A dropshipping business is a great way to start your business journey into the e-commerce market in the UAE. If you want to start a dropshipping business in the UAE, you will need to obtain a trade license. Remember, dropshipping is legal in the UAE. As a business owner, you are allowed to start dropshipping business in Dubai.  

In this blog, we will discuss all the details about how dropshipping works, the steps involved in obtaining a trade license, tips on how to start it, its pros and cons, the best dropshipping suppliers, and many more. 

Let’s continue reading more about dropshipping in the UAE and how to set up your own business in Dubai. 

Introduction 

Before starting your business in the UAE, you must have basic knowledge about dropshipping. If we define dropshipping, then it involves operating a business by accepting online customer orders. The orders are through a website or social media without holding inventory or shipping products yourself. It is the best choice for young entrepreneurs looking for a start-up with minimal capital requirements. Moreover, you must find a particular niche to target. By selling a unique product, you can target specific age groups. It will lead to increased sales. It might take time to research and analyze the competition in your areas of interest. But trust us, it will all be worth it.  

For export and import products to buyers in the UAE, you must require a business trade license before you start any business activity or drop shipping in the UAE. You can obtain it through the Department of Economic Development (DED).

How does dropshipping work in the UAE? 

As we discussed above, dropshipping is a kind of e-commerce business structure. You need to obtain an business license. In this business, online retailers do not invest in physical inventory to sell their products. However, when there is an order replacement, the retailers then buy the item from the manufacturers. The retailers still do not need to worry about the shipment. The manufacturers deliver it directly to the customer. Dropshipping is easier to manage as there is no need to handle shipments or any stock management. It gives you the audacity to work more on marketing and customer services. That’s how you can increase sales and orders and ultimately your profits.

Steps to set up a dropshipping business in Dubai

To start a drop shipping business includes several steps to follow. The steps include:

1. Get a trade license

The first step is to obtain a business trade license before setting up your dropshipping business in Dubai. It is regulated by the DED in Dubai. Obtaining a trade license also includes a few steps, such as: 

i. Choose a business activity.

Identify the exact nature of your business. Check the business activity list on the Department of the Economic Development website and choose the relevant activities that you will conduct. Choosing the right business activity helps you in obtaining the right business license in Dubai.  

ii. Choose a business structure.

It is the foremost important step. Choose a business structure that goes well with your future goals. You can choose from different options. The options include Sole proprietorship, a shared branch, or LLCs.  

iii. Select a unique trade name.

Now is the time to choose at least three unique trade names. The reason is that a name must be unique and should not be registered before in Dubai.  

iv. Get initial approvals. 

The next step is to get all the initial approvals from the relevant authorities in Dubai or UAE.

v. Sign Memorandum of Association. 

After getting initial approvals, draft and sign the Memorandum of Association and Articles of Association (AoA), if required. 

vi. Submit the required documents. 

Submit all the required documents to the Department of Economic Development. The documents include: 

• Passport copy of all shareholders 
• Resident visa copy of all shareholders 
• Signed MoA 
• Emirates ID copy of all shareholders 
• Passport-size photos  
• Application form  
• Articles of Association (AOA) 
• No Objection Certificate or other required documents.

vii. Pay the fees. 

Once you submit all your required documents, the next step is to pay the DED license fee. After the payment, you are ready to collect the dropshipping business license.  

2. Choose a niche

Now that you have obtained a business license for dropshipping. It is time to decide your niche. The niche belongs to certain targeted markets based on your area of expertise. We advise you to aim for a niche that is trending and has the potential to bring business. 

3. Arrange a supplier

After choosing your niche, now arrange suppliers. Finding a reliable dropshipping supplier is very important. Keep in mind that when you select any product from a supplier, it should be of high quality. The supplier must also offer reasonable and competitive prices. 

4. Create a dropshipping platform

The last step is to create a platform that goes well with your dropshipping preferences and needs. You can build your website or buy an existing one. You are ready to start now!

Pros of dropshipping in the UAE 

A dropshipping business set up in the UAE is relatively easy with the right guide. You don’t need a physical store or inventory, and the cost of starting a dropshipping business is low. Simply obtain the necessary dropshipping license and grow your business. Other benefits of having a dropshipping business in the UAE include: 

#1. Low initial investment 

Dropshipping does not require you to purchase inventory upfront. It reduces the need for a large initial investment. It is beneficial for entrepreneurs looking to start an online retail business in the UAE. 

#2. Minimal risk 

Since you do not hold inventory, you do not have to worry about handling stocks and inventory management. So, no need to manage the inventory. No financial loss is involved.  

#3. Tax Incentives 

UAE is known for its favorable tax environment. You can enjoy tax benefits including 0% income taxes, and lower corporate tax rates when setting up a dropshipping business in Dubai.

#4. Strategic location 

One of the biggest advantages of having a business in the UAE is the strategic location. It has the world’s biggest trade hubs. As a result, your dropshipping business will be ready to face the global market.  

#5. Legal requirements 

To start dropshipping, you need to comply with the legal requirements set by the government of UAE. You must obtain a trade license to legally run your dropshipping business in Dubai. It helps you get into the market with a better position legally. 

