How to Start a Dropshipping Business in the UAE?

Start a Dropshipping Business in the UAE

Do you want to set up an online business but have a shortage of funds to start that business? Dropshipping is an ideal business that can help you to pursue your dream business. Are you worried as you are not aware of anything about Dropshipping business in UAE? No worries! Flyingcolour Business Setup is here to help you start your dropshipping business in the UAE.

Today, we will disclose a step-by-step guide to starting your own dropshipping business. In addition, we will delve into some essential information about the dropshipping business in the UAE.

Is Dropshipping Profitable in the UAE?

We are sure most of you might be dealing with the same question. But the answer to this query is yes because the average dropshipping profit margin is approximately 15% to 20% in the UAE. As it is located in the middle of other countries, sometimes the margin can be higher if you find a cheaper supplier and sell to the market with a higher purchasing capacity.

Understand the UAE E-Commerce Market 

• Before you start a dropshipping business in Dubai or any other Emirate you have to understand the growth of the market. The United Arab Emirates has one of the most advanced digital economics in the Middle East. 
• The UAE e-commerce market is currently valued at USD 27 billion. 
• The high use of smartphones, increased income, and quick delivery options make this a major growth driver. 

Choose Between the Mainland and Free Zone Setup 

When you are applying for a dropshipping license in the UAE, you have to decide where to register your company. You can register your company in the mainland or in the Free Zone. 

1. You need a Mainland License from the Dubai Department of Economy and Tourism, which allows you to sell directly in the UAE market. You can also work with the local companies. 
2. If you have a Free Zone license, you will get 100% foreign ownership in a place like Dubai CommerCity, Sharjah Media City, or Ras AL Khaimah Economic Zone. 

Why is the UAE ideal for Dropshipping?

We are sure that you are desperate to learn about the process of Starting a dropshipping business in UAE. However, you should wait a few minutes because several people still want clarification about why this country is suitable for the dropshipping business. So, let us have a look at the top reasons for beginning a dropshipping business in the UAE:

1.  New Market

In the UAE, you can find really profitable products for your dropshipping business. In addition, you can run a dropshipping business with international shipping from this country. Apart from meeting the demand for existing products, you can also launch new products and create demand for them due to the existence of the new market.

2. Growing E-Commerce market

You might be surprised to know that the E-Commerce market in the UAE is growing at an incredible speed. Experts predict that online sales will increase by 60% in 2025. Rising incomes, increasing internet users, and a tech-savvy population are some factors that contribute to this growth. The growth is excellent if you start your dropshipping business in this country.

3. Strategic location

Strategic location is among the significant benefits you can obtain when launching your dropshipping business in this country. It is well-connected to Africa, Asia, and Europe. In addition, Dubai has the world's biggest ports and trade hubs. As a result, your dropshipping company will benefit to face the global market.

Steps to Start Your Dropshipping Business in the UAE

You must follow several steps to start a Dropshipping business in UAE. The steps to start your dropshipping business are mentioned below:

1. Choose your products

Initially, you should select the products you want to sell in your dropshipping business in the UAE. You should figure out what products the ex-pats will be willing to pay for. These could be certain to their countries or even foods, handicrafts, and jewelry produced in your country.

2. Fulfill Legal Requirements

After choosing products for your business, you should register your business with the DED in Dubai or the relevant authority of your Emirate. Moreover, familiarize yourself with the UAE’s export and import regulations, including required permits for specific product categories and customs duties, to ensure you fulfill all legal requirements. Flyingcolour Business Setup can help you to ensure you are fulfilling these requirements.

3. Find a Reliable Dropshipping Supplier

Next, you should partner with trustworthy suppliers for shipping and inventory. It is essential to partner with these suppliers because they will take charge of product inventory and transportation in your dropshipping business in the UAE.

You must find reliable Dropshipping suppliers in UAE who sell their products at competitive prices. You can visit online marketplaces, like Alibaba, AliExpress, and more, to locate the perfect supplier. However, you should read reviews before choosing a supplier.

4. Build a Website

In the dropshipping business, your website is your storefront where you must represent your products. You can use platforms, like Shopify or WooCommerce, to create your website for your dropshipping business in UAE. This step involves mentioning a clear product description, high-quality visuals, and a secure checkout process to build trust and boost conversion.

