how to start an ecommerce business in dubai,UAE?

how to start an E-commerce business in dubai

Start an E-commerce Business in Dubai,UAE

Since 2020, people have increasingly preferred online shopping due to Covid-19, and this trend has continued to grow year by year. Do you want to learn how to start an ecommerce business in dubai?

According to a World Bank report, 9.82 million residents made online purchases, with a predicted increase to 11.11 million by 2025.

After grasping the growth of ecommerce, are you considering becoming an ecommerce business owner in Dubai? If so, learn more about how to start an ecommerce business in dubai.

Here, you will gain insights into what is an ecommerce , Types of E-commerce, trade licenses needed for an ecommerce business, how to set up, where to set up an ecommerce business, the costs involved, the benefits of starting an ecommerce business, and the necessary documents required for establishing an ecommerce business.

What is an Ecommerce and it’s Business Types?

E-commerce, also known as electronic commerce, refers to buying and selling goods or services over the internet. The types of e-commerce are

  • Business-to-business (B2B) : sales of goods or services between businesses.
  • Business-to-consumer (B2C) : businesses selling directly to individual consumers.
  • Consumer-to-business (C2B) : consumers offer goods or services to businesses.
  • Consumer to consumer (C2C) : consumers sell directly to other consumers.
  • Business to administration (B2A) : transactions between businesses and government agencies.
  • Consumer-to-administration (C2A) : This involves individual consumers interacting with government agencies electronically.

How to start and setup ecommerce business in dubai?

Starting an e-commerce company consists of several steps:

How to setup an ecommerce business in Dubai
  1. Find suitable products for your ecommerce company
  2. Select an appropriate location
  3. Obtain a trade name for your company
  4. Ecommerce business permit in uae
  5. Building a presence online by creating E-commerce website
  6. Make a payment gateway for transaction
  7. Customers support and logistics support
  8. Getting Import – export code

Let’s consider my product as a home appliance that folds laundry perfectly every time. Here’s how to find the market and business model for your E-commerce company.

Identify Your Target Audience:

Since it’s a machine that folds laundry, we can consider busy professionals, families with very young kids, individuals, and others who dislike folding clothes.

Finding the Pain Points of Customers:

Conduct surveys or online polls to understand people’s laundry pain points. How often do they fold clothes? How much do they dislike it? What features of the machine would benefit them?

Analyze Marketing Trends:

Is there any demand for time-saving appliances?

Evaluate Competition:

Is there a similar product in the market as a competitor? How can you differentiate from your competitors?

According to your audience, you will be able to select a business model.

When your customer is interested in home laundry folding appliances, it is most likely to be a B2C model. You can sell directly to consumers through an online store or major appliance stores.

If your research suggests that laundromats, dry cleaners, or hospitality businesses could benefit from bulk laundry folding machines, it’s most probably a B2B business.

To start an e-commerce business in Uae, We don’t need an office in mainland or freezone, But we need to select a business license either from free Zone or Mainland. 

If you are choosing a freezone for your ecommerce company, You won’t need to pay for personal income tax or corporate tax, 100% Business profits and very less custom duties.

On the other hand, To start an E-commerce company in the mainland, we need to apply through Ded. And the main benefit of choosing the mainland is that they can do  both international trade and domestic trade.

  • Ras Al Khaimah Economic Zone (RAKEZ)
  • IFZA (International Free Zone Authority)
  • Dubai Multi Commodities Centre (DMCC)
  • Dubai Airport Free Zone (DAFZA)
  • Dubai CommerCity (DCC)
  • Sharjah Research Technology and Innovation Park (SRTIP)
  • Dubai South Free Zone (DWC)
  • Dubai Internet City (DIC)
  • Dubai Silicon Oasis Authority (DSOA)
  • Sharjah Media City Free Zone (SHAMS)
  • Ajman Free Zone (AFZ)
  • Abu Dhabi Global Market (ADGM)

We know that the identity of any company is its name, so choosing the right name for your E-commerce company is crucial.

There are some rules given by the government when you choose your trade name. A few of them are:

  • The trade name must be followed by a business structure acronym, e.g., LLC, FZ-LLC.
  • The name of your company must be unique and should not use exact names of other companies already in existence.
  • Don’t use religious names or government-related names in your trade name.
  • The name must not violate public morals or public order.
  • Make it short and simple so that people remember it.
  • Try to name it according to your product niche so people can easily connect with it.
  • Check whether domain name is available on same trade name for your website.

Securing your e-commerce license in the UAE is a breeze! Once you’ve identified your ideal business location, the Department of Economic Development can process your application.

This license unlocks several  benefits, including the freedom to sell on various social media platforms. Plus, with a free zone license, you can collaborate with a local distributor for broader reach.

