E-Commerce Business in UAE

Global online business industry is rapidly growing. In some countries like the UK for example, 20% of all the businesses already went online and the trend keeps on growing.

Middle East and UAE is particular have huge unopened e-commerce potential. This sector is still at the stage of development here and it’s the best time to occupy your niche in the Emirates’ online market.

ONLINE BUSINESS IN DUBAI

Dubai, being the pioneer in anything new, opens its gates to all types of online businesses. You can do trading, services, education or even cyber sport team registered in Dubai.

Is it mandatory to have a Dubai license to have your e-commerce activity in this Emirate? Not necessarily. You may business Setup Company in Dubai. However, your company can be registered in any other Emirate as well. As long as payment and logistic solutions are taken care of, your business can be managed from anywhere.

LEGAL TYPES OF ONLINE BUSINESSES

Nowadays 3 out of 10 people want to open an e-commerce business. They think that if their company is going to have a website or sell something through that website, they must get an e-commerce license.
That’s not always so. UAE has a few options of licensing online business. Let’s have a quick look at them:

1. Portal
If your company will be acting as an intermediary between the buyer and the seller, your business activity in the UAE will be called Portal or E-marketplace.
Most famous example of e-marketplace is Amazon.com the website serves as a platform for the merchants who advertise their goods, and the buyers.
If your activity is similar to that, Portal is what you need. Most of the free zones have such activity, so it won’t be a problem to find it.

2. E-commerce
E-commerce setup is a choice of companies who want to sell their own goods through their own website.
It can be a website selling only 1-2 types of goods or big online retailers such as Mumzworld.com for example.

3. Commercial or service license
Even if your license does not relate to e-commerce as such, it does not mean you cannot sell your products or services online.
You can open a company with any business activity and conduct it online. As per the law, the mode of sales does not make any difference.
You can provide educational trainings, marketing consultations, sell food or clothes online or do any other type of business thought the Internet.
Then why do people go for e-commerce license specifically? Usually because it’s a requirement from their partners or vendors, or even a payment collection company which they use.

Important: if you are planning to import the goods from abroad and sell them via a website in UAE, you need to take care of the customs clearance. If you have a license with the “E-commerce” activity, you will not be able to obtain customs code from UAE customs in order to clear your goods by yourself. In this case it is better to hire a logistics company, who will be able to do the clearance for you under its own code. Another solution is to have 2 licenses: commercial for import and export and E-commerce for local sales.
Generally, logistical companies service as a perfect intermediary between you and your buyer: they do customs clearance, storage and delivery of the goods.

E-TRADING SUPPORT
E-commerce companies usually need to think about a few important things apart from the website and marketing:

1. Setup a payment gateway solution to be able to accept payments from their clients through their website.
Nowadays there are quite a few solutions which help to collect payments from your buyers: some of them charge membership fee plus commissions from each purchase, others just take the commissions and nothing else.
The usual commission rate is about 3-3.5%.

2. Logistics. A very important question is delivery of the products to the customers. You need to either plan your own delivery system or subcontract it to the courier firms such as Aramex or Fetchr.

WHERE TO REGISTER?
Setting up an online business in Dubai won’t be a problem. Almost all UAE free zones provide a business activity of e-commerce or portal. Interestingly enough, Department of Economic Development does not have a special license for e-commerce for expatriates. The reason is simple any business can go online, regardless of the license type that it has.
There are various ways for your business to go online:

• Your own website
• Instagram
• Facebook
• Portals like Amazon or Noon.com
• Phone applications

Once you have decided how you will market your online business, get the requirements from any 3-rd parties involved. For example, if you are planning to sell your goods through Amazon, you might need the license with the activity e-commerce as a specific requirement from them.
Most people prefer online business company registration through free zones. Here are the free zones that have a dedicated license with e-commerce activity:

• UAQ free trade zone
• RAKEZ
• IFZA
• Ajman free zone
• DMCC
• DTEC
• Ajman Media City free zone
• Fujairah Creative City
• SHAMS

There is even a dedicated e-commerce free zone which is coming up in Dubai soon. It’s called Commercity and it’s going to be completed by 2020 Q4.
It will have all the facilities you need to start online business quick: portal, payment solutions, warehousing, photo studios and logistics. The free zone will serve all MENASA region Middle East, South Africa and North Asia.

BEST UAE REGISTRATION OPTIONS FOR E-COMMERCE COMPANY

HOW TO LAUNCH ONLINE BUSINESS IN DUBAI
In order to start operations of any online business you need the following:
• Website or portal where the products or services are placed
• Payment collection solution
• Delivery solution

CHALLENGES
Despite the quick growth of the online business in UAE and Middle East in general, there are still quite a few things to improve in this region, namely:
• Online payment collection providers
there should be more of them to serve online businesses of all sizes large or small start-ups.
• Delivery companies
there is a need for a bigger number or logistics companies with quick processing time and options to store the goods in their warehouses.
• Urban and suburban system of unified addresses
many addresses across the UAE are still difficult to reach there might be no street name or proper building number or even a landmark.

PROSPECTS
Despite any challenges, the online industry in the UAE and Middle East is expected to further, improving the overall quality of life or the residents and the retail market of the region.