What is a dropshipping business?
We’ve been hearing a lot about dropshipping in the UAE lately and you’re still wondering what it is? For many of you, the concept of dropshipping is still misunderstood or even unknown.
In a few words, dropshipping is an online business where the product is shipped directly from a supplier to the consumer through a reseller.
The dropshipping business model is based on 3 pillars
– the supplier: offers the reseller the possibility to sell his stock;
– the reseller: he implements all the levers to sell the supplier’s products on his online platform;
– and the customer: this is the final consumer, the person who will pay for the supplier’s product without having had any contact with the supplier.
The most important for a dropshipper vendor in the UAE is to find products that have a high sales potential at the best price from various suppliers around the world. Generally, the suppliers are all geo-located in China.
Dropshipping therefore allows you to sell products online without having to worry about stock or storage, fulfillment or shipping. The advantage of this activity is that it is the supplier who ships the product directly to your customer once the order is received. In other words, you never have to touch the product or worry about managing a warehouse. Dropshipping is a legal activity in the United Arab Emirates, provided you obtain a business license that includes this activity. Many Free-Zones in the UAE, especially in Dubai, offer this activity.
Convinced? Ready to embark on the dropshipping adventure? Read the following carefully.
4 important points if you want to start a dropshipping business
- Your success will depend exclusively on the product(s) you wish to sell in your online shop;
- Work on the prices, descriptions and marketing strategy of your products to generate sales;
- As soon as a sale is registered, it is automatically forwarded to your supplier;
- Your supplier will then pack and ship the product directly to your customer, you will never physically see the stock of your products.
How to create a Dropshipping business in the United Arab Emirates?
Setting up a dropshipping business in the UAE is simple. Here are some easy steps to start your dropshipping business:
1- Choose the product(s)
It is essential to find a niche for which there is a real demand. Do your research!
Take the time to understand the trends in dropshipping products and what other businesses are doing in your niche.
2- Study the competition
Focus on a niche or specialized product to reduce competition and position your shop as a leader in its category. The best dropshipping products (the most popular products) will not necessarily work for you if the market is saturated or if margins are very low. It is important to be aware of your competitors’ prices, how they present and market themselves, and what features are unique to them. This will give you the opportunity to differentiate yourself, whether by price, quality, brand or other factors.
3- Find the right supplier
It is essential to find a reliable dropshipping supplier that can support the operation of your business and provide the types of products you want to sell with built-in dropshipping features, including automatic stock updates and order management tools. Spend some time getting to know different suppliers and browsing the products they offer. Read reviews and talk to their sales teams before committing to a relationship.
4- Get the right license in the UAE
If you are based in the UAE, there are several business structures to choose from, from sole proprietorships to limited liability companies.
Since you don’t buy the stock and you don’t have to manage it either, this business will require very little initial investment compared to a traditional business. This advantage gives you the freedom to start quickly. Your main expenses will be for marketing, advertising, development costs, etc.
5- Create your online shop or Amazon seller account
Although it is possible to run a dropshipping business through websites such as amazon.ae or noon.com, a large proportion of dropshippers sell directly on their own website which allows them to bypass the commissions taken by Amazon or Noon.
There are many ways to set up an online shop, and Shopify remains the favorite option for selling products directly to consumers.
6- Get the word out about your shop to the general public
In order to get customers to spend on your website, you need to promote your dropshipping shop using things like search engine optimization (SEO), influencer marketing, Facebook ads, etc. Invest in marketing and spread the word about your business by testing different marketing practices.
7- Get your finances in order
To start a dropshipping business and become profitable, you need to keep a regular eye on your cash flow and make sure you are pricing your products at the right level, so you need to set up efficient accounting. In terms of VAT in particular and when choosing your legal status, it is important to be accompanied, especially in the case of the Emirates where the laws diverge from Europe and change quite often. Finally, it is essential to have your VAT information available to sell in the UAE. UAE residents must register for VAT under certain conditions. To save time, it is best to opt for an e-commerce accounting solution.
Our partner www.ares-accounting.com is an accounting firm based in Dubai and can take care of your accounting.
8- Monitor and improve your offering
Work continuously to ensure that your business adapts and look for new opportunities. Boost the existing offering by adding items to your existing product range and test new categories. This diversifies product offerings while giving you valuable insight into what customers want.
Support from Merritt Middle East
Our firm has been specializing in company formation since 2009. We operate in three main jurisdictions: the UAE, Hong Kong and the USA.
Before meeting with our company formation experts, please consult this page about our Dropshipping Solution.
Our team of specialists will be happy to welcome you from Monday to Thursday from 9.00 am to 6.00 pm in our offices at JLT.
For more information, please email us at the following address firstname.lastname@example.org