Table of Contents
Why start an online business in Dubai?
Online Business Models
– Choose a Product
– Choose a company name
– Buy a domain
– Choose an ecommerce platform
– Build a website
– Digital Marketing
Things to know beforehand
– Choose the right business structure
– Set up in the right jurisdiction
– Open a business bank account
Build your online business in Dubai with Virtuzone
It’s no secret that the future of digital retail is hugely exciting so who could blame you for wanting to start an online business in Dubai. The world has fallen in love with the convenience and abundance of shopping online. Ecommerce rode a tidal wave of growth in 2020 and, while many retail businesses experienced significant contraction, many flocked to get their businesses online. Many even started to thrive. This was the case across the globe and it was no certainly no different here in Dubai.
As many local businesses found, starting an online business in Dubai is not as difficult as you might think. Whether you are opening up your existing business for transactions made via a website or app, or starting a new e-commerce-driven venture, the path to online success remains the same.
While there are definitely significant challenges to anyone wanting to create a profitable ecommerce shop, for anyone who is willing to do the work there remains a bounty of opportunities.
If you are interested in starting an online business, you’ve come to the right place. We’ve prepared the ultimate guide to starting an online business in Dubai to walk you through all of the steps you’ll need to take to successfully launch and operate your e-commerce store.
Why start an online business in Dubai?
Online shopping is now one of the most popular activities globally. In 2020, retail e-commerce sales worldwide amounted to USD 4.28 trillion. Of those,18% of retail sales have been attributed to e-commerce.
In the UAE, the e-commerce market saw a huge leap in 2020, recording a USD 3.9 billion market value and a 53% year-on-year increase. And by 2025, experts foresee that e-commerce in the UAE will reach USD 8 billion.
In a recent study on the digital transformation in MENA and Pakistan, 53% of MENA consumers say they are doing more of their shopping online now compared with before the pandemic started.
Online business models
There are many different types of online business models that you could adopt, depending on the nature of your business. They are all common in Dubai and the UAE, although B2C is undoubtedly the most popular model due to its low barriers of entry.
The B2C model is the most popular business model, it encompasses a wide range of options, including:
- Direct selling – The most widely-adopted B2C model, in which people buy goods from online retailers.
- Online intermediaries – These are liaisons or go-betweens who don’t actually own products or services that put buyers and sellers together.
- Advertising-based B2C – This model uses content marketing to build an audience used to sell advertising to.
- Community-based – Sites like Facebook and Instagram, which build online communities based on shared interests, help marketers and advertisers promote their products directly to their users.
- Subscription – Direct-to-consumer services (Netflix and Spotify) charge a fee so consumers can access their content.
A business sells its product or service to another business in a B2B business model. Most of the time the buyer resells to the consumer. These transactions have longer sales cycles, but greater order values and recurring purchases.
The C2B model caters to freelancers and independent contractors that do compensated activities for a business or organisation. In this e-commerce model, a website may allow clients to post work they need done and have businesses compete for the job – Think Upwork or Fiver. Affiliate marketing services are also classified as C2B.
A consumer-to-consumer (C2C) online business in Dubai, often known as an online marketplace, connects customers to exchange goods and services and generates money by charging transaction or listing fees. This might include a business built on Amazon or eBay for example.
Dropshipping is a fulfilment technique in which a shop does not stock the items it sells. Instead, it buys items from third-party vendors who deliver these to buyers directly. As a result, the seller is relieved of direct product handling. Dropshippers essentially act as middlemen by connecting buyers directly to manufacturers.
Dropshipping is so popular due its low operational costs compared to the standard retail model. You don’t need a physical location, staff, utilities or even inventory! All you really need is a website and the ability to drive and convert traffic.
The steps to start an online business in Dubai
So, feeling convinced that e-commerce is right for you? Ready to start a business, roll out a site and start driving some traffic?
Let’s get started!
Following are the steps you’ll need to take to get yourself set up for online business success.
1. Choose a Product / Find a gap in the market
Step 1 is perhaps the hardest of them all. You want to find profitable, trendy products with good margins. They may be either single products or a comprehensive product line that fills a market niche.
Due to the costs involved in e-commerce, including SaaS fees, shipping fees, advertising costs and labour, it is important to choose products that have profit margins of at least 50%. In order to absorb the price of customer acquisition, finding a suitable product or range is the essential first step.
According to Shopify, there are a few things that can help you in looking for a product or service to sell:
- Solve a customer pain point – What are the challenges that your potential customers are currently facing? Think about ways on how to make their life easier.
- Appeal to enthusiastic hobbyists – Are there any specific niches that you understand really well?
- Go with your passion – Sometimes, your passion could be an excellent source of inspiration for a product or service.
- Consider your professional experience – What are you good at? You may excel at something that can be marketable.
- Capitalise on trends – Stay on top of what is new and exciting in the market.
- Read customer reviews on existing products and look for insights into how their needs could be met in a better way
- Browse what’s trending on online marketplaces through this list
- Research products with higher profit margins.
