If you look front and back, right and center, the e-commerce sector is with no doubt growing tremendously all over the world. This is facilitated by the wide accessibility of the Internet, the availability of smart devices and the incessant development of international courier services. As a result, the e-commerce sector is gradually replacing traditional stores. And this is particularly noticeable in the sale of electronics, furniture, clothing, and household goods. Perhaps, this can also be attributed to the fact that unlike regular stores, online stores are much cheaper, and at the same time, its audience is not geographically limited to a city, region or even a country. As for the UAE, the e-commerce market is as profitable as the online markets in other parts of the world. Its e-commerce sector already exceeds $10 billion, and, given that more than 90% of the population has access to the Internet, this trajectory is prospected to continue on an upward trend.
If you are contemplating starting an e-commerce business in Dubai, there is a high likelihood that you are going to be successful. I mean, besides a readily available market, you will benefit from several other things such as preferential tax conditions when operating in free zones, and a well-developed logistics system – ports, airports and landline networks which make this country a real haven for e-commerce. However, before getting started, you must go through a number of procedures, from developing a website to obtaining an approved license for electronic trading.
How to start an online business in the UAE?
The process of registering, obtaining an e-commerce license and running your business largely depends on what you are selling and the location you will be operating your business from. Generally, starting an online business in Dubai begins with filing an application for a license under the e-commerce sector. It is this license that allows you to conduct business and sell products as specified and stipulated in the license. The entire process involves the following steps:
1. Choosing the right type of company
There are several options available. You can register a limited liability company, a branch of a foreign parent company, or a representative office. Depending on your plans and access to other markets, this any of these options will be optimal. The most common types of companies in Dubai are limited liability companies and subsidiaries since they can be established in free zones which offer a wide array of benefits.
2. Website development
Naturally, when setting up an online store in Dubai you will require a website which will act as your online store. This involves registering a domain name. This normally should be the name of your business. When doing so, ensure that the website imbues the cultural, and social expectations of your target audience. If you can’t do it by yourself, there are several companies whose job is to help you out with it.
3. Choosing a location
When choosing a location, there are two options. You can either register your e-commerce business in the free zones or outside the free zones. Registering a company outside the free zones is a good solution if you are planning to do business within the region. For such companies, there are no restrictions on the import and export of goods and no import/export duties. However, unlike companies in free zones, foreigners must find a local partner who will own a 51% stake.
If you register in a free zone, note that companies in free zones are prohibited from trading outside the free zones. However, the costs of maintaining such a business are lower. Therefore, when choosing a place of registration, all these factors should be taken into account.
4. Registering the name of the e-commerce company
Before getting a license, you must also register the name of your company. When doing so, choose a name that is easily memorable and one that your target audience will find easy to resonate with.
5. Choosing a physical office in Dubai
Although online stores don’t require physical premises like a traditional store, you must have a legal address (office), since the authorities of Dubai oblige e-commerce companies to have it.
6. License approval
After completing all of the above, getting your license approved can take up to 7 days (depending on the registering authority).
7. Bank account and Online payment gateways
Just like any company, you will require a bank account, so you will need to open one. Local banks offer many good opportunities for opening an account, including for offshore companies. And since you will be operating online, you will also be required to set up safe payment gateways. This includes Cash on delivery, Credit cards, and other prepaid card systems such as PayPal and Pioneer.