Start an Ecommerce Business in Dubai
The UAE is the world’s 45th largest e-commerce market. Total sales are expected to reach approximately $7 billion by 2025.
The compound annual growth rate (CAGR) is expected to be 8.7%, reaching over $9 billion by 2028. The country is an emerging and leading e-commerce hub in the MENA region, offering lucrative opportunities for investors and entrepreneurs.
With a penetration rate of nearly 100%, Dubai is the ideal destination for building and expanding an e-commerce business.
In fact, the average online order value in Dubai is the highest in the world at $332, significantly higher than the European average of $73. It means you can expect high-quality sales and higher profits here.
However, Can You Start And Legally Run An E-Commerce Business In Dubai?
This guide provides a comprehensive answer to this question, covering the key steps, benefits, and considerations for starting an e-commerce business in Dubai.
Steps To Start An E-Commerce Business In Dubai, UAE
Starting an e-commerce business in Dubai requires a straightforward process, careful planning, and meticulous execution. By following these steps, you will lay the foundation for your online business and increase your chances of success in the UAE.
Step 1. Market research
It is the first and perhaps most important step. Conduct thorough market research to identify viable business opportunities and gain insight into your target audience’s behavior and preferences. Analyze market trends and customer needs to find a unique value proposition for your e-commerce business.
Step 2. Location selection
Choosing the correct business location is a crucial step, based on your future business goals and needs. It can operate from the mainland or choose a free zone; both offer their own advantages.
Free zones offer unique benefits, including 100% foreign ownership, tax exemptions, and simplified company formation processes. On the other hand, the mainland offers access to local markets.
Step 3. Choose a trade name or enter a company name
Next, need to choose a suitable trade or company name for your e-commerce business. Choose a name that reflects your business and reinforces your brand identity.
However, be sure to follow legal guidelines to ensure that the name you choose is legal, unique, and suitable for your business in the UAE.
Step 4. Obtain an e-commerce license
It is one of the most important steps. You need an e-commerce license from the relevant authority to legitimize your online business in Dubai. This license enables you to engage in various online business activities. You can now sell products and services.
Step 5. Create a website
To sell products and services online, you need an online store. That is why it is important to develop a stable, user-friendly, and secure website.
Optimize your website for a good user experience and SEO to ensure a positive customer experience. Invest time and resources into creating a website that effectively presents your products or services.
Step 6. Payment integration
To facilitate online transactions, you need to integrate secure payment gateways. Secure payment integration is also crucial for user credibility and trust.
You can open a business account with a local bank or payment provider for payments. Additionally, ensure that your business complies with the guidelines established by the UAE Electronic Transactions Regulatory Authority.
Step 7. Establish logistical support
Fast delivery is one of the most important success factors for your e-commerce business. Therefore, efficient logistics and distribution are crucial to satisfy your customers.
Analyze your situation and determine whether to establish your own logistics infrastructure or partner with an external logistics provider. In both cases, you must ensure the reliable and timely delivery of purchased goods to provide an optimal customer experience.
Step 8. Advertise your business
The final step after launching your e-commerce business is to market it. Invest time and resources in developing an effective marketing strategy to reach your target audience.
Utilize various digital marketing channels, including search engine optimization (SEO), social media marketing, and email campaigns, to enhance brand awareness and drive sales.
Benefits Of E-Commerce In Dubai, United Arab Emirates
Dubai offers numerous advantages for e-commerce businesses, which can significantly contribute to the success and growth of your online operations. Here we present the most important advantages of an e-commerce business in the UAE.
Growing trends in online shopping
According to reports from fintech firm checkout.com, monthly online shopping transactions in the UAE have increased by 140% since 2020.
This significant increase in online sales is attributed to changes in user behavior resulting from the COVID-19 pandemic. More and more users have switched to online platforms, which presents a golden opportunity for e-commerce businesses in Dubai.
