UAE is the world’s 45th largest ecommerce market, expecting the total revenue to reach around $6.7 billion by 2024. The total revenue is expected to grow at a CAGR of 8.7%, reaching over $9 billion by 2028. The country is an emerging and leading ecommerce hub in the MENA region, offering lucrative opportunities for investors and entrepreneurs.
With almost a 100% penetration rate, Dubai is the ultimate destination to start and scale an ecom venture. In fact, the average online order value in Dubai is the highest in the world at $332, which is much higher than the European average of $73. This means you can expect to have high-value sales and make higher profits here.
But can you set up an ecommerce business in Dubai and operate it legally?
This guide will give you a comprehensive answer to this question, walking you through the essential steps, benefits, and considerations for starting an eCommerce business in Dubai.
Steps to Start an Ecommerce Business in Dubai, UAE
Setting up an ecommerce business in Dubai requires a well-defined process with proper planning and careful execution. You can follow the below-mentioned steps to establish a successful foundation for your online venture to enhance your chances of success in the UAE.
Step 1. Market Research
This is the first and arguably most important step. Conduct detailed market research to identify feasible business opportunities and figure out your target audience’s behaviour and preferences. Analyse market trends and customer needs to find a unique value proposition of your ecom business.
Step 2. Location Selection
Choosing the appropriate business location is a critical step based on your future business goals and needs. You can either operate from the Mainland or choose a Free zone, each offering distinct advantages. Free Zones offer unique benefits such as 100% foreign ownership, tax exemptions, and streamlined business setup processes. On the other hand, the Mainland provides access to the local markets.
Step 3. Choose a Trade Name or Decide on Company Name
You must then choose a suitable trade or company name for your ecommerce business. Choose a name that suits your business and is good for establishing brand identity. However, you must follow the guidelines set by the authorities to ensure that your chosen name is legal, unique, and appropriate for your business in the UAE.
Step 4. Obtaining an eCommerce Licence
This is one of the most crucial steps. You must obtain an ecommerce licence from the relevant authority to legitimise your online business operations in Dubai. This licence allows you to conduct various business activities online. You can trade products and services now.
Step 5. Build Website
To sell products and services online, you must have an online store. Therefore, you must develop a stable, user-friendly, and secure website. You must optimise it for a good user experience and SEO to ensure your users have a good customer experience. Invest time and resources to create a website that effectively showcases your products or services.
Step 6. Payment integration
To facilitate online transactions, you must integrate secure payment gateways. A secure payment integration is also essential to build credibility and gain user trust. You can obtain a merchant account from a local bank or payment service provider for payments. You must also ensure compliance with the regulatory authority’s guidelines for electronic transactions in the UAE.
Step 7. Logistics Support Setup
Prompt delivery is one of the most critical factors for your ecommerce business success. Hence, you must have efficient logistics and distribution to keep your customers happy and satisfied. Analyse your situation and choose between establishing your own logistics infrastructure or partnering with a third-party logistics provider. Either way, you must ensure reliable and timely delivery of purchased goods to provide a great customer experience.
Step 8. Promote your business
The last step after setting up your ecommerce business is to promote it. You must invest time and resources in developing an effective marketing strategy to reach your target audience. Leverage various digital marketing channels, such as search engine optimization (SEO), social media marketing, and email campaigns, to increase brand awareness and drive sales.
Benefits of Ecommerce Business in Dubai, UAE
Dubai offers many advantages to ecommerce business owners. These benefits can play a significant role in contributing to your venture’s success and growth. Here, we highlight the key benefits of operating an eCommerce business in the UAE.
Growing Online Shopping Trends
According to reports by checkout.com, a fintech firm, monthly online shopping transactions in the UAE have increased by 140% since 2020. This significant surge in online sales can be attributed to user behaviour changes after the COVID-19 pandemic. More users started shifting towards online platforms, providing a golden opportunity for ecommerce businesses in Dubai.
Access to a Diverse Customer Base
Dubai’s position as a global hub makes it an ideal gateway to reach a diverse customer base. You can access markets such as the Middle East, Africa, and Asia. By establishing your eCommerce business in Dubai, you can cater to consumers from vast and varied markets globally.
