The Middle East’s e-commerce market is rapidly expanding. Gulf States made approximately $5 billion in profit in 2015 and $20 billion by 2020. Despite the fact that nearly 90% of their online products are imported from other nations, there is still evidence of rising profits in the e-commerce sector. Now is the time to consider how to start an online business in Dubai.
The massive growth is due to the always improving online payment methods and electronic gadgets.
Investing in an online business in Dubai should be top of your list to enjoy minimal bureaucracy, 100% business ownership, 0% tax rate, no import or export duties, and low operating expenses.
Keep reading to know how to start an online business in Dubai.
Reason to Start an Online Business in Dubai
Currently, the most popular activity in the world is online shopping. The worldwide retail e-commerce sales amounted to $4.9 trillion in 2021.
18% of the sales are due to e-commerce. The UAE saw its e-commerce market record a $3.9 billion market value, a 53% year-on-year increase.
Experts predict that the e-commerce market will hit $8 billion by 2025. Also, about 53% of MENA consumers agree that they are doing more online shopping now than before COVID 19 started.
What to Know When Setting Up an Online Business in Dubai
The process of beginning your online UAE business is pretty straightforward. You want to attract many business activities as possible.
The process will involve filling out an application to gain an e-commerce business license.
But, before making that crucial step, here are some things you need to know.
Choosing the Right Business Structure
The most critical step is determining your business structure. The company structure will depend on your preferences and activities.
For instance, do you want 100% ownership or need a local partner or sponsor? For an e-commerce business, the ideal business structure will be a Free Zone Company and a Limited Liability Company.
But, receiving advice from a business setup consultant is the best option. They aid you in determining the correct business structure for your e-commerce business.
1. Setting Up Your UAE Jurisdiction
Note that you can register your business on the mainland or in a free zone. But, it will depend on your e-commerce business nature.
A mainland license allows your business to sell directly to the local market. A free zone license will need you to operate with a local distributor.
Also, there are over 30 free zones in Dubai. Each free zone offers complete foreign ownership and allows you to trade internationally.
When choosing a UAE jurisdiction, check the factors that benefit your company. That way, you enhance your market share and scalability.
2. Picking Your Business Name
Do you already have a business name? Though it seems like an easy task, remember that the UAE has very strict naming conventions.
By all means, avoid names that include:
• References to Allah
• Offensive language
• Sectarian or political groups
• Politically charge terms
• Initials and abbreviations
Are you having trouble picking a good name for your online business Dubai? Consider contracting a consulting firm with a deep understanding of Dubai’s culture and customs.
3. Preparing Your Business License Application
It’s now time to submit your license application. Note that the license application process takes less time if you have the required basic documents.
The documents will include:
• Two-colour passport photos
• Passport copy of the business owner or owners
• Properly filled out the application form
Remember that any inaccuracies on your application form will lead to delays and complications. We recommend you check and double-check everything before submitting your business license application.
If all goes well, the application approval will take a week. Of course, you can hire a company formation expert to handle this step for a fee.
4. UAE Visa Application
Though your e-commerce business might not need a physical premise, it must have a legal address. You and all your employees need a valid UAE visa to move to a Dubai-based office.
Have you set up a business of your own in the past? If so, you can apply for a business visa. The visa is part of the Golden Visa system, allowing foreigners to get a long-term visa for themselves and their staff.
5. Opening a Business Bank Account in Dubai
Since your business is in Dubai, you need a local bank account. But, for non-residents, you will not need to jump many hoops to open a local bank in Dubai.
You only need a password, a copy of your visa, UAE identification card, and business license. You might feel tempted to use your bank account to avoid extra fees and convenience.
But, note that revenues from your company might be difficult to track when combined with your finances. Also, it creates confusion when noting your business tax liability and cash flow and leads to inaccurate bookkeeping.
The Top Online Businesses Ideas in Dubai
Do you want to start an online business in Dubai and have an idea of the business? Here are some ideas:
App Development – According to statistics, the global smartphone industry will reach $520.7 billion by 2030. The market will register a 7.6% CAGR by 2030.
There is a huge opportunity for you to start an online app development business. You can publish your mobile apps on the major app marketplaces like Apple App Store and Google Play Store.
Online Teaching – Do you have a relevant skill in demand? Consider publishing courses on the internet or starting an online teaching business.
Online Store – For years now, e-commerce has been booming in the UAE. The pandemic has accelerated growth. If you have a product or service in demand, consider setting up an online store.
Online Business Models in Dubai
Depending on your business nature, you can adopt various online businesses in Dubai. Here are a few:
1. Business-to-Business (B2B)
Your company will sell its products to another company in a B2B business model. The buyer will then resell the product to consumers.
