How to get an e-commerce license in Dubai
Whether purchasing for personal consumption or business through the internet, online shopping is now a big part of our everyday lives. This is going to grow further in the coming years with the upsurge of e-commerce businesses that are promptly capitalizing on the soaring number of online shoppers everyday.
There has been a growing demand for e-commerce licenses in Dubai, UAE. The United Arab Emirates having the most advanced e-commerce market in the whole MENA region is set to hit a staggering US$50 billion (AED 184 billion) in e-commerce transactions by the end of 2021, boosted by a surge in e-commerce as a result of the global coronavirus pandemic.
The figure is up from the previously estimated figure of $26 billion, due to the impact of Covid-19 on the regional retail industry, according to DeVere Forster, chief operating officer, Dubai CommerCity, the region’s first dedicated e-commerce free zone.
Several factors have contributed to the UAE’s global e-commerce positioning, including the rise of startups and tech-savvy consumers in the country. More importantly, the UAE government plays a vital role in reinforcing smart transactions between businesses and consumers today by expanding cashless payment options for various types of purchases and government services in the country.
Process of getting e-commerce license in Dubai
With the increasing number of internet-savvy users, it can be profitable to start an e-commerce business in UAE. To get an e-commerce license you need to follow the below-given steps.
1. Choose your jurisdiction (mainland or free zone)
In Dubai, mainly there are two jurisdictions in Dubai to set up your e-commerce business. If you are opting for a mainland, your e-commerce license in Dubai is issued by the Department of Economic Development (DED). If you opt for the free zone, the portal license is issued by the relevant free zone authority. There are many advantages and disadvantages of choosing a free zone or mainland accord to your business activity in business scope, visa eligibility and office location.
Also read: Mainland or free zone – which one is better for you
2. Decide on your legal structure
The next step to obtain an e-commerce license in Dubai is to choose a business structure. It can be a sole establishment, LLC, civil company, branch or representative office. Among these, LLC and branch are the most popular business structures in Dubai. Choosing the right business structure can give you financial benefits. So it is advisable to consult business setup consultants in Dubai.
Also read: Different types of legal structures in the UAE
3. Register your trade name and get initial approvals
As your e-commerce business does not have a physical location, it is important to be mindful in choosing a company name. You can use the same for your online store so people can easily find it on the internet. The name should be unique otherwise there are chances for legal issues. You must reserve your trade name and obtain an initial approval certificate from the DED.
Also read: What to name your company in the UAE
Documents required to apply for e-commerce license in Dubai
- Passport/visa copies of the shareholders
- Copy of sponsors passport/ emirates ID
- Local service agreement/ Civil works agreement
- NOC from the relevant authority
- Draft an MOA
4. Get final approval
Submit all the documents with the Tenancy Contract and Ejari to the relevant authority for the final approval. Open a corporate bank account after receiving the license.
Also read: How to open a corporate bank account
Cost of E-commerce license in Dubai
The cost of an e-commerce license in Dubai will depend on various factors such as the exact business activity, number of visa, office space and location. If you are looking for a low-cost e-commerce business setup in Dubai, free zones would be the better option and it will cost around AED 12,500 (without visa)
If you are interested in setting up your e-commerce store in UAE, you can calculate your cost here.
How to set up an e-commerce business in Dubai
With such positive growth forecasts on the e-commerce economy, it’s high time to start your online business now more than ever. In order to operate legally, you must obtain a trade license from a Free Zone or Mainland authority before proceeding. Here’s how to set up your e-commerce business in the UAE:
1. Choose the right jurisdiction and get a trade license
Choosing between a Free Zone and the Mainland authority will entirely depend on the nature of your online business. A mainland license gives you the freedom to trade or sell your products and services directly to the local market while a free zone license will require you to work with a local distributor. In this case, consider the factors from which your business can benefit more in terms of market reach and scalability.
Also read: Mainland or free zone- which one is suitable for you?
2. Develop, build, and launch your website
The most important aspect of your e-commerce business is your website. It may take a while to build and test your website, but it’s worth spending time and effort as it will serve as your stage to showcase your products or services, a platform to gain and interact with customers, and your primary tool for making profits. So to build an income-generating website you have to keep in check its user-friendliness, web maintenance, secure hosting, and mobile usability among other things.
3. Include online payment gateways
As an e-commerce business, it is necessary to present different payment options to your consumers. Integrated secure payment gateways that include credit card payments and pre-paid card systems are the most convenient ways to do this. Another payment option is cash-on-delivery (COD), which comes in very handy for various situations.
4. Secure logistics, storage, and delivery
If your online business involves physical products to sell or trade, it is mandatory to have proper warehousing to store your goods. This factor is equally important when deciding the jurisdiction to set up your company. Once you secure a warehouse and office space, the next thing on your list is to establish a reliable logistics system to ensure the efficient delivery of your products to your consumers. You can opt for a third-party logistics or build your own.
5. Market your products or services
Once your business is ready to roll out in the market and after having all things in place, everything still boils down to your marketing strategy. The best way to do this is by targeting the right market for your products and services. Consequently, create an effective marketing plan that aligns your products and services to the needs and wants of your target consumers.
These are just some of the steps you need to consider before starting an online business in the UAE. Depending on the nature of your business, you may or may not need more steps than those mentioned above.
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There are many kinds of activities you can do online and we can brief you about all the possibilities you have in the online business industry.
This is a rising industry and you can build your empire online with the right business setup guidance.
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We can help you setup a business in Dubai and UAE completely through online processes.
Contact us now at +971 4 581 3618 or email@example.com to book a free consultation with our company formation specialists. This is going to grow further in the coming years with the upsurge of e-commerce businesses that are promptly capitalizing on the soaring number of online shoppers everyday.