Advanced Infrastructure and Logistics
The UAE boasts world-class infrastructure and logistics facilities. This allows you to deliver products and services to customers more efficiently and in a timely manner. Dubai has advanced transportation networks and smooth customs procedures as well for importing and exporting goods. The city provides a perfect environment to ensure the success of ecommerce businesses.
Business-Friendly Regulations
Dubai has business-friendly regulations and initiatives to support the growth of the eCommerce sector. For instance, the UAE Free Zones company formation offers tax incentives and streamlined licence processes with favourable investment policies. All these factors create a welcoming environment for entrepreneurs and businesses.
Access to Skilled Workforce
Dubai also attracts a diverse and skilled workforce from around the world. This enables you to hire some of the most talented and qualified professionals. Your ecommerce business will have more chances to succeed with a highly-skilled talent pool in areas such as marketing, technology, and logistics.
Tax-Friendly Environment
Dubai has 0% personal income tax followed by a 9% corporate income tax in the Mainland. However, in Free Zones, you are exempt from corporate tax as well if you only engage in specific tax-free business activities. This favourable tax structure can contribute to cost savings and improved profitability for eCommerce businesses operating in Dubai.
How Much Does it Cost to Start an eCommerce Business in Dubai?
The cost of starting an ecommerce business in Dubai can vary significantly based on a number of factors. It also depends on the jurisdiction where you choose to operate. Free Zones are usually more cost-effective than the Mainland due to flexibility and virtual office setup.
However, you can still assume that the cost would come around at least AED 10,000, considering the ecommerce licence, website development, logistics, marketing, and operational costs with other miscellaneous expenses. It can go up depending on the type of licence, business size, and operational requirements. It’s essential to consult with professionals to understand the specific costs associated with your ecommerce venture.
The cost of a license to start an eCommerce business in UAE would start from AED 5,510 for a 0 visa package, and for Dubai it typically starts at AED 12,900 for a 0 visa package, that will go higher if you need a package that includes a visa too.
The cost of eCommerce licence to start an eCommerce Business in UAE Free Zones are as follows:
| S No. | Location | 0 Visa Price | 1 Visa Price |
| 1 | SRTIP Freezone | AED 5,510 | AED 12,000 |
| 2 | IFZA Free Zone | AED 12,900 | AED 21,450 |
| 3 | Ajman Free Zone | AED 5,500 | AED 11,999 |
| 4 | Meydan Free Zone | AED 12,500 | AED 20,500 |
| 5 | RAKEZ Free Zone | AED 5,999 | AED 12,000 |
Note*: Price listed above are just an estimate and are subject to change.
List of Free Zones Suitable for Ecommerce Business in UAE
Free Zones in UAE offer attractive incentives and a favourable environment for ecommerce businesses. Here are some notable free zones suitable for establishing an ecommerce venture in the UAE.
Ajman Free Zone
Ajman is often referred to as the cheapest Free Zone in UAE due to its low company registration cost. You can start a business here for as low as AED 5,555 with all the Free Zone benefits in sectors, such as healthcare, beauty, food, automotive, construction, education, and agriculture.
Ras Al Khaimah Economic Zone (RAKEZ)
RAKEZ Freezone is one of the most popular Free Zones in the UAE. It provides a variety of cost-effective options for starting an ecommerce business in the UAE. You also get access to a highly-developed infrastructure here required for smooth logistics.
Sharjah Publishing City (SPC)
SPC Free Zone is located in Sharjah and caters businesses mostly in the publishing, media, and eCommerce sectors. You will get specialised services for your ecommerce business here.
SRTIP (Sharjah Research Technology and Innovation Park)
SRTIP Free Zone supports businesses in sectors, like technology, research, and eCommerce. This Free Zone offers advanced facilities and a supportive ecosystem, making it an ideal hub for startups and established businesses in the UAE.
SHAMS Free Zone
Sharjah Media City – Shams Free Zone was set up in 2017. The Free Zone offers a global media hub to promote innovation and creativity by providing a favourable environment to creative entrepreneurs, freelancers, startups, and businesses.
