Why Now Is The Right Time To Start Your E-Commerce Business in the UAE
Updated: Apr 27
7th April 2020
Online retail is booming and the UAE is the most advanced e-commerce market in the Middle East and North Africa. A study between the Dubai Economy and Visa estimated e-commerce transactions in the country to hit $16 billion in 2019 and grow 23% on average annually to 2022. With consumers increasingly relying on online shopping, it is estimated that 95% of purchases will be made online by 2040. E-commerce is opening the doors of opportunity to countless entrepreneurs.
How is Covid-19 affecting e-commerce?
Because of the various lockdown restrictions across the UAE, including the temporary closure of shopping malls and all shops selling non-essential items, shoppers are turning to on-line! They can shop from the comfort and safety of their homes and have their chosen products delivered to their door at a convenient time for them. What could be easier? Its hassle free and shoppers stay safe.
The supermarkets are currently experiencing a huge surge in online grocery orders according to V. Nanadakumar, Chief Communications Officer of the Lulu Group, home deliveries have increased 10-15 times the usual traffic.
As most people are currently stuck in their homes, they have more time to browse the internet and shop at leisure. There has never been a better opportunity to reach out to a highly engaged online audience!
What is hot in e-commerce right now?
Five of the top e-commerce business ideas for 2020 are:
1. Fashion/Jewellery Products
2. Smart Home Products & Accessories
3. AR/VR Headsets, Apps & Accessories
4. Vape Hardware, Flavours & Liquids
5. Online Learning Platforms
To get started you will need more than a “hot” trending product or service to have a sustainable online business. You will also need a well-defined target market. Millennials and Gen Xers are the biggest online shoppers, with 67% of Millennials and 56% of Gen Xers preferring to shop online versus in a mall. Part of the reason you see these two segments of the population spending more money online is that they spend more time shopping online. Though women are stereotypically pinned as shoppers, when it comes to online shopping, men dominate the stats, spending 28% more than women!
How do I start my E-commerce business?
Choose the product/service you want to sell. If you make the product this step is easy. If not, you will need to find a secure supplier so you can meet your customer’s demands both now and in the future. Dealing with suppliers, you will also need to consider upfront payments and delivery times to bring your products to market.
Market research - where do your products fit in the market? Is there a demand? If they are innovative, will you need to educate people? Will you position them as high end and premium priced or as a low-cost product where selling volume is key? Will they need to be adapted to the local market in any way?
Where will you store your products?
How will your products be distributed to your customers?
Who will build your e-commerce website? Will you outsource or will you build it yourself using a platform like Wix?
How will you market your e-commerce business? E.g. setting up social media accounts, organising photography, PR, trade samples, focus groups, advertising, testimonials etc...
Getting a business license (trade license) to legally sell your products (see the next section and how Gateway Group can help you with this).
Opening a corporate bank account
Arranging an online payment gateway
You are open for business!
How do I setup e-commerce trade license?
Even with limited capital, its easy to setup an online business nowadays. Setting up a business is exciting and its getting quicker, easier and cheaper all the time, which is great for YOU, the entrepreneur. However, we strongly advise entrepreneurs not to rush in and sign up for the first business license or the cheapest trade license available. This is where most entrepreneurs go wrong and end up paying the price later in terms of closing a business that has the wrong license, setting up a new/correct license, this all takes time and money, not to mention the hassle of changing contracts with suppliers/customers and updating banking details etc…
At the Gateway Group, we will help you to avoid the above mentioned pitfalls. We'll take time to understand your personal circumstances relating to your UAE residency situation and requirements (which can affect how you set up your business); what you are wanting to sell and whether those products are suitable for the UAE, whether they might require testing or special approvals and possibly even be on a banned list of products; we'll understand where the products are coming from either overseas, in which case you will need an import permit, or from wherever they might be in the UAE; and we'll need to understand who your target markets is, e.g. individuals, government or private sector businesses. All of these pieces of information can and will affect the type of e-commerce license that you will need.
As you can see from the above overview, there are a lot of things to consider before starting an e-commerce business in Dubai or Abu Dhabi. There are different license types and jurisdictions to be considered for getting the right license for your circumstances. Each license type has different document requirements and processes, different timescales for setting up, different fees and different ongoing renewal fees. Given there are so many variables, this means fees will be specific to each company formation. Each company formation is personalized based upon the individual's specific situation and requirements.
How can Gateway Group help you set up your e-commerce business in Abu Dhabi or Dubai?
Award-winning Gateway is the authority on company formation in Abu Dhabi and Dubai. We have experience of setting up all types of businesses including free zone companies, mainland companies and offshore companies, as well as providing all the supporting services that you would expect, relating to visas and Emirates IDs, special permits and general PRO services. We've heard all the stories about where people have gone wrong in setting up businesses here in the UAE, so our focus is on making sure that you get it right first time and don't have to worry about compliance and being unduly exposed to risk. So we will make sure that you have full control of your business and keep 100% of your profits - then it up to you to get on with the running of your business with the peace of mind that we've got your back! To get started with setting up your own e-commerce business contact us now: info@GatewayToUAE.com
Written by Nathan Hunt, Senior Managing Partner
Gateway Group of Companies, Abu Dhabi & Dubai UAE
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Protect your business and profits and have an efficient business setup in Abu Dhabi and Dubai by engaging the award-winning Gateway Group to deliver our customised business setup, unique local sponsor packages, and visa processing. To establish your business in the UAE, Email us: Info@GatewayToUAE.com
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