Cons of dropshipping in the UAE 

Starting a dropshipping business in the UAE can also be challenging. This is due to the strict regulations and requirements. It requires a lot of effort to market your dropshipping store. Without a proper strategy in place, it can be difficult to reach your target audience. Other cons of dropshipping include the following: 

#1. Lower profit margins 

You can expect lower profit margins starting from 15%. The profit margin is very low, and you are not guaranteed to have sales abruptly. The only way to increase sales is to have a high-traffic-generating website. 

#2. Local customs regulations 

It is necessary to adhere to local customs regulations for businesses importing goods into the UAE. The knowledge about the specific requirements for each product is a must. General requirements such as necessary permits or certifications, following labeling and packaging guidelines, and paying necessary duties and taxes. Failing to follow customs rules can cause shipment delays or penalties. 

#3. Competitive market 

UAE is a highly competitive market. An affordable investment leads to increased competition. The most popular markets are saturated with drop shippers offering competitive prices. One of the difficulties you may face is the lack of control over the shipping and delivery procedures. In today’s market, customers demand swift and precise delivery. If there are any errors or delays, it can result in unfavorable feedback.

#4. Less control 

When running a dropshipping business, you have the responsibility of managing customer services. It includes inquiries, complaints, and returns. But you do not have direct involvement in the shipping procedures. It becomes more difficult when dealing with an unresponsive or unreliable supplier.

 4 Best dropshipping suppliers in the UAE  

Starting a dropshipping business in the UAE is a perfect choice with the growing popularity of e-commerce businesses. Several dropshipping suppliers in the UAE can help you get your business up and running. The four best dropshipping suppliers in the UAE are:   

1. AliExpress 

AliExpress is a top choice for dropshipping due to its vast product range and competitive prices. 

• Ideal for young entrepreneurs without investing much.
• Compatible with numerous dropshipping tools and platforms. 

However, there are some drawbacks: 

• Deliveries to the UAE may take longer. It can potentially impact customer satisfaction. 
• Product quality can be inconsistent. You need to select a supplier carefully. 

2. Alibaba 

Alibaba is another of the best dropshipping suppliers in the UAE. It also comes with some benefits and challenges such as: 

• You can enjoy competitive rates by directly accessing manufacturers. 
• Customize your products and packaging that suit your brand’s needs. 

However, there are challenges: 

• Many suppliers require bulk purchases. It may not align with all dropshipping models. 
• Direct negotiations with suppliers require more time. 

3. eWorldTrade 

It is another dropshipping supplier in the UAE. eWorldTrade is connecting buyers and sellers worldwide.  

• It offers various products from global suppliers such as clothing, electronics, and home goods.  
• It offers more business features like order tracking that simplify business operations.  
• Low price ranges are suitable for entrepreneurs on a tight budget.

The potential drawbacks of eWorldTrade: 

• Quality control challenges due to a wide range of suppliers. 
• High competition among sellers. 
• Longer delivery times. 
• Customer service difficulties. 

4. GeekBuying 

It is a Chinese dropshipping supplier. GeekBuying primarily focuses on electronics.  

• It is known for its user-friendly platform.  
• It offers competitive pricing, making it a favorable choice for dropshipping companies. 

The key drawbacks of Geekbuying: 

• Lengthy shipping times and potentially high shipping costs 
• Possible issues with product quality, particularly with electronics. 
• Communication challenges due to language differences. 

Secrets of a successful dropshipping business in UAE 

Tip #1. Before starting dropshipping in the UAE, research the market. Understand the demand for specific products, competition, and consumer preferences. 

Tip #2. Choose the right products that are in high demand in the UAE. High-demanding products have a good profit margin with easy shipments.  

Tip #3. Partner with reputable suppliers who offer quality products, competitive prices, and reliable shipping services.  

Tip #4. Create a professional website that is mobile-friendly. It must be secure for online transactions. Include high-quality product images with detailed product descriptions. 

Tip #5. Set reasonable prices for selling your products. Stand out from the competition by offering promotions, discounts, and free shipping. 

Start your dropshipping business now

To set up a dropshipping business, you must choose the right business consultancy in Dubai. Emirates Business Setup is here to help!

Working with our top business consultant in Dubai can help you achieve your goal faster. We offer business setup services in mainland areas as well as in UAE-free zones. You can contact us to start today!

FAQs

1. What is dropshipping in the UAE?

Dropshipping is a business model in UAE, where a supplier ships products directly to customers on behalf of the retailer. It allows entrepreneurs to start a dropshipping business without inventory management.

2. How to start a dropshipping business in Dubai?

To start a dropshipping business and become profitable in Dubai, you need a business license, and partner with reliable dropshipping suppliers in the region.

3. Is dropshipping legal in the UAE?

Yes, dropshipping is legal in the UAE. You must have a license in the UAE to operate your dropshipping business within the country.

4. What are the benefits of starting a UAE dropshipping business?

Start a drop shipping business in the UAE as it offers benefits such as low startup costs such as in the reputed free zone like Meydan free zone, and the opportunity to reach a global market through Shopify.

5. How do I register my dropshipping business in the UAE?

To register your dropshipping company in the UAE, you need to follow the legal procedures and obtain the necessary license to operate your company in the United Arab Emirates.

6. Can anyone start dropshipping in the UAE?

While dropshipping is accessible to most individuals, it’s important to ensure compliance with legal requirements and obtain the proper license before starting a dropshipping company in the UAE.