Business

How Do You Start an E-Commerce Business in Dubai?

With the advancement of technology and the availability of cheap internet, the e-commerce industry has grown multi-fold across the globe. Moreover, the COVID-19 pandemic gave the final push to the e-commerce sector, with all the physical stores shut down around the world and people becoming over-reliant on online shopping. This left an irreversible change in consumer behaviour and buying patterns, benefiting the e-commerce business all over the world. In the Gulf Cooperation Council (GCC), the UAE is the leader in the e-commerce industry, and Dubai has approximately 60% of the e-commerce buyers. So, starting an e-commerce business in Dubai is a profitable idea owing to the constant growth of the e-commerce sector in Dubai. This blog sheds light on the benefits of setting up an e-commerce business in Dubai, the required documents and the cost incurred to obtain the license from the relevant authorities. We have also discussed the process of starting an e-commerce business in Dubai in simple steps. Read this comprehensive guide to clear all your doubts and start your journey today.

Dubai: A Haven for E-Commerce Business

In layman’s terms, E-commerce is nothing but buying and selling goods online through the internet. It is a retail store but on the Internet, which increases its potential consumer base exponentially. Dubai is an ideal location to start your e-commerce business owing to the several advantages it offers to foreign business owners and entrepreneurs, including no personal or corporate income tax, simplified trade licensing procedure, favourable business policies, modern and advanced infrastructure, strategic location, and a modern and safe banking system. All these advantages make Dubai a perfect destination for establishing a profitable e-commerce business.

Factors Behind the E-commerce Boom in Dubai

Dubai has experienced remarkable growth in the e-commerce sector over the past few years. With its modern infrastructure and advanced technology, it has become a hub for e-commerce businesses. Below, we have discussed several factors that have led to this remarkable surge in the e-commerce industry in Dubai:

Access to Smartphones and Internet

In Dubai, around 99% of the population has access to smartphones and the internet, creating a massive consumer base for an e-commerce business in Dubai.

Vast Variety of Products

A website or an online platform provides customers with a wide variety of products to choose from, unlike the physical stores where the choice of products is quite limited.

Technology-Friendly Population

Another factor behind the growth of the Dubai e-commerce sector is the young and technology-friendly population of Dubai. They have a tendency to choose their convenience over everything, i.e., they prefer to shop online instead of visiting the physical stores for shopping.

Support from the Government

The government of Dubai has passed various initiatives and policies encouraging foreign investors to setup their e-commerce business in Dubai. Various free zones have been setup providing 100% ownership and e-commerce licenses to business owners and entrepreneurs.

Key Advantages of Establishing an E-Commerce Business in Dubai

An e-commerce business setup in Dubai offers various benefits to business owners and entrepreneurs. Some of the benefits have been discussed below for your understanding.

No currency restrictions

One of the best parts of starting a business in Dubai is that no currency restrictions are placed on the businesses established in its territory, i.e., multiple currency transactions are allowed for the business in Dubai. 

Modern and Safe Banking System

Having a secure and advanced banking system is a key aspect of building a successful e-commerce business. The local banks of the UAE give competition to the most developed economies around the globe with their advanced financial technologies. On top of that numerous payment gateways are available to facilitate online payments for your e-commerce business in Dubai. So, Dubai provides access to both key aspects of a successful e-commerce business, i.e., a modern and secure banking system as well as safe online payments.

100% ownership

The best part of an e-commerce business setup in Dubai from the perspective of a foreign investor is that you can own 100% of the business and enjoy full control over the important decisions of your business. 

Tax Benefits       

Dubai is a dream city considering the tax benefits it has to offer. There is a 100% exemption on the payment of personal or corporate income tax and only a 5% VAT is charged on the goods sold within its territory.

Strategic Location

The central location of Dubai provides easy access to the Asian, African and European markets. Dubai is home to one of the busiest ports, Jebel Ali Port, and one of the largest airports, Dubai International Airport. It makes Dubai an ideal destination for an e-commerce business, as it has access to a humongous market of 2.5 billion potential customers in Africa, Asia, Gulf countries, and Europe.

Simplified Licensing Process

Dubai has a very easy and quick process of obtaining a trade license for your business. You only need to fill out the application form, submit the required documents, and pay the specified fee to the relevant authority (Department of Economic Development or Free Zone authority). You will get your license in a few days.

Advanced Infrastructure

Dubai is known for its state-of-the-art infrastructure and cutting-edge technology, which include modern office spaces and warehouses. All these facilities smoothen the business operations and help grow your e-commerce business in Dubai.

Simplifying the E-Commerce Business Setup in Dubai: A Step-by-Step Guide

Setting up a business is not a piece of cake, and only some individuals are able to crack it. Moreover, doing business in a foreign country and an e-commerce business requires extensive knowledge about the procedure, local laws, guidelines, trends in the market, etc. To simplify the e-commerce business setup in Dubai, we have provided a step-by-step guide below for your better understanding:

Step 1: Conduct Market Research

The first step involves conducting extensive market research to understand the needs and wants of the potential customers. You don’t need an R&D team to conduct market research; you can do it on your mobile device and the internet. Check out the trends and demands of customers in UAE and then understand the market fit of your product. Only after thorough research can you understand the market potential and select your business model, i.e., B2B (business to business), C2B (client to business) or B2C (business to client).

Step 2: Trade Name Selection

You need to select a trade for your e-commerce business in Dubai that will help your customers associate with your business and build a brand in the future. The selection of the name should be done in compliance with the UAE laws and guidelines provided by the Department of Economic Development. Some of the guidelines are that the name should be unique and should not be similar to any already existing business, it should not have any offensive terms, and it should not insult Allah and Islam in any manner. If you wish to use your own name as the trade name for your e-commerce business in Dubai, you can do it, but you have to use your full name and not only the initial or abbreviations. You can submit your selected name to the Department of Economic Development for mainland business setup and to the relevant free zone authority for free zone business setup.

