Faster internet speeds, high mobile penetration rates, and access to credit and debit card facilities, UAE is one of the forefronts of digital space and online retail in the world. Currently, the e-commerce market of UAE accounts for annual sales worth $10 billion which sets it among the top regions in digital retail. Moreover, a survey by Hootsuite and We Are Social revealed a stunning percentage of UAE’s internet users who now shop online. The survey showed 62% of UAEs internet users now shop online and spend an average of $332 per purchase, making UAE Middle-East’s largest marketplace for online shopping.
With over 90% of the population having access to the internet, e-commerce setups have become the most sought out solutions for entrepreneurs in UAE. Furthermore, in UAE’s bid to diversify its economy, the government has introduced different e-trader licenses, setting a sound stage for foreign investors to establish their e-commerce setups.
According to AWOK, Dubai leads the list at 46%, the highest number of online shoppers in the U.A.E.
Why Open an Online Clothing Store in Dubai?
A business hub and a fashion capital of the Middle East, Dubai has continuously proven a fertile ground for budding entrepreneurs from the fashion apparel industry. From ethnic and traditional, to casual and business wear, Dubai is home to one of the world’s biggest consumer markets for clothing and accessories. While conventional modes of shopping such as brick and mortar stores still flourish, online shopping has enabled clothing companies to maximize their revenues by extending their products to UAE’s growing number of online shoppers.
Starting an online clothing store is a great way to debut a legitimate business in Dubai that involves no rent, no utility bills, minimum staff, integrated marketing, and fail-proof shopping security. Like any business in UAE, e-commerce stores also require a trade license register and operate as a legal entity. Here is a detailed guide on setting up an e-commerce store in Dubai.
- Trade License
To start an online clothing business in Dubai, the first step is to legitimize it. Dubai offers a variety of e-commerce licenses in various jurisdictions from mainland to free zone locations. Selecting the license depends on the available capital and the specific legal structure the investor applies for. A trade license will allow the business to legally operate in the region, access government facilities and any other specialized incentives the zone has the offer.
The cost for setting up an e-commerce company in UAE can vary from one zone to the other. For example, in DMCC an e-commerce trade license will cost around AED 40,000 which is divided into
- Initial Application AED 1,015
- Registration AED 9,020
- License AED 20,285
- Establishment Card AED 1,800
- Memorandum of Association (MoA) AED 2,020
- Visa Deposit AED 3,000
- Residence Visa AED 3,330
Each stage of e-commerce trade license process requires certain documents to secure approval from the UAE government. The documents include,
- Filled and attested online application form
- Copy of investor’s passport
- Proof of residential address in country of residence
- Business plan for online clothing store
- Lease agreement of office space in DMCC
- Office Space
Getting an office space entirely depends on brand’s operational preferences, budget and the jurisdiction the e-commerce license is registered to. In some free zones, the investor can get an e-commerce license and visa without the need to set up and office space or even a shared-desk. Most licenses associated with the Dubai Economic Department (DED) require a physical space for e-commerce companies to conduct business in the UAE.
- Online Payment Solutions
Adding an online payment solution allows the merchant to enable electronic sales generation from the online store. This requires the 2 accounts, commercial bank account, and merchant bank account. The commercial bank account is owned by the business whereas the merchant account is owned by the investor and will process all the online transactions from the buyer’s debit cards, credit cards or pre-paid card systems such as PayPal. Here is how it works
- A customer visits the site and places an order at the checkout, he may need to enter his credit card details.
- The potential customer visits the website and decides to purchase a product/service.
- The customer completes the checkout by entering his/her bank details
- The e-commerce store sends the bank details to the payment gateways
- The details are then forwarded to the seller’s bank by the payment gateway
- The merchant’s bank contacts the buyer’s bank to exchange details
- After validating the details, the buyer’s bank authorizes the transaction
- The amount is deposited in the merchant’s account
- The payment gateway confirms the transaction was successful and informs the customer through the website
- E-commerce Website
This is one of the most crucial stages of the entire process. An e-commerce website is the platform that will contain all the digital content of the clothing store, but more importantly, it will serve as the only channel to transfer funds to the merchant’s account. This also where merchant must put maximum effort to make the website attractive, engaging and user-friendly so any potential customer that lands on the page is easily converted. Hiring a good web development agency in Dubai is a great option for new entrepreneurs. Web development companies in Dubai handle everything from domain name registration, design, and development, content as well as digital marketing services in affordable packages.
- Logistics Support
Well-developed infrastructure, extensive network of superhighways, and access to international markets makes Dubai a great location for almost all types of businesses. As a part of the brand’s logistics strategy, it is essential to partner with a reliable shipping company that can deliver purchased items safely on time to the buyer’s address. Shipping companies in Dubai offer a range of corporate packages for e-commerce stores based on the specific needs of the brand.
How IBG Can Help?
IBG Consulting is an award-winning business setup agency in Dubai offering a range quality services for company formation, UAE visa, trade license, digital marketing, and PRO services in Dubai. As seasoned professionals, we understand your business needs better than anyone else and provide 100% satisfaction guarantee with every service we offer. Get in touch with our PROs to get the best online business set up services in Dubai or visit our website ibgme.ae