How to Start an E-Commerce Business in Dubai, UAE
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Roughly 8% of all retail sales in the United Arab Emirates are made up by e-commerce. But more interestingly, the United Arab Emirates is well-connected to the rest of the Middle East by air, road, and sea. Did you know that the e-commerce sales accounted for $55.4 billion worth of spending in the Middle East-North Africa region? This is the figure for one year alone.
66% of customers in the region actually purchase from online businesses that are not located in their country, so the Middle East-North Africa region presents a lot of opportunity. You could ship to anywhere in the Middle East-North Africa region using a superior logistics network that you can rarely find anywhere else in the world. Or you could let Amazon handle the delivery for you.
Even if you want to limit yourself to the United Arab Emirates, the average consumer spend is $3104 every year. Or you could make your products also available in select countries that have a high spending average, such as Qatar which sees an annual spend of $1488 on e-commerce purchases. Israel has an average annual spend of $1181 per consumer on online purchases.
The latter would also mean that you have to spend lesser on logistics costs incurred during shipping to customers on the mainland – which is where the overwhelming majority of them are located. Or you could entrust delivery to a logistics provider, which would rule out you having to be based on the mainland. There are also no foreign currency restrictions in a free zone.
If you are based in a free zone and partner with a logistics company based in a free zone – any free zone – you are exempt from the 5% Value Added Tax payable when one of the businesses involved in the transaction is located on the mainland. There are also no import or export duties payable when you are located in a free zone; and there is no tax on personal income either.
We recommend a free zone because not only are the costs of obtaining an e-commerce license on the lower side when compared to the mainland, but also because there is plenty of warehousing space to be had at low costs. This would enable you to scale up with ease without having to change your address. Plus, you are exempt from labour restrictions – you can hire the staff of your choice.
Because there are so many factors involved, getting in touch with a business setup consultant is your best course of action.
For more information on opening an e-commerce company in Dubai, please +971 55 113 4789 or email info@flybiz.ae