Access to a diverse customer base
Dubai’s position as a global hub makes it an ideal base to reach a diverse customer base. It can reach markets such as the Middle East, Africa, and Asia.
By establishing your e-commerce business in Dubai, you can serve customers from large and diverse markets around the world.
Advanced infrastructure and logistics
The UAE boasts world-class infrastructure and logistics facilities that enable products and services to be delivered to customers more efficiently and quickly.
Dubai offers advanced transportation networks and smooth customs and import/export procedures. The city provides a perfect environment for e-commerce businesses to thrive.
Business-friendly rules
Dubai offers favorable regulations and initiatives to support the growth of the e-commerce sector. For example, setting up a business in the UAE’s free zones offers tax benefits, simplified licensing procedures, and favorable investment policies.
All of these factors create a welcoming environment for entrepreneurs and businesses.
Access to qualified labor
Dubai also attracts a diverse and skilled workforce from around the world, allowing you to hire the most talented and qualified professionals.
With a pool of highly skilled talent in areas such as marketing, technology, and logistics, your e-commerce business has a better chance of success.
Tax-friendly environment
In Dubai, the income tax rate is 0%, whereas on the mainland, it is 9%. However, in free zones, you are also exempt from corporate tax if you only carry out certain tax-exempt business activities. This favorable tax structure can contribute to cost savings and increased profitability for e-commerce companies operating in Dubai.
How much does it cost to start an e-commerce business in Dubai?
The costs of starting an e-commerce business in Dubai can vary greatly depending on several factors. They also depend on the jurisdiction you plan to operate in.
Free zones are generally more cost-effective than the mainland due to their flexibility and the ability to establish a virtual office.
However, you can still expect costs of at least AED 10,000, including e-commerce license, website development, logistics, marketing, operating expenses, and other expenses.
Costs may vary depending on the type of license, business size, and operational requirements. It is essential to consult with experts to determine the specific costs associated with your e-commerce business.
The cost of an e-commerce business registration permit in the UAE starts at AED 5,510 for a visa-free package.
For Dubai, the typical starting price is AED 12,900 for a visa-free package. This amount may be higher if you require a package that includes a visa as well.
The cost of an e-commerce license to establish an e-commerce business in the UAE free zones is:
| S-No. |
Location |
Show price 0 |
Show price 1 |
| 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 |
| Please note*: The prices above are estimates only and are subject to change. |
List Of Free Zones Suitable For E-Commerce Businesses In The UAE
Free zones in the UAE offer attractive incentives and a conducive climate for e-commerce businesses. Here are some notable free zones in the UAE that are suitable for starting an e-commerce business.
Ajman Free Zone
Ajman Free Zone is often considered the most affordable free zone in the UAE due to its low company registration fees.
For just AED 5,555, you can set up a business here and enjoy all the benefits of a free zone in various industries, including 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 offers several cost-effective options for starting an e-commerce business in the UAE. You also gain access to the well-developed infrastructure necessary for seamless logistics.
Sharjah Publishing City (SPC)
Located in Sharjah, SPC Free Zone primarily targets companies in the publishing, media, and e-commerce sectors, offering specialized services tailored to your e-commerce business needs.
SRTIP (Sharjah Research, Technology and Innovation Park)
Supporting businesses in sectors such as technology, research, and e-commerce, the SRTIP Free Zone offers modern facilities and a supportive ecosystem, making it an ideal hub for startups and established companies in the UAE.
SHAMS Free Zone
Sharjah Media City Shams Free Zone was established in 2017. The free zone offers a global media hub that fosters innovation and creativity by providing a conducive environment for creative entrepreneurs, freelancers, startups, and established businesses.
IFZA Free Zone
IFZA Free Zone offers flexible and cost-effective solutions for e-commerce businesses. It offers simplified business startup processes, customizable licensing packages, and access to a global network of resources. It is a strategic choice for companies looking to establish an online presence with minimal effort.
Dubai Commercial City
The Dubai Commercial Free Zone is an initiative by the UAE government aimed at promoting the growth of the e-commerce sector. The free zone provides specialized services to e-commerce companies operating within its boundaries.
