Why start an e-commerce business in Dubai? With an e-commerce industry capitalization of more than US $10 billion, the UAE is a regional leader in MENA. The UAE is the region’s largest B2C e-commerce player, with Dubai leading the way with over 60% of online purchases in the Gulf Cooperation Council (GCC). The thriving e-commerce industry and robust marketing infrastructure in Dubai make it a great location for online businesses. It has a lucrative market full of customers who spend extensively. Starting an e-commerce firm in Dubai becomes a breeze with the help of firm setup consultants.
Before we learn how to open an e-commerce business in Dubai, let’s dispel some misconceptions.
Misconception #1- You need a high capital to start an e-commerce business.
To start an e-commerce business in Dubai, your investment need not be sky-high. E-commerce businesses do need capital to get off the ground but it will be cheaper than your brick-and-mortar store. Analyze the expenditures that your business will have to endure, from one-time investments to modest day-to-day expenses. A budget will help you estimate how much it will cost to establish and run your online enterprise on average. You can even start small by obtaining a Dubai E-trader license, one of the UAE’s e-commerce trade licenses.
Misconception #2- You need to be a business expert.
Starting a business in Dubai entails taking risks. It is necessary to have some basic knowledge of fundamental business principles to be effective at running a business.
If you’ve decided to start an online business and believe you have the necessary fundamentals, you can invest in expanding your knowledge, getting relevant experience, and even learning new skills to better run your online endeavor.
Misconception #3- You can only succeed with a great website
Your website should be the onset for convincing consumers that your company provides excellent products/services. Customers may become dissatisfied if you only focus on web design and the service/product is not up to par. It is always necessary to strike a balance between the two.
Tips to Start an E-commerce Business in Dubai:
Now here are some tips to start an e-commerce business in Dubai:
1. Niche selection/ line of business
After deciding to launch an e-commerce firm in Dubai, you must pick what services and products to sell. You must explore products/services that are both appealing to you and in high demand in the market. Choosing your expertise early on allows you to make decisions about licenses and other legal requirements.
Consider the following e-commerce business ideas in Dubai:
- Online consultation
- Digital Marketing
- Influencer marketing
- Delivery platforms
- Web development
2. Market research/ target audience
To open an e-commerce business in Dubai, knowing your market and customers is as essential as having a product/service that is in demand. Building your customer persona in advance will not only help you market your product/service effectively but also make your service/product market-specific.
3. Select the right jurisdiction
Select the jurisdiction, either Dubai mainland or a Dubai free zone. This is quite important as selecting the jurisdiction based on the product/ service to be traded helps you foresee the mainland and free zone regulations and processes governing business formation in Dubai. You can speak with company setup consultants to get a clear picture of the jurisdiction for the business activity you intend to pursue.
4. Acquire your trade license
Now that you’ve decided on your business and jurisdiction, it’s time to get your licenses. To apply for licenses, you must first register your e-commerce business in Dubai. Apply to the Department of Economic Development for a mainland e-commerce license. If you are looking for a free zone business, the application must be made with the free zone authorities. This license is commonly used by e-commerce enterprises and permits a variety of online business activities.
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5. Open a corporate bank account
You can’t start your e-commerce business in Dubai unless you have a corporate bank account, even if you have an e-commerce website and a trade license in Dubai. The process of opening a bank account in the country is straightforward, but you may require professional assistance to complete the paperwork and open a bank account. Most entrepreneurs are unfamiliar with the process in a foreign country, which might place them in a tough spot.
6. Build your e-commerce platform
As previously stated, a website will be the starting point for you to start an e-commerce firm. However, investing too much in it might lead to consumer dissatisfaction, while investing too little can lead to user apathy. You must guarantee that your website is appealing to customers while also being free of technical issues.
7. Integrate the payment system into your platform
To accept credit card payments on your website, you must have a merchant account with your local bank or payment service provider. Because the Telecommunications and Digital Government Regulatory Authority (TDRA) in the UAE is the principal authority responsible for electronic transactions, payment gateways must be optimized to manage user traffic in compliance with TRDA rules.
8. Prepare support for customers and logistics
Ensuring consumer happiness is key for any business. For your firm to succeed, your customer service, technical support, and database administration should all be in sync. Logistics and distribution are equally important aspects of an e-commerce operation. You can either build your logistics in the UAE or engage third-party logistics support.
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9. Get Import-Export code (IEC)(If required)
An Import-Export Code (IEC) issued by the competent customs agency in UAE is required to export goods produced in the UAE, import goods from a foreign country into the UAE, or even re-export commodities previously imported into the UAE.
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10. Launch and market your product /service.
Once your company is up and running, you must determine your marketing and sales strategy. If you’ve already done your market research and determined your consumer persona, this stage should be a piece of cake with the appropriate techniques.
Now that you have an idea about how to start an e-commerce business in Dubai, let’s look at some common mistakes entrepreneurs make in this process:
- Having no proper business plan
- Not being aware/learning required technical skills
- Starting a business while being unaware of the complications or difficulty level
- Underestimating the capital/investment required for the business
- Neglecting the payment methods and gateways.