Start your search with related products – You can always offer a product or service that can improve an existing product in the market. As an example, when wearing face masks became mandatory and high in demand, several individuals have started selling face mask holders, strings, beads, and other accessories.
Sourcing your product or manufacturing
Now that you have a great product in mind (shhh, don’t tell anyone yet), you need to think about how you are going to source it.
A good place to start is by researching online. Websites such as Yellow Pages, Abraa and Alibaba are excellent sources of information. Reaching out to local manufacturers and suppliers as well as to your network should also be a logical first step when hunting for a vendor.
Online competition is fierce and every e-commerce business strives to provide high-quality products that meet increasing consumer expectations. As ecommerce becomes more customer-centric, product quality becomes critical for success. Make sure that you source products that encourage loyalty and positive brand associations.
The best-quality product is useless if you can’t easily purchase it and bring it to market so look for suppliers in locations with strong infrastructure and convenient transit.
2. Choose a Company/brand name
If you’re trying to come up with a name for your online business in Dubai, you’ll be happy to learn that there aren’t many limits on what you can call it. The rules are simple:
- Your business name should not contradict your company’s activity. It is highly recommended that your business name should reflect your activity.
- Your company name should not already have been reserved or protected by copyright by a similar business in UAE. As such, it is best that you use Google to search your preferred name to make sure it does not belong to others.
- The name should not contain obscene or indecent words, and must not be offensive to the general public, even if it is a person’s name.
- The name should not indicate God’s names or his divine attributes neither in Arabic nor in English e.g., Al Qader, Al Aleem, Al Razzaq, etc.
If you are uncertain about whether or not your business name is legal, check in with one of our business setup experts.
3. Buy a domain and social handles
The next step is to secure a domain name and (hopefully-matching) social media handles. A domain name is the address at which your e-commerce shop will live. Social media handles are your name as displayed on your social profiles. If possible, it’s really beneficial to have them all as congruent as possible. If the ones you want aren’t available, you may need to get a bit creative to find one that works well with your business name. For an online business in Dubai, the most common domains are either top-level domains such as .com or country-specific domains such as .ae.
Some of the most popular places to buy a domain are:
5. Get an ecommerce license
Next, you’ll need to determine if you are required to get an e-commerce license.
In the UAE, it is important to differentiate between selling services and selling products. If your business sells physical products in the UAE via online platforms, then you will need to get an e-commerce licence.
If you are an online fitness trainer or a life coach offering online classes, then you don’t need an e-commerce licence. Instead, you’ll need a professional licence, which allows you to offer your professional services to your clients.
Another example of when you do not need an e-commerce licence is if you sell digital products, even if you do have payment gateways and online transactions. Your business will be categorised as “online services” since there are no physical goods being delivered to customers.
If you’re not sure, then it’s best to check with a company formation specialist as they will be able to inform you about the best licence and activities to apply for your online business.
5. Choose an ecommerce platform
What is an e-commerce platform?
An e-commerce platform is an all-in-one solution for running an online business. It is a piece of software that handles all aspects of both the vendor-side and customer-side of a transaction.
What are the best e-commerce platforms?
Many e-commerce platforms exist to assist in the creation of an online store that is simple, cost-effective, and quick to set up. Here, we will take a look at the most popular e-commerce platforms and break down the advantages they offer online businesses.
Shopify has quickly become the world’s most popular, fully-managed ecommerce platform since its launch in 2004. It is used by over 1 million retailers around the world with more and more companies choosing to migrate over from existing platforms.
Its popularity is, to a large extent, due to its simple and easy-to-use interface and excellent app marketplace. Unlike Magento, Shopify is a software as a service (SaaS) monthly membership service and includes website hosting, domain hosting and mail hosting.
There are many great themes for your store, both paid and free, with almost any feature you might want to use to sell your product. You should understand that Shopify is developed in a proprietary coding language called “Liquid.” If you need something very customised for your brand, you will need to hire a Shopify developer to modify or write the template code for you. That said, if you are happy to use a theme without requiring deep customisations, you can create a stunning website using Shopify.
WooCommerce is a WordPress plug-in that easily converts your WordPress site into an online store. Despite the fact that it is a plug-in, WooCommerce is an exceptional platform that comes with virtually all of the features that every other known platform has. WooCommerce is one of the most popular e-commerce platforms in the world, with 3.8 million online businesses using it.
WooCommerce is a free and open-source e-commerce platform. To utilise it, all you need is a WordPress site. The platform is great for small- to medium-sized enterprises but it does introduce limitations at the enterprise-level.
Keep in mind that, unlike Shopify, WooCommerce is not an out-of-the-box solution that you can set up in one day. WooCommerce might take you more time to get up and running and it is more “hands-on”, in the same way that WordPress is.
Magento is widely regarded as one of the most dependable and effective e-commerce systems for online retailers, especially for large businesses. