In the UAE, e-commerce has a bright future. From 2019, online shopping sales are expected to almost double, to $6.54 trillion, and the UAE has one of the largest B2C e-commerce markets in the fast-growing
Middle East and North African (MENA) region. With over 9.5 million internet users and a 96.4% rate of internet penetration, the UAE e-commerce market is expected to keep growing by more than 10% every year.
Here are some important things you need to know about the UAE's e-commerce market if you are thinking about starting an online business there.
Why start an E-commerce business in the UAE?
Fastest Growing E-Commerce Market in the Middle East
Even though the UAE has only a third as many people as Saudi Arabia, its e-commerce market is worth more than $10 billion, which is more than Saudi Arabia. Eshop World says that 60% of all online buyers are from Dubai, where an amazing 81% of the 3.2 million adults buy things online.
The government of Dubai just started the Dubai E-Commerce Strategy, which aims to make the city a global logistics hub for the Middle East and grow its contribution to the local economy to AED12 billion (about US$3.2 billion) by 2023.
As part of the strategy, there are plans to get more foreign direct investments and cut the costs of e-commerce by 20%. (including storage, customs fees, VAT and transportation).
World-Class Transport Infrastructure
The UAE also has one of the best systems for getting around in the world. In the 2018 Global Competitiveness Report, it was ranked third for "airport infrastructure and means of air transport quality" and fourth for "quality of infrastructure." It also connects you to 80% of the world's GDP in 8 hours or less.
Since the air transportation industry contributes about $20 billion to the GDP of the UAE, the government works very hard to keep it competitive. Official numbers show that about AED 1 trillion (about US$272 billion) has been spent on airport infrastructure and development projects so far. That's just the infrastructure at airports.
In addition to all of that, the UAE's Infrastructure and Vision 2021 (which aims to ensure sustainable development while protecting the environment) shows how the country plans to build roads, bridges, seaports, and other public works to help the economy grow.
Extensive Support for New Businesses
In the World Bank's "Doing Business 2020" report, the UAE was ranked 16th in terms of how easy it is to do business. It beat out countries like Thailand, Germany, and Canada when it came to overall business regulations and practices. As part of Vision 2021, the UAE is trying to diversify its economy by helping Free Trade Zones (FTZs) grow. FTZs are places where businesses can take advantage of benefits like lower operating costs, lower tax rates, and chances to network with other professionals.
For example, FTZs like DMCC in Dubai can offer:
- 100% repatriation
- 0% Corporate Income Tax
- 0% Personal Income Tax
FTZs can also be the home of business incubators like the Google-certified Astrolabs, which give tech startups professional training programs. Take a look at our FTZ guide if you want to learn more about Dubai's FTZ landscape.
Gain a competitive edge with DMCC
With DMCC's investment in making the perfect incubator for your e-commerce business, it comes with a wide range of ecosystem services to help your business grow.
With benefits like better infrastructure, easy business setup, connectivity, help for businesses that has never been seen before, good government incentives, and a lot more.
How do you start selling online in the UAE?
If you want to start an e-commerce business in the UAE, the best place to do so is in Dubai. As we've already said, 60% of the UAE's online shoppers live in Dubai, and the city is also trying to get more foreign investment in its e-commerce sector.
Dubai has a legal system that makes it easy for e-commerce businesses to get a licence to do business. But it's important to remember that, even though it's easy, it's against the law to run an ecommerce business without the right licenses, so it's important to follow the right steps to stay on the right side of the law.
Steps for Opening an E-Commerce Business in Dubai
You can set up a business in Dubai either in person while you are there or online. Here are the steps you usually need to take to get set up:
- Decide on your licence type and business activities
- Most small and medium-sized businesses choose to form a Limited Liability Company (LLC), but the type of legal entity you choose will depend on your own needs.
What kind of business structure do you like best? What kinds of business things will you do? What is your residency status right now? When making your choice, you should think about these questions. In the end, this will tell you what papers and licences you need to run your e-commerce business legally in Dubai.
- Select a location for your business
- As an e-commerce business, you still need a physical location, even though you only need a business address. FTZs usually offer a range of low-cost options for businesses of all sizes, and they may also offer deals on office space for new businesses.
- Submit your application
- Fill out all the necessary forms, pay any fees, sign all the necessary papers, and send them to the right offices.
- Open a bank account
- Once your business is up and running, you should open a bank account for it. This will make it easier for you to manage the finances of your business and file taxes in the future.
Starting an e-commerce business in the UAE is simple
By starting your new online business in the UAE, you can take advantage of the many possibilities in the Middle East. In the UAE, Dubai has a big, well-connected population, and the government is working on a lot of projects that will help e-commerce grow over the next ten years.
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