Note that the transactions will have a longer sales cycle but have greater order value and recurrent purchases.
2. Business-to-Consumer (B2C)
This model is the most popular one since it encompasses many options. You can choose direct selling, the most adopted B2C business model. Here customers will buy directly from your online business.
Another option is to become an online intermediary. Here, you become a go-between but do not own any product or service.
You can also choose to be an advertising-based B2C where you will use content marketing to build your customer base.
The model caters to independent contractors and freelancers doing compensated activities for companies. In this e-commerce model, some websites will allow clients to post work they need freelancers to do for them.
Here, think of sites like Fiver or Upwork.
This model, also known as an online marketplace, connects most customers who exchange goods and services. They will generate money by charging listing or transaction fees.
Dropshipping is a model that allows an online store not to stock the items they are selling. Here, you will buy items from third-party vendors to directly deliver the goods to your buyers.
The Steps to Starting an online business Dubai
Are you now feeling convinced the e-commerce business is right for you? Are you ready to start your online business?
Here are the steps to ensure you have online business success in Dubai.
1. Choosing a Product or Finding a Gap in the Market
The first step is somehow the hardest. You have to find a profitable product that has good margins. You can either choose a single product or a comprehensive product line to fill a market niche.
Because there are many costs involved, you have to choose products with profit margins above 50%. That way, you will be absorbing the price of customer acquisition.
Here are a couple of things to aid you in looking for what to sell:
• Find something that solves your customer’s pain point
• Identify something that appeals to enthusiastic hobbyists
• Choose your passion
• Your professional experience
• Always capitalise on trends
• Know the products with higher profit margins
Begin your search with related products. Decide to offer a product that will improve an existing one in the market.
2. Choose Your Brand’s Name
There’s no limit to what you can call your brand in Dubai. But, your brand name shouldn’t go against what your company is offering; rather, it should reflect your company’s activity.
Also, the name should not be similar to another brand name protected by copyright. If you aren’t sure if your brand name is acceptable, consider consulting with a business setup expert.
3. Buying Your Business Domain and Social Handles
Acquire a domain name and social media handles matching your business name. The domain name is the address at which your online shop will live.
Your social media handles are how you will display your business name on social profiles. Remember to have them all as alike as possible.
If the name you want isn’t available, be creative and find the ones that work best with your business. For online businesses in Dubai, the common domains are country-specific domains like .ae. or top-level domains like .com.
4. Choosing an E-commerce Platform
An e-commerce platform is a channel or software that will allow you to run an online business. The software will handle all aspects of your business and customer sides of transactions.
The Best E-commerce Platforms
Many e-commerce platforms help with a simple creation of an online store. The platforms are cost-effective, simple, and quick to set up.
Here are a few e-commerce platforms you will come across:
Launched in 2004, Shopify is the most popular and fully managed platform. The platform now hosts over a million shops worldwide.
The platform has an easy to use interface and an excellent app market. Also, Shopify is a (SaaS) or software as a monthly membership service.
You will enjoy domain hosting, website hosting and mail hosting. You also have a variety of themes to choose from, both free and paid.
The site is one of the most effective and dependable e-commerce systems. Magneto excels at performance and scalability.
And that’s why it now accounts for over a quarter of the market. Companies such as Huawei, Burger King, and Liverpool Football Club use Magento.
If you are considering an enterprise-level online business, use Magento.
The WordPress plug-in will convert your WordPress website into an online store. WooCommerce has all other e-commerce platforms’ features though it’s a plug-in.
Also, it’s among the most popular e-commerce platforms worldwide. Over 3.8 million businesses are using WooCommerce.
Note that WooCommerce is free and an open-source platform. To use it, you only require a WordPress website.
The site has over 55,000 stores, and it is a close rival to Shopify in terms of ease of use and features. The site has entry-level plans and has a choice of inclusion and exclusion.
5. Getting Your Brand Designed
Unless you’re a graphic designer, do not look for shortcuts during branding. Nowadays, branding is everything for businesses.
Your brand will always represent the business’s value, philosophy, and ‘personality’. Branding communicates visually and with a tone of voice everything your online business entails.
You want your e-commerce business to feel welcoming to shoppers. Since you have minimal time to create an impression, branding is the answer.
6. Building a Website
After choosing an appropriate branding, build your website on the e-commerce platform you want. Building a website can be something easy to achieve on any platform.
But, if you don’t know how to do it, we suggest you hire a professional. A lot goes into designing an operational, modern and professional website.
Here you have to understand:
• User flows
• Image optimisation
• Mobile optimisation
• Website speed