The growth in eCommerce Business is creating enormous investment opportunities in the UAE. The Demand for eCommerce business in UAE has grown significantly over the past few years in the Gulf region.
As the eCommerce sector is maturing in the UAE, there is a growing requirement for the support system and mainly the real estate space for warehouses to serve online customers effectively. So, there is a huge opportunity for an eCommerce company in UAE to expand and grow its business.
There is a shortage of high-quality warehouses for secure product storage globally. However, UAE has a wide range of custom-made warehouses with world-class facilities to support your eCommerce establishment.
The high internet penetration and smartphone usage are making UAE the ideal destination for eCommerce businesses. To promote eCommerce businesses in Dubai, Dubai Airport Free Zone has launched a dedicated Free Trade Zone – Dubai Commercity.
The online product selection is catching up and there is a wide range of eCommerce service providers in the UAE who are offering services in food delivery, electronics, fashion, Beauty products, online services, etc.
Start an eCommerce Business in UAE
UAE has a robust business ecosystem for eCommerce Companies to thrive. To power the growth of eCommerce Business in UAE, there must be a certain infrastructure plan in place.
The Free Trade Zones and the Government of Dubai are actively drafting policies and initiating infrastructural developments to cater to the eCommerce company requirements and the growing market requirements of the eCommerce business in UAE.
Process of starting an eCommerce Company in UAE
There is an evident shift from the traditional shopping environment to online shopping mainly due to the shopper’s convenience, availability of wide choice, and discounts.
The shift has made more entrepreneurs offer online selling and platforms that facilitate online shopping and secure payments online.
Here are the steps for opening an eCommerce Company in UAE:
- Choose the right legal structure for your eCommerce business in UAE – Free Zone Company or a Mainland LLC Company
- Select the ideal business location – Specific Free Zone, or any location in the Mainland
- Company Trade Name Reservation – Investor must provide 3 names in priority and the Licensing Authority will approve one for the company after review
- Submit the eCommerce license application to the licensing authority along with the investors passport copy & photograph
- Obtain the initial approval certificate from the respective authority.
- Prepare the Memorandum of Association (MOA) with the respective licensing Authority. Aurion will assist in preparing the document and getting the approval
- The tenancy contract for the office space must be ready. (Investors must take separate warehouse space for storing the goods for delivery, packaging, etc.). Aurion will assist in preparing tenancy contract for office and warehouse for your ecommerce company.
- For ecommerce companies indulging in import/export of goods to international markets, having the company registered with Ports & Customs Department is mandatory.
- The investors can now start operating their ecommerce company legally in UAE. They can also apply for a UAE Residence Visa and Corporate Bank Account for facilitating trade.
Cost of starting an eCommerce Company in UAE
The cost of an eCommerce License in UAE for a 1 Visa Quota starts from around AED 11,743. However, there are many cost-headers the investors will incur with the eCommerce License in UAE.
Few Additional Costs for setting up an eCommerce company in UAE by the investors are the following:
- The Investor and Employee Visa cost (Depending on the number of staff required at the start)
- Medical and Emirates ID Costs for investors and employees
- Medical Insurance Fee of Investors & employees
- Company Establishment Card Cost. Depending on the specific Free Zone, the fee varies
- Company Stamp – To be used in all Government & customer communication like invoices, contracts, and more
- Company name changes (if any)
- Other Government fees for special requests, etc.
Aurion provides you with the most cost-effective eCommerce license package in UAE from top Free Trade Zones.
eCommerce Business in UAE – Support System
Here are a few support systems required for an eCommerce Company in UAE. For an eCommerce Company in Dubai to sustain and achieve business productivity of desired levels, there has to be a certain support system in place that the company has to implement.
1. Suppliers and Distributors
Identifying the right suppliers and distributors for the eCommerce business in UAE is crucial. The suppliers and the distributors form the backend support system and are a crucial part of your business success.
They ensure the delivered products are of high- quality and act as an intermediary between the manufacturer and the retailer.
Having an efficient supplier and distribution network helps in reducing cost, improving the product offering, building a strong relationship, enhance process improvements, etc.
2. Improved Logistics
The logistics requirement in e-commerce is undeniable. eCommerce Companies in UAE must require a well-supported logistics network to fulfill the order requirements.
A warehouse for storage and facilitating logistics is crucial for maintaining the required stock of the items.
The scope of Logistics is vast and tasks such as packaging, preparing the document of delivery, coordinating delivery service, returns, etc., fall under the purview of Logistics support services.
Additionally, The logistics support must be effectively ensuring the information, goods flow, and capital flow. Also, The dependence of an eCommerce company on third-party logistics providers for storing and transporting products is unavoidable.
3. Warehousing and Storage
The warehousing and storage facilities are a major requirement for an eCommerce company in UAE. It ensures the proper management of the shipment.
Inventory management and communication with the eCommerce business drive smooth supply chain operations in UAE.
Another aspect of Warehouse operations is the Order Management System. The details of the order shipment, tracking, and delivering the product to the end customer are to be dealt with high precision during eCommerce operations.
Outsourcing or using a third-party warehouse for operations and order management is an effective solution to easily scale by reducing overhead expenses and fixed costs to a great extent.
4. Online Payments Management
Retailers are tapping into the eCommerce world and selling through multiple digital platforms and mobile eCommerce platforms.
The online payment system is backing up the eCommerce websites facilitating quick payments in the digitally first world.
A robust payment gateway integrated into a user-friendly checkout page is a win for an eCommerce Company in UAE. Also, It acts as a secure channel between the bank and the eCommerce site.
Additionally, It facilitates all the transactions and ensures no fraudulent activities are taken place, and shares the required information with both parties.
5. Increased Security and Database Management
The eCommerce Company in UAE must have a secured website and backend system in place to detect fraud and also any external hacks.
There is a vast amount of customer information that must be always kept safe and secured.
The eCommerce software must be constantly updated, the address verification system must be in place to check credit card fraud, also the Card Verification Value (CVV) requirement for the transaction must be made mandatory.
Additionally, Cybersecurity is very important in the eCommerce business to avoid data hacks, and financial losses, and to keep up the reputation of a trusted eCommerce company.
6. Robust Technology Platform
The integrated technology platform for eCommerce must be capable of monitoring, managing, and executing all the requirements of the customer effectively.
The system must be capable enough to manage daily eCommerce transactions precisely and enhance customer satisfaction.
Also, the platform must be easy to operate for the user and must be having an easy checkout process with a robust payment system integrated into it.
7. Customer Experience
The entire experience of online shopping through the website must be seamless and deliver a positive customer experience.
The eCommerce platform must be tested and secured. There must not be any downtime or error message while the customer is shopping or while making a transaction.
This way it will provide a seamless shopping experience for the shopper via your eCommerce website.
To know more about eCommerce business opportunities in the UAE and selling on Amazon or noon read our blogs!
Contact: Aurion Business Consultant