The internet era changed the dynamics of how businesses interact with their consumers. Applications and platforms in mobile phones or devices are available for use to instantly shop anywhere around the globe. It allows consumers to conduct online payment and the products ordered shipped directly to the selected location and instantly or within a set shipping period.
E-commerce is defined as the ability of businesses to buy and sell goods and services electronically or over the internet. Amazon, Zomato and Noon are examples of well-established e-commerce platforms.
KEY FACTS & TRENDS IN THE E-COMMERCE MARKET
- There are currently 4.7 billion internet users which accounts for 60% of the global population (As of April 2022 statistics).
- E-commerce accounted for 13% of the total goods-retail value across the world in 2019 (2% for the Middle East and Africa).
- There is an 86% growth in global food and drink e-commerce from 2019 to 2021.
- Loyalty in the digital era will be a less tangible feature. The most influential loyalty features are ‘helping solve a problem’ (40% of digital users) and ‘making shopping process more convenient’ (38% of digital users).
- 65% of the global digital consumers indicate worry about climate change. This will become the key element to find ways for e-commerce sustainability.
E-COMMERCE CLIMATE IN THE UAE
Since the Covid-19 pandemic, there has been a significant increase in the e-commerce sector to cater the growing digital market in the UAE. The e-commerce industry was valued at USD $22 billion by the end of the year 2020. Egypt, Saudi Arabia, and the UAE are the key drivers for this e-commerce growth. Surge in e-commerce demand led investors to grasp the opportunity and open new e-commerce businesses in the region. Over USD $665 million has been invested in e-commerce start-ups in MENA between the year 2016 and 2019.
If you are planning to establish an e-commerce business in the UAE, you may choose to set up the licenses in one of the many free zones and/or within the mainland depending on your company’s target market. Company licenses in both mainland and free zone offer 100% expatriate ownership and complete control over your company operations and finances. A mainland company will offer better flexibility of operations, reach, ease of logistics, established infrastructure, and accessibility to the local market.
Free zones and mainland offer warehousing and storage facilities depending on the requirements. Certain free zones in Dubai have a larger variety for warehousing compared to others. For example, Jebel Ali Free Zone and Dubai Aviation Corporation offer a wider range of warehousing facilities and have direct access to Jebel Ali port and Al Maktoum International Airport.
UAE currently offers 0% taxation on all businesses. However, starting mid-2023 the UAE will introduce 9% corporate tax which applies to all UAE companies that generate income from providing goods or services to consumers or businesses in the UAE.
HOW TO REGISTER AN E-COMMERCE COMPANY & GET AN E-COMMERCE LICENSE IN DUBAI & THE UAE?
There are no formal qualifications required to set up an e-commerce license in Dubai and the UAE. Creation Business Consultants can guide you through the entire company registration process of your e-commerce business which includes:
- Guiding you on a suitable jurisdiction to set up your e-commerce company (mainland or free zone).
- Drafting and submitting the documentation for your e-commerce company. Including but not limited to the application with the proposed company name, business plan, ownership, and management details to the respective authority.
- After an initial approval from the licensing authority is received, the business will need to select suitable business facilities. The business facility options available include serviced office for digital services companies, functional office or a warehouse for businesses that have a fulfilment centre.
- Following on, the authority will request signatures from the shareholders or authorized company representatives. Once the e-commerce application with the business lease is lodged to the authorities, the e-commerce lease will be issued.
- The next step for your e-commerce company is to apply for a residence permit/ and Emirates ID card of your business manager.
- Upon completion of the requirements, Creation Business Consultants will then assist you in issuing an application to open your business bank account.
- Once bank account is operational, your e-commerce business can apply for a payment gateway (an online payment service integrated into the e-commerce website to collect payments) through companies such as Network International and Magnati or outsource it to other payment gateway service providers like Payfort and CC Avenue.
Thereafter, your e-commerce company can start its operations online. Creation Business Consultants can also assist you with post-company set-up processes including employee sponsorship, financial year set-up, books of accounts and VAT registration, etc.
TAKEAWAY
Advancements in technology and the post-pandemic environment gave a boost to the future of e-commerce in the UAE. Consumers are preferring the convenience brought forth by e-commerce and it is expected to become part of the norm in the years to follow.
Creation Business Consultants provides a wide range of services to assist you in setting up an e-commerce business in the UAE. For a free consultation, email us on info@creationbc.com or call UAE +971 4 878 6240 Saudi Arabia +966 54 995 2676.
