent straight from the supplier to the buyer, dropshipping avoids these expenses. Due to which, it is a desirable choice for anyone wishing to launch an online business without substantial financial backing.

Wide Product Selection

Scalability and Flexibility

Global Market Reach

Others

Market Trends

• Optimization for mobile phones

• Chatbots and private messages

• Subscription-based models

Global Dropshipping Revenue by Regions (2018-2023)

Global Dropshipping Revenue and Market Share (%) by Regions (2018-2023)

Global Dropshipping Revenue Market Share (%) by regions in 2022

Global Dropshipping Revenue Market Share (%) by regions in 2022

Source: Cognitive Market Research

Based on region, Asia Pacific is dominating the dropshipping market in terms of revenue market share throughout the forecast period. This is due to the presence of several key players in dropshipping in this region. In addition, Asia-Pacific, particularly countries like China, India, and Vietnam, has established itself as a global manufacturing hub. These countries have robust infrastructure and manufacturing capabilities, enabling them to produce a wide range of products at competitive prices. The robust logistics network in the region encourages the e-commerce industry and drives the dropshipping market.

Global Dropshipping Revenue by Segment 

Global Dropshipping Market by Product

• Electronics
• Toys, hobby, and DIY
• Food and Personal Care
• Fashion
• Others

Global Dropshipping Revenue Market Share (%) by Product in 2022

Source: Cognitive Market Research

Based on the product segment, the electronics and fashion segments are dominating the dropshipping market during the forecast period. This is attributed to the increasing demand for electronic products. Fashion and electronics are two of the most popular and frequently purchased product category from online platforms. The strong consumer demand for fashion and electronics translates into higher sales and revenue in the e-commerce market.

Global Dropshipping Market by Destination

• Domestic
• International

Global Dropshipping Market by Business Type

• Business-to-Business (B2B)
• Business-to-Consumer (B2C)
• Customer-to-Customer (C2C)

Global Dropshipping Market by Organization Size

• Large Enterprises
• SMEs

Global Dropshipping Manufacturers Profiles/Analysis

Alibaba Group Holding Limited

Alibaba Group Holding Limited Company Basic Information, and Sales Area

Business Segment/ Overview:

Alibaba Group Holding Limited, through its subsidiaries, offers technical infrastructure and marketing reach to assist retailers, brands, merchants, and other companies in connecting with their users and consumers both domestically and abroad. The firm operates in seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, Innovation Initiatives, and Others.

Financial Analysis

Alibaba Group Holding Limited Net Sales, By Segments (2020-2021) (USD Million)

Source: Cognitive Market Research

Dropshipping Product Types Specification

Business Strategy 

Alibaba Group Holding Limited focuses on a globalization strategy that compromises two components including globalization of consumption and globalization of cloud. It also emphasizes leveraging China commerce platforms, Alipay, and data technology to expand offerings from shopping to services, further tapping into new addressable markets for consumption in China. Alibaba contributes its Internet technology to support the AACA through a number of cooperation programs that rights holders can opt into. It seeks to expand choices to traditionally underserved consumer groups, or those who are technology-challenged due to age or disabilities.