Dropshipping has seen a stark rise in popularity in recent years. The global market, valued at USD 102.2bn in 2018, is expected to reach USD 557.9bn by 2025, representing an annual growth rate of almost 30%.
Thanks to an increasing appetite for online shopping, an ideal trading location, and simple setup procedures, this pattern is reflected here in Dubai.
The emirate is home to numerous warehousing facilities with dropshipping capability, as well as a simple company formation process, a 0% corporate and personal income tax rate, and a welcoming business environment.
If dropshipping has piqued your interest, here’s how to get started in the UAE.
What is dropshipping?
Dropshipping is a business model whereby a seller, usually online, fulfils customers orders without holding stock. Under this model, the seller is simply a shopfront. The physical item is shipped directly from a dropshipping company to the buyer.
Dropshipping allows sellers to offer a range of inventory without holding stock and taking on the associated costs. Instead, items are ordered and shipped on an order by order basis.
How to pick a niche for a dropshipping business
Dropshipping can be lucrative, but any success is based on your chosen niche. As with any business model, it’s not advisable to enter a crowded or saturated market. Instead, find an as yet unplugged gap.
The key to finding your niche is to research the market thoroughly, along with any successful competitors. Tools, such as Google’s Keyword Planner and Trends feature are also useful for gauging local interest.
When starting in Dubai, you should look to offer a product that is not readily available in the UAE.
Do I need a trade license for Shopify dropshipping in Dubai?
Yes. To engage in any trading activity in Dubai or the wider UAE, you will require a trade license. In this instance, you will need an e-commerce license.
Fortunately, with the right guidance and support, e-commerce licenses are easy to obtain. The most straightforward and cost-effective approach is to apply to incorporate your business in one of the UAE’s free zones.
What is the best license for your dropshipping business?
The best option for most dropshipping businesses is to set up in a low-cost free zone such as Fujairah Creative City.
From here, you can trade with the rest of the world, accepting orders via your online store and arranging for fulfilment via your chosen dropshipping agent.
As well as the many benefits of trading from the UAE, at Fujairah Creative City you’ll also benefit from low setup fees, a fast incorporation process and, if required, use of its on-site coworking space, equipped with everything you need to run your business. That’s on top of guaranteed 100% ownership of your business, zero currency restrictions, and the freedom to repatriate all capital and profits.
How to start a dropshipping business in Dubai
The first step is to engage a free zone or company setup agent who can guide you through the formation process.
Your free zone will assign you a designated contact who will manage every step of company formation on your behalf.
Firstly, your agent can help you choose your company name. There are a few key things to keep in mind at this stage – many that would not apply anywhere else in the world.
Be aware that you must abide by a strict set of naming conventions. You should avoid any offensive or blasphemous language. Avoid names of well-known organisations and avoid abbreviations if naming your company after yourself – i.e. Dave Mann Consulting, rather than D Mann Consulting.
When it comes to applying for your license, you will be asked to provide some basic documentation, including:
- Completed application form
- Passport copy of the proposed owner or owners
- Two colour passport size photos.
Your free zone will take care of the rest, liaising with all relevant bodies on your behalf.
Next, you’ll need to apply for your visa if you wish to live and work in the UAE. Again, with the right guidance, the visa application process can be incredibly straightforward. Most free zones and company formation agents can assist with this step.
As the holder of a UAE business license, you can sponsor others for their visas too. This could be a spouse, parent or child, or a domestic worker such as a housekeeper.
The maximum number of visas you can apply for will depend on the size of your company, your chosen setup and, for dependant visas, your personal earnings.
Finally, you’ll also need a corporate bank account to do business in the UAE.
Before making your application, you should first familiarise yourself with several financial institutions to find one that is best suited to your business needs and most likely to offer you corporate banking services. Once again, your company setup agent can help you with this process.
Are you ready to start your dropshipping business in Dubai, UAE?
Hopefully, this guide has made clear that if you’re equipped with the right knowledge, setting up a dropshipping company in Dubai doesn’t have to be overly complex.
That being said, it does require a level of prior knowledge of the process. What’s more, it is important to note that the application process is only straightforward if your license application is complete at the time of submission and free from errors.
To help you to ensure that this is the case, it’s a good idea to work with a company formation specialist such as Business Incorporation Zone (BIZ) when establishing a new company in the UAE.
We are a team of company registration professionals who are passionate about bringing the dreams of aspiring entrepreneurs and SMEs to life.
As well as handling your license application, BIZ can also assist with the opening of corporate bank accounts and advise on the most appropriate financial institution to suit your specific needs.
We also offer visa and immigration services and can handle all government formalities, permissions, work permits and visas applications that are required to trade in the UAE.
In short, our experts can establish your company on your behalf, make your license and visa applications, and take care of all the necessary admin – leaving you free to get on with running your business.