5. Set your Pricing

Next, you should start setting your pricing for products that you want to sell on your dropshipping store. You should perform a deep competitor analysis to know prevailing pricing trends and ensure their offering. Apart from market research, you should consider factors like product cost, profit margin, and shipping cost to set pricing.

6. Set up a Bank Account

After setting product pricing, you should set up a bank account in any UAE bank.  You should partner with a bank that understands the intricacies of online business and can give valuable financial guidance.

You may select a business bank account with features, such as a secure payment gateway, online banking, and more, geared to E-Commerce merchants.  Remember, you will require a bank account to receive payments and pay your suppliers.

7. Promote your Business

Lastly, you should start marketing your dropshipping business in order to reach your potential customers in the UAE.  You can market your business through social media,  Search engine optimization (SEO), Pay-per-click (PPC), and more.

Do I Require a License to Start Dropshipping in the UAE?

Yes, you need a dropshipping license to start a Dropshipping business in UAE.  Remember, a dropshipping license falls under the type of E-commerce license that will allow you to sell your products online without having an inventory.  You can also call this license a trade license.

You can obtain a trade or dropshipping license from the DED in Dubai or one of the free zone authorities in the UAE. However, the cost of this license varies depending on the business structure and free zone you choose.

Estimate the Setup Costs

Dropshipping is a cost-effective business idea but it is not completely free. Having a clear budget will help you to avoid the unexpected costs while building your dropshipping business in the UAE. You can plan for:

• The company registration fees around AED 8,000* - 15,000*
• Website development and hosting 
• Domain and SSL security certificate 
• Payment gateway integration
• Marketing campaigns and ads
• Customs registration or VAT registration 

Documents Required for a Dropshipping License 

If you want to apply for a UAE E-commerce license, you need the following documents:

• The passport copies of all shareholders
• UAE visa or entry permit copies 
• Proposed trade name 
• The basic business plan 
• Bank reference letter 

Common Challenges and How to Avoid Them 

If you are running a dropshipping business, then you will face some challenges. Some of the common problems you will face:

1. Shipping Delays: You should use reliable UAE-based suppliers to ensure fast delivery. 
2. Product Quality Issues: You can face issues with order samples and check quality before listing products online. 
3. High Competition: Selling niche products that are not easily available locally. 
4. Currency Exchange Charges: Compare different payment gateways to reduce the fees. 

Why should You Consult Flyingcolour Business Setup?

Indeed, you need a lower cost to start a Dropshipping business in the UAE.  But you need to go through several complex steps to start this business in this country, especially when it comes to meeting legal requirements. Here, the Flyingcolour Business Setup Services comes into play. Our experts can help you handle every complex step to start your dropshipping business in the UAE. Flyingcolour Business Setup is one of the most trusted business setup firms in the UAE. Here is how we can help you start the dropshipping business in the UAE. Here are our services:

• Expert guidance on the Mainland and Free Zone license options. 
• We will help you with the legal approvals and paperwork. 
• We will help to prepare your business plan and trade name
• Help you get license approval to save your time
• Support you in operating a corporate bank account 

FAQs About Starting a Dropshipping Business in the UAE 

1. Do I need a license for dropshipping in the UAE?

You need an e-commerce license or dropshipping license to sell legal products online in the UAE. 

2. What is the cost of starting a dropshipping business in Dubai?

The cost of starting a business in Dubai is around AED 8000* - 15,000*. The cost also depends on the location, mainland or free zone, and other factors like visa requirements. 

3. Can foreigners open a dropshipping business in the UAE?

Foreign investors can fully own their business in the UAE free zones. You can run a dropshipping company from abroad or within the country. 

4. In how many days can I get a dropshipping license in the UAE?

It usually takes 1-2 weeks if all documents are properly submitted. Our team at Flyingcolour Business Setup can help you get your license. 

To learn more about starting a start Dropshipping business in UAE, book a free consultation with one of the Flyingcolour team advisors.

Please note that this article was published on  13/05/2024 by the federal policies and updates at the time of writing. For the latest info please talk to our consultant.