Step 3: Choose a Business Location

The next step in setting up an e-commerce business in Dubai is to choose a location for your business from where you will be conducting your business operations. You can choose between the Dubai free zone and the mainland, depending on your business goals and requirements. If you set up your e-commerce business in Dubai-free zones, then you can enjoy several benefits like 100% ownership of your business, full repatriation of profits and capital, and 100% exemption on corporate and personal income tax. On the other hand, if you set up your e-commerce business in the mainland of Dubai, then you can expand your business to not only other UAE markets but also other international markets. Establishing a business on the mainland provides you an opportunity to run a local as well as an international business. So you can make the choice that fits your needs and business plan.

Step 4: Apply for Trade License

Following the selection of a business location, you need to apply for a trade license for your e-commerce business in Dubai with the relevant authority, i.e., the Department of Economic Development in the case of the mainland and the Free Zone Authority in the case of free trade zones. You need to collect all the mandatory requirements and submit them along with the completed application form to obtain your e-commerce license in Dubai. The specified fee also needs to be paid at the time of submitting the documents.

Step 5: Develop a Website for Your Business

This is the most important step of the e-commerce business setup in Dubai. After you have applied for the trade license with the relevant authority, you have to develop a safe, secure and user-friendly website for your e-commerce business in Dubai. The first step in developing a website is registering a domain name like amazon.com, enterslice.com, etc. After registering your domain name, you can use free website-building tools and make your business website on your own with any coding. You can also hire third-party services if you are unable to make the website on your own, and if you want to find a more economical option, then you can hire a freelancer on a project basis to develop a website for your e-commerce business in Dubai.

Step 6: Payment Gateway

The next step involves setting up a payment gateway to receive payments from the customers buying the products from your e-commerce website. You need to select a payment gateway capable of handling the user traffic on your website and ensuring safe and secure transactions. The payment gateway should be established in accordance with the TRA (Telecommunications Regulatory Authority) guidelines, as it is the central authority responsible for handling electronic transactions in the UAE. One more important point that you should take care of is that your website should provide 24/7 support to customers in situations of payment failures. It will help develop the trust of consumers with your e-commerce business in Dubai, and they will visit the website again to buy your products.

Step 7: Logistics and Distribution

One of the key aspects of starting an e-commerce business in Dubai is the logistics and distribution of your products. You need to have suitable warehouses to keep your products safe and secure, along with an effective distribution strategy to ensure timely delivery of the products sold to the customers. For your e-commerce business setup in Dubai, you have the choice to either build your own logistics or you can also hire third-party services to handle your logistics. The vital aspects of the e-commerce business in Dubai include database management, customer support, and import-export facilities. Kindly keep all these points in mind to build a successful e-commerce business in Dubai.

Step 8: Open a Business Bank Account

You need to open a business bank account with a local bank for your e-commerce business setup in Dubai. Opening a business bank account is necessary to conduct the financial transactions of your business. So, you must find a local bank providing suitable facilities for an e-commerce business and open a business bank account.

Types of E-Commerce Licenses in Dubai

E-Trader License

It is a license given to small business owners willing to start their online business through social media platforms like Facebook, Instagram, Twitter etc.

Portal License

If you want to setup a company that is not selling its own products but acting as an intermediary between the buyer and seller of a product online, then you need to obtain a portal license. Basically, your company is acting as a portal or an e-marketplace for the buying and selling of products.

E-Commerce License

It is a license given to businesses willing to sell their physical products online through their website.

Freelancer License UAE

It is a specific license given to freelancers who want to provide their services in the UAE. With a freelancer license, you can market as well as provide your services online in the UAE and other parts of the world. This license is mostly obtained by IT professionals, tutors, designers, etc.

Service or Commercial License

When your company is not engaged in e-commerce activities but still wants to sell its services and products online, you need to obtain a service or commercial license. You can set up a company engaging in any business activity and start conducting it through the Internet; it is that simple.

Required Paperwork for E-Commerce Business Setup in Dubai

To start an e-commerce business in Dubai, several documents must be collected and submitted to the relevant authority. A list of the mandatory documents is provided below for your reference:

• A copy of the passport and visa of shareholders of the company
• A detailed business plan
• Feasibility Study
• Bank Statements
• No Objection Certificate from the relevant authority
• Memorandum of Association
• Trade Name Approval by the relevant authority (DED or a free zone authority)

Some additional documents might be required based on your selected business location.

Conclusion

The change in consumer behaviour and buying patterns after the pandemic has been massive, and it has permanently shifted a majority of consumers to online shopping. With the UAE being one of the fastest-growing economies around the globe, the e-commerce industry is estimated to reach about $8 billion by 2025. As Dubai is the market leader among all the seven emirates of the UAE, this is the perfect opportunity to build a profitable e-commerce business in Dubai by following the simple steps mentioned in this blog, i.e., conducting market research, selecting the trade name, choosing a business location, applying for the trade license with the relevant authorities, developing a secure and user-friendly website for your e-commerce business, establishing a payment gateway following the TRAI guidelines and sorting out logistics and distribution of your products. So, don’t be confused and set up your e-commerce business in Dubai to enjoy 100% ownership, a modern and safe banking system, no currency restrictions, tax exemptions, a strategic location providing access to African, Asian and European markets, simplified licensing process, state-of-the-art infrastructure and advanced technology.

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