HOW TO START AN E-COMMERCE BUSINESS IN DUBAI
Online shopping is predicted in the UAE to be big in 2021. As the e-commerce market gains momentum regionally and globally, customers today can get their hands on a vast range of consumer goods and services, all available via a tap, click or swipe. Dubai, a city with incredibly high levels of Internet penetration, a techno-savvy population, and a solid infrastructure for business, would be an ideal location for the start or expansion of your e-commerce business in Dubai.
In the wake of the Coronavirus outbreak, which disrupted international travel and slashed energy exports globally, the Middle East and North Africa (MENA) economies were particularly hard-hit. As a way of boosting economic activity and stabilizing balance sheets, the member states of the GCC have turned to the e-commerce sector to recover from the economic downturn caused by COVID-19. Fortunately, Dubai is already benefiting from this decision.
An increasing number of consumers may continue to shop from the comfort and safety of their homes, appreciating the convenience that e-commerce and contactless transactions can bring them. With the world becoming more connected and consumers’ trust in online shopping evolving, we believe that consumer spends via online retail platforms will see significant growth in the coming years.
Likewise, there are many reasons why Dubai is becoming a hub of e-commerce.
- High digital penetration and growing digital shopping opportunities:
Mobile phone penetration is now at a world-record high of 210.9%. Dubai residents are also among the top 10 worldwide when it comes to spending time on the internet and social media, averaging seven hours and 54 minutes daily. We have seen growth both domestically and internationally, including the rise of several digital startups offering in-app and mobile shopping experiences that are world-class. The same is true of traditional retailers across all industries going digital and of global brands opening their delivery services to the UAE, which makes it easier for consumers to place and receive orders for goods seamlessly.
- Cashless transactions and stronger security:
While it may seem that the UAE is still a long way from going cashless, it has already laid a foundation for digital transformation. It is among the region’s fastest-moving economies to move away from cash. Another important aspect is striking a balance between frictionless customer experience and strong security. Payment providers and banks are working to improve the security of card transactions in the UAE, adding yet another layer of security.
- Increasing use of mobile wallets:
With global giants such as Google Pay, Samsung Pay, and Apple Pay joining the fray, local players like Etisalat Wallet and Beam Wallet, as well as local banks, mobile wallet use in the UAE has increased significantly. Many retail outlets, including supermarkets, hotels, department stores, petrol stations, taxis, cinemas, and many more, allow residents to pay via their Smartphone or smart watch.
- Government vision:
A top priority in UAE Vision 2021 is to create a digital economy and cashless payments. To support it, the government has implemented several initiatives, such as wage protection. In addition, the Smart Dubai 2021 initiative aims to create a digital, lean, connected “paperless, cashless government” powered by cutting-edge, disruptive technologies.
- Consumer trust in digital payments:
According to a Visa-DED security survey that examined consumer perception of payments online and shopping online, 66 percent of respondents believe online shopping is safe, and 70 percent believe online payments are trustworthy.
Logistics is one of the greatest factors in e-commerce. Fortunately, the UAE is a focal point for distribution, and its low logistical costs and superb infrastructure make it a great place for e-commerce. It enjoys an advantage as a major global trans-shipment hub providing a high standard of logistics.
- Digital millennials:
The UAE’s population comprises nearly 30 % of digital-native millennials (born between 1981 and 1996) as well as the Gen Z generation (born between 1997 and 2012). They are always online and seek near-instant solutions to everything. Due to this, their desire for convenient and fast shopping is expected to increase the amount of online shopping.
The following are some reasons why you should start your online business in Dubai.
- Taxes and fees are non-existent (except for VAT of 5%).
- There is no restriction on the withdrawal of capital or currency use.
- Foreign companies can own 100% of a free zone company.
- Operating expenses are lower than in any other jurisdiction.
- No import/export duties with an e-commerce license.
- Obtaining a UAE resident visa for three years with the possibility to renew the visa.
The following are the steps/procedures to be followed to get a Dubai e-commerce license:
- A stable website: To be successful in e-commerce, this is the most crucial component.
- Decide on a location: You have to consider all the factors and decide where you want to set up your online business and the place from where you want to get your license. You will need to decide whether to use a Free Zone or the Mainland authority based on the nature of your online business. If you have a mainland license, you can trade or sell your products and services directly to the local market, but a free zone license will require you to work with a local distributor. Free zones and Mainland allow you to have 100% ownership of your company.
- Trade Name Registration: Due to your business’s absence of a physical presence, you should choose an easy-to-remember name.
- Apply for a License: You must apply for an e-commerce license once you have chosen the location.
- Request a Certificate of Initial Approval: Dubai requires that e-commerce businesses apply for an initial approval certificate before opening. It will be valid for 6 months, and can’t be renewed.
- Prepare a Memorandum of Understanding and Corporate documents: You must draft a Memorandum of Association (MOA) and submit it to the Department of Economic Development (DED). If your company is located on the mainland, then you must follow this step. However, companies setting up in free zones can skip this step.
- Set up a physical office: As a physical office is a requirement in Dubai to be considered a legal entity, the next step is to set up a physical location there.
- Licensing approval in final form: When you complete all the above steps, you will receive a business license within 1-7 days, depending on the authority.
- Import/Export Requirements: Registering with a port and customs authority is required so that you can obtain an importer’s code.
- Establishing a company bank account: Set up your corporate bank account after receiving your e-commerce trade license and setting up your e-commerce business.
Does starting your e-commerce business in Dubai seem promising? Let the Adam Global team assist you in getting your license starting from just Dhs 5,750. Whether you are a budding entrepreneur or investor thinking about investing in the Dubai e-commerce economy, we have plenty of opportunities for you. Our team has extensive experience setting up e-commerce businesses throughout the region and has guided several clients in the process. Get in touch with Adam Global; we’re happy to help.