A Guide to Launching an E-commerce Business in the UAE in 2022

As the world shut down in 2020 owing to the pandemic, it allowed e-commerce to bloom tremendously. The unexpected events of the past year brought about the growth of e-commerce markets as they were easy, convenient, and affordable. Even if the world seems to be getting back to normal, people have discovered the wonders of shopping sitting in the comfort of their homes, which presents a bright future for an e-commerce business. Worldwide revenues in online shopping are expected to double from 2019 to 2022. 

The Middle East and North African Region are growing quickly and the UAE has emerged as one of the largest B2B e-commerce markets. In UAE, e-commerce represents 4.2% of retail profit and is expected to escalate to 23% by 2022.

If you are planning to begin your e-commerce business in the UAE, now is the right time. The pandemic has catalyzed the digital era and retail businesses are continuously shifting online. Looking at the statistics, we can expect further growth in the e-commerce trend, with businesses becoming digital and more and more people willing to shop from the comfort of their homes. 

Setting up in Dubai would be the best option if you are starting your business in the UAE. Besides being home to more than half of the UAE’s online shoppers, it is actively supporting foreign investment in the e-commerce sector. Cashless payments and digital trades are amongst the leading government priorities for economic growth. The process to obtain a business license is fairly easy, and the laws must be strictly followed for operating a business. And this is why there are approximately 190 new e-commerce licenses issued in Dubai every month!

Now, the important question is how can you start your business? Developing the business will require an array of procedures to be carried out with the utmost scrutiny. It can be a complicated process but we got it broken down for you! 

1. Determine the type of license and business activities

The DED maintains a database of more than 2000 permissible activities and you can also obtain additional approvals. A business can have more than one business activity. Decide on the business structure, the type of business activities you want to undertake, and also consider your current residence while making the decision. These will form the basis of the kind of license you will need to operate your business legally.  There are six types of licenses: industrial, commercial, professional, tourism, agricultural and occupational. 

A new license was launched last year that allows start-ups in Dubai to conduct business online and via social media. This is a great option for entrepreneurs that are just starting out and want to explore their business idea without the requirement of a physical location.

2. Choose a location for your business

Even if you are operating your business online, you will be required to register a physical address. Gather the necessary information about the possible locations and analyze their pros and cons before you decide on the location.

Coworking spaces are becoming extremely popular for e-commerce businesses as they are the most cost-effective way to start. In the best coworking spaces you can join a community of like-minded entrepreneurs and accelerate your growth. Read our ultimate guide to coworking spaces in Dubai.

If you are already employed full-time and don’t require a physical store for your venture, you can also consider setting up in the United States as an LLC. This allows you to skip the employer NOC requirement which is compulsory to set up a business in the UAE. If you like to learn more about this, AstroLabs partners with Stripe Atlas to help you navigate through the above. 

3. Register a trading name:

A trade name is what makes your business stand out from other businesses as it is reflective of the type of business. 

The trade name must:

1. Be following with public morals and public order
2. Be agreeable with the business’s activities and legal status of the company
3. Not be previously registered
4. Not be offensive and should not contain the names of any government bodies

4. Apply for the license

Fill up all the relevant forms, submit all the relevant documents, and send them to the allocated offices. If the government has no objection to the business being set up, the initial approval is granted, and then continued for the further process. Don’t forget to collect your license before starting the operations for your business. 

5. Open a Corporate Bank Account

It is advisable to open a local bank account to facilitate easy transactions.  Some of the banks might not provide corporate banking facilities, so make sure that you are being provided with the facilities required for your business. 

Bonus tip: Once you’ve gotten your trade license, try setting up your account with Abu Dhabi Commercial Bank, Mashreq Bank or Emirates Islamic Bank as they have a partnership with Dubai Economic Department on e-commerce licenses that helps make the process easier!

Once your business is registered, you need to go ahead with building up the business. Build a website, get payment gateways, logistics, storage, delivery, and then comes the marketing of your business. It might sound overwhelming especially if you are new to the e-commerce world. That’s why we’ve built the UAE E-commerce Incubator– a 5-week program during which you will work on everything your business needs: from a business plan, to finding right products, building a website and launching your marketing plan. 

The UAE has vast opportunities to offer in the field of E-commerce. It is the perfect time to dive into the ocean of opportunities and build a successful business. As the retail trends are shifting, there is no better time to start than now!