Dropshipping in UAE: Ultimate Guide for (2023)
The emirate has several storage facilities that are suited for dropshipping, as well as a straightforward process for the registration of businesses, a tax rate of zero percent on both personal and corporate income, and a business-friendly environment. In this ultimate guide, we will be reviewing the do’s and don’ts of setting up a business of dropshipping in UAE.
What is dropshipping business?
If you are unfamiliar with the term, dropshipping is a method of doing an online business that allows retailers to ship retail items bought by consumers directly from a third party to retailers’ customers. In this instance, the third party may be a manufacturer, a distributor, or a large retail establishment.
Essential to the success of dropshipping is the merchant’s ability to acquire products from a range of wholesalers, retailers, and manufacturers at the lowest feasible price.
One of the attractive features of dropshipping as an online business is the cheap or nonexistent initial investment necessary to get started. This is because the drop shipper is not responsible for buying, storing, or warehousing the goods; rather, he is solely responsible for acquiring the products from third parties and ensuring they are sent directly to the consumer.
Now, if you want to build a dropshipping business in UAE, you should be aware that the things sent to consumers may be imports or exports. In several ways, the DED controls imports and exports.
How to Start Dropshipping in UAE?
The United Arab Emirates (UAE) retains its status as a regional center for business and internet commerce. The United Arab Emirates (UAE) has been on an upward trend in terms of e-commerce for a number of years and only recently has the government made a lot of attempts to further enhance the e-commerce development activities occurring inside the country.
The Department of Economic Development of the United Arab Emirates (UAE) has recently updated a number of laws in an attempt to further position the UAE as the regional hub for all e-commerce-related enterprises.
In recent years, the number of individuals using the dropshipping business model has skyrocketed. The global market, which was valued at USD 102.2 billion in 2018, is anticipated to reach USD 557.9 billion by 2025, representing an annual growth rate of almost 30%.
Benefits of starting a Dropshipping in UAE
Having a concept for a business model should be made easier by having knowledge of the many different methods things may be drop shipped. The following is a list of the benefits of establishing your business in UAE in the dropshipping sector.
1. Low Cost
The United Arab Emirates has a low average entrance barrier for dropshipping businesses. Entrepreneurs may start a dropshipping company with very minimal start-up money since they do not have to worry about product creation, finding storage solutions, or managing the expenses of delivering products.
2. Ability to Market a Wide Range of Products
Both the fact that they are not branded to a particular niche and the fact that they do not need storage to contribute to the fact that dropshipping businesses are able to offer a wide variety of items. If an entrepreneur does not have a brand, they are free to deal with a diverse range of product suppliers within a number of markets. A drop shipping firm is free to offer whatever they want so long as there is marketing support accessible for any product they sell.
This is complemented by the fact that there are no storage constraints placed on them. Because drop shippers are not required to keep their items before sending them, they have an unlimited amount of potential in terms of the kinds of things they may choose to offer.
3. No Shipping & Logistics
The fact that the wholesaler or manufacturer takes care of shipping is one of the most practical advantages of dropshipping in the UAE. Your supply chain won’t need any effort on your part to figure out distribution, quality control, storage, or shipment. This provides an additional potential advantage to your consumer in the form of speedier shipments to them.
4. Thriving Economy Complementing Dropshipping in UAE
Because of the nation’s rapidly expanding e-commerce market, the UAE is an especially good place in which to launch a dropshipping company. In the year 2020, the value of sales made online increased by more than 50 percent, reaching over 3.9 billion US dollars. According to the findings of recent studies, this value will surpass $9 billion by the year 2025.
The demographics of the Arab nation contribute to the country’s e-commerce sales. The United Arab Emirates (UAE) has a very technologically advanced populace, with 99 percent of the population utilizing the internet on a regular basis. E-commerce sales will only continue to increase as long as the whole population uses the internet for browsing.
Businesses based in the UAE are able to make the most of a number of opportunities that are unique to the nation. Owners of businesses that are ready to go through the necessary steps to register their companies are exempt from paying income tax, property tax, and corporation tax. When figuring out how much money you will make, you need to keep these things in mind.
5. Still A Young Market to Dive Into
Despite the fact that internet shopping is already extremely prevalent in the United Arab Emirates, the industry is still regarded to be relatively new. In the next years, it is predicted that the market would more than double in size. This shows that there are still a great lot of opportunities for your dropshipping firm to find its niche and become really successful.
6. Geographic Location of UAE
The United Arab Emirates is strategically located at the crossroads of Asia, Europe, and Africa. In addition, Dubai is one of the world’s biggest ports and most significant commercial hubs. Your drop shipping firm is now authentically connected to worldwide logistics and know-how, allowing for the expedited shipment of products from foreign areas to the UAE and vice versa.
Types of business activities allowed in Logistic license in UAE
When contemplating the launch of dropshipping in Dubai, UAE, you should carefully consider the business plan you want to use. The common dropshipping setups that are most prevalent in 2022 are shown below.