Meydan Free Zone
Meydan Free Zone is the ideal choice for e-commerce entrepreneurs seeking affordable packages and a prime location. Setup is fast, and the free zone provides your business with the support it needs to realize its full potential in the UAE’s booming digital economy.
Dubai Internet City (DIC)
DIC is another free trade zone that focuses on attracting technology companies, such as those in the digital media, e-commerce, and software development sectors.
It features a well-maintained infrastructure specifically designed for technology companies. Also, it offers a comprehensive range of business support services.
Dubai South
Dubai South Free Zone is situated near Al Maktoum International Airport. It offers many affordable business startup opportunities. Its strategic location makes it one of the free zones ideal for starting an e-commerce business.
Dubai Multi Commodities Center (DMCC)
DMCC is one of the fastest-growing and largest free zones in Dubai. The DMCC Free Zone offers a special e-commerce license that enables you to create and manage an online store.
Collaboration with G12
Suppose you are considering starting an e-commerce business in Dubai. In that case, it is essential to be aware that the process can be complex.
However, with the right advice and support, you can ensure a smooth transition. With the help of the right business consultant, it can easily overcome the challenges of starting a business in Dubai and capitalize on the numerous market opportunities.
At G12, our team of e-commerce experts understands the complexities of starting an e-commerce business in the UAE. Our experienced e-commerce consultants will provide you with the proper support and increase your chances of success.
G12 offers a range of tailored services for e-commerce businesses, including company formation, licensing, and legal advice. We recognize the importance of professional guidance and industry expertise for a seamless and successful startup process.
By working with us, you benefit from our extensive knowledge of commercial law in Dubai. We also support you with tax returns and regulatory compliance.
Contact us today to ensure the success of your e-commerce business. Together, we will transform your entrepreneurial vision into an online business that will soon reach new heights.
Frequently Asked Questions About Starting an E-Commerce Business in Dubai
Is e-commerce profitable in Dubai?
Yes, e-commerce is very profitable in Dubai. Since 2020, the region has seen significant growth in online shopping.
Thanks to its advanced infrastructure and business-friendly regulations, Dubai offers a lucrative e-commerce market. The customer base is also expanding, which will ultimately lead to significant long-term profits.
How much does e-commerce cost in the United Arab Emirates?
The cost of starting an e-commerce business in the UAE depends on several factors. There are numerous costs involved, including the cost of an e-commerce license, developing an online store, marketing, logistics, product procurement, and operating expenses.
Therefore, you can expect an initial investment of AED 10,000 to AED 30,000. However, it is advisable to consult with experts to understand the specific costs of your e-commerce business, taking into account its size and requirements.
Do I need a license to sell online in Dubai?
Yes, you need a license to sell online in Dubai. To legally run your e-commerce business, you need to apply for an e-commerce license from the relevant authority.
This license enables you to engage in various online activities, including selling products and accepting payments through online platforms.
Do I need a license to sell on Amazon UAE?
Amazon UAE offers a platform exclusively for sellers. To run your business, i.e., sell products and generate profits online, you need appropriate business licenses. For commercial operations, you must comply with the laws and regulations of Dubai.
Can I open a bank account in Dubai with an e-commerce license?
Yes, you can open a bank account in Dubai with an e-commerce license. This license entitles you to open a business account. However, many banks require a valid business license, along with an e-commerce license, to legally accept payments for your online business.
Is dropshipping legal in the UAE?
Yes, dropshipping is legal in the UAE. However, to operate legally, you must treat dropshipping as a full-fledged business venture.
You must apply for and obtain the necessary permits, such as trade and e-commerce licenses. Another important step to comply with the regulations is to ensure that you are not dropshipping any restricted or prohibited products in the UAE.
It is advisable to hire an expert to ensure that you have all the necessary permits, licenses, and approvals to sell legal products in the future without any issues.