Planning an e-commerce business in Dubai is much easier when you have a seasoned business consultant at your side. However, knowing the nitty-gritty of this business in advance will help you understand the process of business setup with ease. So, here, we are sharing important things you should know about starting and running an online business in Dubai. Let’s take a look.
E-Commerce Business Platforms
First of all, one should know the difference between the two types of e-commerce businesses – web platform and e-trading.
Web Platform
In this, you create an online platform where buyers and sellers connect. You can start a business in which you won’t hold any stock. Rather, you will just operate the infrastructure that allows the visitors to place orders online. Once the visitor places an order, you will forward the order request to the seller who will be fully responsible for preparing and packaging goods, arrangements for shipment, and shipping goods directly to the customers.
E-Trading
It is just like an online shop with its own stock. In other words, you can open an online shop for selling stocked products in your warehouse in Dubai. Once you receive an order through an online medium, you will be responsible to ship the order directly to the end-customer.
Procedure to Obtain E-commerce License in Dubai
The convenient way to acquire a license is to get the assistance of a reputed business consultant in Dubai.
Here are the main steps to acquire e-commerce license:
- Select the legal business activity
First, you need to decide which e-commerce business activity you want to carry out in Dubai and find out if it is allowed legally there.
- Choose the business type
Once you have decided what you want to do, choose whether you want to set up an LLC, Sole Proprietorship firm, branch of a company, or representative office. Most commonly, people choose to open LLCs and branch offices in Dubai as they come with several benefits.
- DED or free zone??
Based on your business type and budget, determine which option you want to go for:
Web Platform – A free zone business setup is sufficient as you will not be involved in the storage and delivery of goods. Goods will be from third parties. You will be just acting as a bridge between sellers and buyers.
E-trading – For this, you will need local or mainland company formation as your company will be responsible for the shipping and distribution of goods.
- Select trade name
In Dubai, there are detailed guidelines for business nomenclature. So, select a name that doesn’t violate guidelines and people can also easily remember.
- Apply for a business license
If you are forming a company in the mainland, you will need to pay around AED 10,000 for issuing of business license and if you are choosing a free zone setup, you need to contact relevant free zone authority and submit your business plan to get the license.
- Get the initial approvalÂ
You are required to get an NOC from the concerned DED or free zone authority to start your e-commerce business in Dubai. Its validity is 6 months and you cannot get it renewed.
- Prepare MOA and LSA agreement
After getting approval, you will need to submit a draft of the Memorandum of Association (MOA) and Local Service Agent agreement with the sponsor to DED. This step can be skipped for free zone.
- Establish a business location
Since DED has made it mandatory for a company to have an office to consider it a legal entity, you need to establish an office in Dubai.
- Collect business license and Open a bank account
Within a week, you can collect your business license. After that, open a corporate bank account in a bank in Dubai according to your needs and preferences.
Once you complete all these steps, you are good to go. The whole process can be vexing for you especially if you are a foreign entity as documents are made in Arabic language. Therefore, it is highly recommended to get expert advice from one of the best business consultants in Dubai.