1. Products Reselling
The remarketing of items is one of the most prevalent uses for drop shipping. On their own websites or market platforms, merchants discover products from a number of sources and then make them available for sale. Those that are skilled in product marketing, as well as those who are experts in their field or demographic, may find success with this kind of dropshipping. On the other side, since you will be compelled to pay for items in advance, this may need a larger initial capital commitment.
2. Extensions of Existing Businesses
Retailers without an internet presence may use the dropshipping services provided by business extensions. This model functions as an intermediary, promoting the items offered by the merchant. After a transaction has been completed, the drop shipper contacts the merchant and asks for the shipment of the product to the customer.
Because you must build a strong relationship with a single merchant to participate in this kind of dropshipping, it may require more effort than product resale. You must have a thorough grasp of their products and services. Nonetheless, since there is so little external competition, this method has the potential to be very effective.
3. Product Creations
This dropshipping strategy involves integrating many products into a single offering that can subsequently be offered to clients. After a purchase has been made, the vendor will ship the bundle’s contents to the customer. The seller must participate in critical thinking while creating a new product. Despite this, it offers up a possible niche market where there are few rivals.
It is crucial to remember that the creation of a packaged product by a single manufacturer or distributor may result in items arriving simultaneously. This is due to the fact that the product development process involves the transportation of several items.
4. Print-On-Demand Business in Dubai, UAE
If you want to deal with pre-printed items, such as t-shirts and mugs, a print-on-demand dropshipping model might better suit your needs.
In order for this kind of dropshipping to operate, creators must submit their text or image to the drop shipper. The drop shipper is responsible for printing the file on the product and mailing it on the creator’s behalf when the product is sold. Given the number of sales that these products create, it would be to your benefit to possess superior marketing skills.
Steps to start a Dropshipping Business
In Dubai, the United Arab Emirates, and the rest of the UAE, it is far easier to begin a drop-shipping firm than it is to launch the majority of other sorts of businesses. This is owing to the fact that obtaining a drop shipping license in Dubai and the United Arab Emirates is all that is necessary.
If you have never started a company in Dubai or the United Arab Emirates before, it is fair for you to feel overwhelmed by the procedure. In such situations, it is highly advised that you seek the advice of specialists who specialize in business formation.
1. Decide your Business Activity
Because marketing the products is the most important aspect of running a drop shipping business in Dubai, UAE, it is highly advised that you identify a particular market niche and stay committed to servicing just that audience. As a consequence, you will have an easier time marketing your unique niche and selling the products.
To achieve success in this endeavor, you will need to find a specialized area of community interest. You also have the option of promoting the products internationally, giving you access to a bigger pool of prospective buyers.
2. Choose a Business Structure
You must choose the organizational structure of your firm. This is owing to the fact that your organization’s legal structure will define the rules and regulations it is obligated to comply with. The United Arab Emirates provides a range of business structures, including sole proprietorship, general partnership, civil company, limited liability company, and others, to help you make a decision.
3. Launch Your Dropshipping Website
There is no assurance that opening an online shop and a social media platform will provide you with sufficient space to begin selling your items. If you want to be successful as a drop shipper, you need to have a strong internet presence so that people all over the world are aware of what your company and brand stand for.
4. Select your Trade Name
In order to legally establish dropshipping in UAE, a trading name must be registered. Thus, you must select a trading name that is completely unique inside the United Arab Emirates. You are able to choose a name that is already in use in another region of the world. You are allowed to explore this alternative so long as it is unique to the UAE and meets the regulations’ standards.
5. Apply For the Drop shipping License
If you’re starting a dropshipping in Dubai, United Arab Emirates, the Department of Economic Development in Dubai will provide your business license also known as a trade license. If, on the other hand, you decide to visit one of the other emirates, you will be required to get a license from the governing body responsible for licensing in that emirate.
To apply for this job, you must complete an application form, submit the required documents, and pay the application fee.
6. Apply for Visa and Open Bank Account
After successfully receiving the drop shipping license in the UAE, you will be allowed to submit a visa application. If you possess a trade license in the UAE, you have the opportunity to sponsor visas for certain of your close relatives. Additionally, you will be required to open a bank account. However, before you open an account with a financial institution, you should do a complete background check on the organization.
Dropshipping business costs in UAE
Drop shipping is the cheapest business to start in Dubai and the UAE. In the UAE, all you need is a website and a drop shipping license. If you operate your company on social media, you don’t need a website. Company Setup Consultants will help you start a drop shipping company in the UAE for AED 21,500.
How Airzone can help you start Dropshhing Business in Dubai, UAE
A company formation specialist like Airzone can help you ensure that this is the case when you start a new firm in the United Arab Emirates (UAE).
When it comes to helping small and medium-sized businesses (SMEs) achieve their goals, we are a team of company registration experts. In order to free you up to concentrate on running your business, our experts can create your company, apply for licenses and visas, and handle all of the necessary administrative chores on your behalf.
If you’ve never done dropshipping before, it might be a challenge to get started in the United Arab Emirates. The truth is, it’s much easier than it seems. As a low-cost business model, dropshipping is especially attractive in 2022 because of how simple it is to set up and maintain Dropshipping in UAE. As if that weren’t enough, internet shopping is becoming more and more popular with the general public.