Opt for a mainland license, and you’ll gain the ability to directly trade with the local market, opening doors to a vast customer base.

Websites are a crucial part when you are starting an  ecommerce business in Uae.

With a proper website designed for customers, It’s easy to sell your product. You only need to get a Domain name and a good hosting.

If you are using user-friendly platforms like shopify  and magento, You will be able to create your own website without the help of any developers without knowing coding.

You need a bank or payment provider’s account to take credit card payment online. Make sure your payment system follows TRA rules in the uae.

If you are using platforms like shopify you don’t need to get worried about payment issues, rather they take commission on products you sell.

Warehousing and fulfillment : Decide on a storage and fulfillment solution. You can manage inventory yourself, use a fullfillment center, or dropshipping is another option ( supplier ship directly to customers).

When it comes to delivery options, you can use reliable couriers to offer reliable delivery options in uae.

Also consider offering flexible delivery options like cash on delivery ( COD)

There are 3 different trade licenses you can consider for your e-commerce business in dubai, depending on your specific needs and setup.

E-trader license

  • Offered by dubai department of economic development
  • Ideally for uae and gcc citizens residing in dubai who want to sell through social media platforms like instagram, facebook,pinterest etc.
Limitations of E-trader license
  • Business activity restricted to social media channels 
  • Cannot open physical store
  • No Visa 
  • Single Ownership ( sole proprietorship )

Virtual Company License

  • Issued by freezones in dubai like Dmcc
  • Ideal for foreign investors who wants to set up an online business with limited physical presence in dubai
Benefits of Virtual Company license
  • 100% foreign ownership
  • No corporate tax on e-commerce activities
  • Access to designated free zone facilities
Limitations of Virtual Company license
  • May not allow direct trade with Uae Mainland market ( restrictions vary by free zone)

Commercial License

Obtained through ded for business operating in dubai mainland. Suitable for e-commerce business that want to

  1. Sell online through their own website.
  2. Potentially have a physical presence.
  3. Trade directly with customer in uae mainland market.
Benefits Of Commercial License

More flexibility in business operations

Limitations Of Commercial License
  • Requires a local sponsor ( uae national) unless operating in special economic zone.
  • Higher fees compared to some free zone licenses.


Additionally, there is the Tajer Abu Dhabi E-commerce license offered by Abu Dhabi, the capital of the UAE.

It might be an option if you plan to target markets beyond Dubai. According to the products you wish to sell, we can select the right trade license for you.

It is always recommended to consult with a business setup specialist like us to choose the correct license for your requirements.

To obtain an Import-Export Code (IEC) in Dubai, it isn’t necessarily obtained separately for e-commerce businesses; it’s usually tied to your trade license.

So, what is the eligibility to get an Import or Export Code?

Businesses with a valid trade license can apply for an import or export code. For e-commerce companies, this typically means having a commercial license (Mainland) or a virtual company License (Free Zone) that allows import activities.

Now, let’s discuss the application process for Import-Export Code. You can usually apply for an import/export code during the process of acquiring a trade license.

Many free zones and DED offer online portals for license applications and might include import/export code application during the process.

Even though it’s an easy process, there might be many errors during the process, so it’s always better to consult with us or have us do it for you to ensure a successful import/export code acquisition for your E-commerce company in Dubai.

How much does it cost to start an E-commerce company in Dubai?

Business license of an ecommerce company starts at 5,750 aed to 15,000. But the cost of starting an e-commerce company completely include several other factors.

They are:

  • Types of license
  • Business setup fees
  • Visa requirements
  • Website development
  • Inventory and warehousing
  • Marketing and advertising expenses
  • Payment processing fees
  • Ongoing business operation cost like rent ( If you have physical office)
  1. Start with basic ecommerce license like E-trader if it meet your needs.
  2. Consider using website builder platforms with affordable subscription plans
  3. Explore cost-effective warehousing and fullfillment options
  4. Utilize low marketing strategies like social media marketing before going to paid advertising

If you want to start an E-commerce business, Its necessary to know the E-commerce Business models.

What are the types of E-commerce Business models?

E-commerce business models outline how an online store operates, including how products are sourced, sold to customers, and revenue is generated. Let’s discuss some E-commerce business models:

Retail

This involves buying products from wholesalers or manufacturers and selling them directly to consumers through a shop. Examples include online clothing stores or electronics retailers.

Wholesale

In this model, products are purchased in bulk at a lower price and resold to other businesses at higher prices. This is less common in direct-to-consumer e-commerce.

Dropshipping

In this model, you partner with a supplier who stores, packs, and ships products directly to customers. However, you handle online store management, marketing, and customer service and do not need to hold any inventory yourself. This can be a low-risk way to start but offers less control over product quality and shipping times.

Wholesaling

Involves buying bulk from wholesalers or manufacturers and then selling them individually to consumers. It requires upfront investment and a need for storage space.

Manufacturing

Involves designing, developing, and manufacturing your own products, offering a unique selling proposition and potentially higher profit margins. However, it requires significant upfront investment and manufacturing expertise.

Selling Products

Revenue is generated by selling physical or digital products through your online store.
Subscription Model: Involves paying monthly/yearly fees to access services, such as antivirus software.

Freemium Model

Offers a basic version of the product or service for free for a limited time, then encourages users to upgrade to premium plans for full features. This is an effective way to attract customers and upsell them.

Marketplace Model:

Involves creating a platform where other businesses or individuals can sell their products, with the platform earning a commission on each sale, such as Amazon or Etsy.

Who can start an e-commerce business in dubai?

Anyone with a good  business idea and willingness to work hard can start an e-commerce business in dubai. However, there are few key requirements.

  • You must be at least  21 years old
  • You will need a valid emirates id or visa to operate a business in dubai
  • When deciding a business structure based on your needs, you might need to partner with a local sponsor for mainland setup.

Advantages of E-commerce business in dubai

  • Enjoy tax-free benefits, No personal or corporate income tax .
  • Earn Money Passively
  • Flexible timing
  • Work from anywhere
  • Don’t need much operating income requirements.
  • Return 100% of your profits and capital
  • Skip import/export duties hassle-free.
  • Maintain full ownership of your company ( Doesn’t require local sponsor).
  • currency exchange with zero restrictions.
  • Best strategic location for global market access.
  • Benefit from advanced infrastructure and logistics support.
  • High potential consumer base who uses online shopping.
  • Capitalize on Dubai’s robust e-commerce ecosystem for growth and innovation

Required Documents for E-commerce Business

  • Passport Copies
  • Emirates ID copies
  • Business Plan
  • Trade License Application
  • No Objection Certificate ( NOC )

Best time to start an E-commerce Business

We cannot provide a single fit answer for that question. When it comes to seasonal products, such as winter clothing, people only require those products during the winter season.

Therefore, it’s suitable to launch them just before entering the winter season. These kinds of products are called seasonal products.

When you are going to launch a product, ask yourself some questions like:

  • When will I need this product?
  • What is the purpose of this product?

Ensure you have a solid business plan, product sourcing, and marketing strategy in place before launch. Rushing in without proper preparation can result in unnecessary financial losses.

Additionally, it’s always better to research competitor activity and launch dates to avoid direct clashes with established competitors, as this can decrease demand.

Analyze any upcoming product launches that might impact your market.

Other than these considerations, I can gladly say it’s always a good time to enter the Dubai market because it’s expanding rapidly year by year.

Why Start an E-commerce Business in Dubai?

Starting an E-commerce business in Dubai is the best choice due to its high Internet penetration rates. Revenue in the eCommerce Market is projected to reach US$3,226.00 billion in 2024, thanks to its rapidly growing online consumer base with high incomes.

The UAE government also actively promotes and facilitates e-commerce businesses through initiatives, infrastructure development, and streamlined regulations.

Dubai’s central location allows easy access to regional and international markets, opening doors for ecommerce expansion beyond the UAE.

All these factors combined make Dubai the best place to start an e-commerce business.

Is E-commerce Profitable in Dubai and the UAE?

Since the cost of starting an E-commerce business doesn’t require physical office space, staffing, or utilities like other businesses, it offers significant cost savings. Online stores also help to overcome geographical limitations, enabling you to sell across the UAE and beyond.

Even as your customer base grows, you don’t need to make significant investments in acquiring new physical stores. This scalability allows for efficient expansion without the burden of traditional brick-and-mortar expenses.

Moreover, with minimal initial costs, we can reduce product costs and offer customers very reasonable prices, increasing competitiveness in the market.

In my opinion, E-commerce is highly profitable from other businesses, leveraging its cost-effectiveness, scalability, and market reach to drive success in the digital marketplace.

Why Choose Us for Starting Your E-commerce Business in Dubai?

After going through the guide, you may have realized that setting up an e-commerce business in Dubai is not as easy as it seems. Therefore, it’s necessary to seek help from a business setup company like us to assist you in starting your e-commerce company.

In addition to business setup assistance, we also provide supporting services such as Vat & accounting services, corporate PRO services, banking consultancy services, and marketing management services.

To support entrepreneurs further, we offer free consultations for those who want to start a business in Dubai, UAE. Contact us right now or fill in the form for a callback!