Profit from the thriving ecommerce market in the UAE by setting up an ecommerce company within the country.
The latest statistics show that ecommerce is booming in the United Arab Emirates. Research from Merchant Machine in September 2022 found that of 25 regions internationally, the UAE ranked number 1 as the fastest-rising ecommerce country.
The same report highlighted an impressive statistic for ecommerce in the UAE. In 2021, the UAE's ecommerce spending as a percentage of GDP increased by 1.10%.
The UAE ecommerce market is forecast to be worth USD 9.2 billion by 2026, says a report from the Dubai Chamber of Commerce. They found that ecommerce sales doubled from USD 2.6 billion in 2019 to USD 4.8 billion in 2021.
We know that ecommerce is a smart venture in the UAE, but what business activities does this involve? These are popular ecommerce business models:
Dropshipping in the UAE is a great option with extremely low start-up costs. Warehousing, stock, and shipping of customer orders are managed by a supplier, giving you more time and finances for marketing and running the business.
The procedure to set up an ecommerce company in the UAE involves the following steps:
1. Decide what type of company
2. Choose to operate in a free zone or UAE mainland
3. Register the company name
4. Rent an office
5. Apply for a trading licence and registering
6. Open an Emirati business bank account
Here are the full details to help you get started.
The type of company you choose for your business is also known as your business legal structure or business entity. This will affect:
Types of business structures to choose from:
In a free zone, it is permitted to set up either one of these business entities:
It is recommended to consult a chartered accountant for advice on which is the best option for your business. The most common type of business structure in Dubai is a limited liability company due to the benefits it can receive.
There are more than 40 free zones in the UAE, over half of which are in Dubai. The benefits of operating in a free zone include:
Apply for a trading name through the online economic department of the emirate you will operate in. The application requires you to submit 3 name choices.
Check with the free zone authority you will be based in for any restrictions on trade names and availability. In general, these are some guidelines from the Department of Economic Development:
For inspiration, read our post: How to choose a name for your dropshipping store.
To establish an ecommerce business, it is a legal requirement that you have a physical office as your business address if you choose to operate in mainland UAE. The space must be at least 200 square feet. However, if you will be based in a free zone, it's not mandatory to have an office space.
An ecommerce business will need to apply for an ecommerce licence. For businesses that wish to operate in the UAE mainland, applications for a licence are through the Department of Economic Development.
To operate in a free zone it is necessary to apply with the corresponding free zone authority.
Application for initial approval will require documents such as:
Once the initial approval is complete, there will be registration and licence fees to pay. After this, further information will need to be submitted:
As the procedure is very strict with documentation, you might want to consult a professional who offers legal support, especially for company formation.
All companies need a business bank account to monitor cash flow, track business expenses, assess taxes, and apply for business loans or credit cards.
Popular banks in the UAE for corporate accounts include: