The enthusiasm shown by foreign investors for e-commerce is revving up the ecosystem of business setup in Dubai, especially after the COVID-induced changes in consumer behaviour. A recent statement made by a top Dubai Customs official has underpinned the investors’ optimism about starting an e-commerce business in Dubai. The Director-General of Dubai Customs stated on the sidelines of the recently concluded GITEX-2020 that e-commerce sales in Dubai would rise 23% to touch USD 27 billion (AED 100bln) in 2022.
The statement underscores the general belief that ‘2021 is the best time to establish an e-commerce business in Dubai.’ The opportunities are plenty, both in mainland and free zones and the foreign investor’s only need to consult with the best business setup consultants in Dubai to grab the opportunity. Meanwhile, we guide aspiring e-commerce entrepreneurs to make the best of this opportunity through this blog. Let’s read on.
Research about Profitable Business Activities
E-commerce business in Dubai is a growing sector, which means everyone can prosper in their niche segment. Conduct an in-depth market study to know which sectors are in demand and which segments promise long-term promise for growth.
For example, the e-grocery segment in the UAE posted a growth of 300% in the third quarter of 2020, according to a WAMDA article that quoted the statistics of RedSeer Consulting. Entrepreneurs need to select the right activity before approaching the relevant licensing authority to commence business setup in Dubai. Some of the other niche segments that the entrepreneurs are,
- Fashion/Jewellery Products
- Smart Home Products & Accessories
- AR/VR Headsets, Apps & Accessories
- Vape Hardware, Flavours & Liquids
Get a Free zone or Mainland License
Obtaining an e-commerce license from Dubai free zones or the mainland is the first step the foreign investors must take. A mainland e-commerce license issued by the Dubai Department of Economic Development (DED) gives foreign investors the benefit of trading goods anywhere in the UAE. In contrast, a Dubai free zone license generally restricts the entrepreneurs to trade the goods within the free zone itself or to foreign clients (imports/re-exports).
E-commerce business owners can circumvent this restriction by tying up with an agent who has the license to distribute goods in the UAE market. Investors can obtain an e-commerce license effortlessly by availing the services of business setup consultants in Dubai. The right advice from experts makes the process of business setup in Dubai easier for newbie entrepreneurs.
Decide on Warehouse Requirements
If the online business involves the selling of physical goods, the entrepreneurs need to rent warehouses of good storage capacity. When applying for a DED e-commerce license, the investors need to spend some time scouting for warehouses that fit their requirements depending upon the goods they are planning to sell. The cost of an e-commerce license increases depending on the respective warehouse capacity and other requirements.
While initiating business setup in Dubai free zones, the entrepreneurs have plenty of options for choosing the warehouse as per their needs. Free zones come with a wide range of warehouse options, which makes the company formation in Dubai a lot easier for e-commerce investors. If the entrepreneurs are doing business in the ‘drop shipping’ method, the storage requirements will be taken care of by the suppliers such as Amazon or Noon.com.
Think about Logistics & Office Space
E-commerce players who sell physical goods should be equipped with strong logistics capabilities to ensure smooth delivery of products. The companies can tie up with a logistics service provider to ensure the products are delivered on time. Timely delivery of products is paramount to ensure customer satisfaction, which is a key factor in business success.
While forming an e-commerce company in Dubai, the entrepreneurs need to secure an office space that fits their requirements. In the mainland, it is mandatory to have a physical office space to secure a trade license from the DED. The investors can set up their office space in business centres in Dubai, which is the most cost-effective option available. The free zones also provide cost-effective co-working spaces for e-commerce companies along with the license. Consult with the best business setup consultants in Dubai to easily secure office space.
Register the Products with If Necessary
Product registration with Dubai Municipality is a mandatory requirement to sell the goods anywhere in the UAE. Selling products that are not registered with the Municipality would be deemed as fake goods and would be rejected during shipment. However, product registration applies to the e-commerce sellers who import or directly distribute physical goods in the UAE.
In some cases, the entrepreneurs just run an online shopping platform where others can sell the products. In such instances, the suppliers of the goods will be importing the goods, and it would be their responsibility to register the products. It all depends upon the nature of the business model the investors have set up in Dubai. For assistance, the entrepreneurs can contact full-service business setup consultants in Dubai who provide consultation on product registration.
Best Free Zones in Dubai that Provide E-commerce License
If the investors are looking for low-cost e-commerce licenses in Dubai, there are plenty of free zone options. The following are some of the best free zones that offer e-commerce license in Dubai:
- E.Z Dubai (Dedicated e-commerce free zone by Dubai South)
- Dubai Commercity (Dedicated e-commerce free zone by DAFZA)
- Dubai Multi Commodities Centre (DMCC)
- Jebel Ali Free Zone (JAFZA)
Apart from these free zones, many free zones in other emirates also offer cost-effective e-commerce licenses for company formation in the UAE. The following is a list of such free zones,
- Ras Al Khaimah Economic Zone (RAKEZ)
- Sharjah Media City (SHAMS)
- Ajman Media City
- Fujairah Creative City Free Zone
- International Free Zone Authority (IFZA)
- Umm-Al-Quwain Free Trade Zone
- Twofour54, Abu Dhabi
Company Formation in Dubai Simplified for Foreign Investors
The phenomenal growth of the e-commerce sector is one of the best things that happened post-COVID-19 that drastically changed the prospects of company formation in Dubai. Consumers shifted their purchasing preferences away from physical stores to online platforms. As a result, the e-commerce market burgeoned, attracting numerous foreign investors into Dubai. Business setup consultants in Dubai recommend the investors make the most of this opportunity by obtaining an e-commerce license from either the DED or free zones.
Foreign investors need the helping hand of experts to decide to choose between mainland or free zone licenses. Experienced company formation specialists in Dubai, such as Jitendra Business Consultants (JBC), provide robust consultation in this regard. JBC’s highly qualified business setup experts in Dubai help the entrepreneurs in obtaining a licence, drafting documents, processing visa, and opening a corporate bank account. JBC’s assistance helps the investors achieve business goals in a cost-effective way.