IFZA Free Zone
IFZA Free Zone provides flexible and affordable solutions for eCommerce businesses. It offers simplified company setup processes, customizable licence packages, and access to a global network. It is a good strategic choice for businesses aiming to establish an online presence with minimal overhead.
Dubai CommerCity
Dubai Commercity Free Zone is an initiative by the UAE government to support growth in the ecommerce sector. The Free Zone is designed to offer specialised services to ecom businesses operating here.
Meydan Free Zone
Meydan Free Zone is a perfect option for eCommerce entrepreneurs looking for affordable packages and a prime business location. The setup process is quick, and the Free Zone provides all the support your business needs in reaching its full potential in the UAE’s booming digital economy.
Dubai Internet City (DIC)
DIC is another Free Zone that focuses on attracting technology companies, such as digital media, ecommerce, and software development. It has a well-maintained infrastructure tailored to tech businesses and also provides many business support services.
Dubai South
Dubai South Free Zone is located near the Al Maktoum International Airport. You will find many cost-effective business setup options here. It is one of the Free Zones that is ideal for starting an ecommerce company due to its strategic location.
Dubai Multi Commodities Centre (DMCC)
DMCC is one of the fastest-growing and largest Free Zones in Dubai. The DMCC Free Zone has a dedicated eCommerce licence that lets you set up an online store and operate it.
Working with Avyanco
If you want to start an ecommerce business in Dubai, you must understand that it can be a complex process. However, you can have a smooth experience by opting for the proper guidance and support. With the help of the right business consultant, you can easily overcome the business setup challenges in Dubai and take advantage of the unlimited market opportunities.
At Avyanco, our team of ecommerce business experts understands the intricacies of setting up an ecommerce venture in the UAE. We have experienced ecommerce consultants who are dedicated to providing you with the right assistance and increasing your chances of success.
Avyanco offers a range of services tailored to the needs of eCommerce businesses, including business setup, licensing, and legal consultation. We recognize the importance of seeking professional advice and leveraging industry expertise to ensure a smooth and successful business setup process.
By partnering with us, you get the benefit of our extensive knowledge related to Dubai’s corporate law. We assist you with taxation and compliance as well. Hence, to ensure the success of your ecommerce company, connect with us today. Together, we can turn your entrepreneurial visions into an online business that will scale to new heights soon.
FAQs on Starting an eCommerce Business in Dubai
Yes, ecommerce is highly profitable in Dubai. Since 2020, the region has witnessed a significant growth in the online shopping trends. With its advanced infrastructure and business-friendly regulations, Dubai offers a lucrative ecommerce market. The customer base is also growing, which will generate substantial profits in the long run.
The cost of starting an ecommerce business in the UAE depends on multiple factors. There are many costs associated with starting an ecommerce venture, including eCommerce licence cost, developing an online store, marketing, logistics, manufacturing or sourcing products, and operational expenses. Hence, you can expect anywhere from AED 10,000 to AED 30,000 as your initial investment. It is, however, recommended to consult with professionals to understand the specific costs associated with your eCommerce venture based on its scale and requirements.
Yes, you need a licence to sell online in Dubai. To legally operate your ecommerce venture, you must obtain an ecommerce licence from the respective authority. The licence allows you to conduct various online activities, such as selling products and receiving payments through online platforms.
Amazon UAE only provides a platform for sellers. To operate as a business, i.e., selling products and generating profits online, you must require the appropriate business licences. To engage in commercial activities, you must remain compliant with Dubai’s laws and regulations.
Yes, you can open a bank account with an eCommerce licence in Dubai. The licence enables you to open a commercial bank account. However, many banks would require you to have a valid trade licence with ecommerce licence to accept payments for your online business legally.
Yes, dropshipping in the UAE is legal. However, to operate legally, you must consider dropshipping as a proper business venture. You must apply for and obtain necessary licences, such as trading and ecommerce licences. Another important thing to remain compliant is to ensure you are not dropshipping any restricted or prohibited products in the UAE. It is recommended that you engage a professional to ensure you have all the required permissions, licences, and approvals to sell legal products without any issues in the future.
