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What Do You Need To Know About Ecommerce Business License In Dubai?
In today's convenient focus and competitive world, people no longer want to go to busy streets looking out for the products they want to shop. Instead, they want to shop sitting at their convenient place avoiding all the hassles. Even a few months ago, people used to go out shopping for the experience, but with the pandemic situation which we are going through, they have completely shifted to online shopping, which makes entrepreneurs be more serious about ecommerce business.
Major advantages of Ecommerce business
Here are the major advantages of running an ecommerce business:
First and foremost, people have shifted to online shopping because of the convenience it provides for customers. Customers can sit in the comfort of their couch and bulge into the vast range of products. Also, people don't have time these days to physically go shopping, instead, they are more and more leaning towards online shopping.
Gives more opportunities for marketing
Business is all about how you showcase your product and marketing is inevitable for that. Ecommerce offers you a lot of techniques to help your products reach the target audience. Alongside a well-built website, you can reap the benefits of marketing campaigns like pay per click and social media marketing.
Can broaden the range
One of the advantages of such an ecommerce site is that your customers can reach out to you at any time 24/7. With e-commerce, you can add up to a wide range of products for your customers who can shop regardless of time and other constraints.
Shopping with Social Distancing:
Even Though we are social beings, we are now forced to maintain a social distance because of the pandemic situation of COVID-19. People are avoiding social gatherings, and this has a direct effect on their shopping behavior as well. Limiting the shopping to necessary essentials has become the new normal. From a user’s point of view, online shopping is an effective way for them to buy their essentials by maintaining social distance.
With ecommerce, you are no longer into one store business. In this digital world with easy access to the internet, a wide range of people will get to know about your business and website. There is no way one shouldn't be thinking about taking his/her business online.
Growth in Ecommerce Business in 2020
According to studies prior to the COVID-19 spread, the e-grocery market was worth $200m in the GCC and Egypt, constituting less than 1 per cent of the e-commerce industry. Only 27 per cent of consumers in the Middle East and North Africa (MENA) region were keen to order groceries online. 58 per cent still prefer to buy groceries at physical stores. But after the COVID situation, it has hit over a 500% increase in the search for online groceries, and more than a 200% increase in the search for pharmaceuticals. Now, the spotlight is on the online grocery industry like never before. Prior to COVID, people largely depended on ecommerce sites searching for electronic gadgets, and now people have started to go grocery shopping online more often than before.
Planning to start a new Ecommerce business?
As we all know, like every other business, an ecommerce business also requires a license before we start off the business. The process to have it is affordable and not so complicated.
UAE is considered as one of the best countries to start an Ecommerce business, and Several factors have contributed to it, including the rise of startups and tech-savvy consumers in the country. The UAE government has played a vital role in reinforcing smart transactions between businesses and consumers today by expanding cashless payment options for various types of purchases and government services in the country.
Ecommerce license in the UAE
First, you have to select which license you want to go with. Mainland or the Freezone. Mainland license is issued by the Dubai Economic Department and the Freezone by the relevant free zone authorities. Below are a few of the advantages of having an ecommerce license from Dubai Mainland and Freezone:
Ecommerce license in Dubai Mainland
- Investors can opt for a General trading license along with an Ecommerce license.
- Ecommerce license enables the investor to store the products in the warehouse and sell them online.
- 5% Vat will be charged on the transactions as part of the UAE Law
- Easy availability of Logistics and support
Ecommerce license in FreeZone
- One of the major advantages is to opt for a virtual license without office space.
- For startups and Freelancers or entrepreneurs to test the market, this is the ideal choice.
- Freezone companies are eligible for a waiver of customs duties during imports into the free zone
- Most of the free zones in the UAE offer customized warehouse facilities.
After this, you have to look for the legal structure to go with. A few of the different legal structures in the UAE are as follows.
- Limited Liability Company
- Foreign Branch
- Sole Proprietorship
- Civil Company
Limited Liability Company is the most common business structure in the UAE. This allows it to have 2-50 shareholders, and each will be liable according to the percentage of shares they have in the company.
LLC can have any kind of activity except for some professional activities which require some approvals. If you are an expat and you want to start an LLC business, you must have a local agent who will share 51% of ownership. LLC licensed companies can trade anywhere in UAE and GCC.
In Sole Proprietorship, one single person is responsible for the entire financial commitment. The Individual will own and run the entire business. A civil company is the one with multiple shareholders. It will be owned 100% by the shareholders even though a UAE National local is required. With an LLC license, you are not accountable personally for any debts, so there is a layer of protection but with a Civil company, it’s 100% your liability.
Once the legal structure is decided, you should register the trade name and get initial approval from the Dubai economic department. It will be valid for 6 months and it can be applied at the same time as submitting their trade name. The documents required for this are:
- Personal Profile for the shareholders
- Passport/visa copies of the shareholders
- Copy of sponsors passport/ Emirates ID
- Local service agreement/ Civil works agreement
- NOC from the relevant authority
- Draft an MOA
This has to be done only if you select your office location on the mainland. If you are planning to set-up on Mainland you have to apply through Municipality or DED. Companies setting up offices in free zones can apply directly. For MOA any legal firm can help with this and it should specify the arrangements made and ownership percentage among all partners.
Once the above steps are completed you can go for the final approval of the license. Submit all the documents to the relevant authority and you will get the final approval for the license. Then you can apply for the resident visa as well for your employees. The number of visas will depend on the size of the business. After the final approval is received you can proceed to open a corporate bank account.
Ecommerce business and shopping is the hot business and UAE has seen rapid growth in the past few years. So if you are considering taking your business idea to online, then Ecommerce will be a very good option to consider. Even Though it's not very complicated, we recommend you consult an expert as any error would cause a delay or rejection.
Royex Technologies, based in Dubai, is an Ecommerce development company. We have developed and successfully delivered more than 300 projects to date for our clients in Dubai, UAE and other Middle East countries. Our team consists of accomplished and highly skilled software architects, engineers and developers, who work together to provide you with the best services to achieve solid growth in the web solution market.
About the Author
Suraj S Nair
Suraj has been working in the IT field for the past 5 years as Support Engineer under various industries like travel, hospitality, and IT. Currently working with Royex technologies as a Project Coordinator.