Introduction – E-Commerce in Dubai
E-Commerce is regarded as one of the most versatile and opportune sectors for business startups in Dubai. In recent years, this sector has shown tremendous spike in growth rates. According to the reports, the annual growth rate in revenue for e-commerce in the UAE is expected to be 7.7%. 2020-2025 will be a great time for you to Set Up an E-Commerce Company as Dubai is focusing on providing a business environment that will encourage innovation and more business startups in the region, which was evidently shown at this year’s GITEX Global Event. Also, with the growing population, digitization, and government support, there will be endless growth opportunities for your business setup in Dubai.
In this guide, we will discuss the E-Commerce Industry in Dubai, growth factors, possible challenges, and how to set up an E-Commerce Business in Dubai with professional guidance from Next Generation Corporate Services, the leading Business Setup Advisor and Business Consultancy in Dubai.
The E-Commerce Industry of Dubai, UAE
The UAE is the 27th largest e-commerce market in the world. It is projected that by the end of 2023 the revenue will be around $10+ billion and till the end of 2027 the compound annual growth rate (CAGR) is predicted to be around 7.7%. With expected growth of 2.7% in 2023, the UAE e-commerce market contributed to a global growth rate of 9.6% in 2023.
Top E-Commerce Market Contributors
Fashion is the largest market, accounting for 34.0% of the e-commerce revenue. This was followed by electronics and communications with 21.3%, toys, hobbies, and DIY with 16.6%, food and personal care with 14.8%, and furniture and home appliances with 13.3% remaining.
Factors Contributing to The Growth of E-Commerce in Dubai
There are many reasons why the e-commerce industry received a growth boost in the recent years. One of the most prominent factor being the swift changes in consumer buying behavior, which heavily digitized with the onset of the pandemic of 2019-2020. Let’s explore more factors that contributed to this growth:
- Strong Logistics and Infrastructure: For e-commerce to be a successful industry, you need to have a strong infrastructure and connectivity throughout the region. Dubai in this regard has outclassed many with its world class infrastructure and logistics system, making it easy for e-commerce businesses to grow.
- Favorable Government Policies: Dubai is constantly developing policies that strongly favors new business setups. Be it the recent tax relief for qualifying small businesses or the introduction of lowest corporate tax rate in the world. Dubai is always ahead of rest of the world in introducing business policies to encourage a business friendly environment.
- Growing Consumer Demand and Purchasing Power: With a population of more than 3.6 million and access to more than 50 million people in the region, more and more people are turning towards the usage of digital products in Dubai. The demographic mosty includes young, affluent, tech-savvy people who are increasingly turning to online shopping, driving the growth of the e-commerce sector.
Things to Consider while Setting Up an E-Commerce Company in Dubai
Setting up an E-Commerce business is comparatively easy, but there are few considerations that if overlooked could hinder the growth of your business. Below are few challenges that you should overcome while setting up an E-Commerce company in Dubai:
- Compliance with Local Laws: Every e-commerce company is liable to comply with the local laws that include commercial rules, data and consumer protection laws, and e-commerce regulations. If found for non-compliance, the company could face legal penalties, fines and even criminal liability. It is best to consult a business consultancy like Next Generation Corporate Services to remain fully compliant to avoid any uncertainties.
- Copyright Issues: One of the most common issues for e-commerce companies is the use of third-party product images or logos. You should always be careful before you use assets of other companies on your e-commerce website. If you want to sell third party products on your website, it should not be done before a prior agreement between the companies. Contact us for copyright registration in order to secure your intellectual property from infringements.
- Payment Processing and Fraud: Research and employ only the most trusted payment gateway which is secure, reliable, fast, and capable of quick customer assistance. Take preventive measures to control fraud activities and ensure customer data safety.
- Shipping and Logistics: One of the top complaints from customers in the e-commerce sector is delayed delivery of products. Plan to design a smooth shipping and logistics system.
- Taxation and Customs Duties: If you are shipping products overseas, make sure to comply with the local rules and regulations of customs. The nominal custom duty rate is 5% of the value of goods + CIF (Cost, Freight, and insurance) unless specified otherwise for goods like alcohol and tobacco, which may vary.
To know more about these challenges, how to overcome them, and how to set up your e-commerce business in Dubai, contact the Best Business Setup Consultancy in Dubai, Next Generation Corporate Services, or email us at info@nxtg.ae.
Set Up Your E-Commerce Business Easily in Dubai with Next Generation Corporate Services
Got everything you need to set up your business in Dubai? Don’t worry, we are here to solve all your problems related to business setups in Dubai. We at Next Generation Corporate Services have a team of expert business consultants who are determined to assist and guide you at every stage of your business in Dubai with our best business setup and Professional Corporate Services. So why wait? Contact us today and achieve your dream of owning a business in Dubai.
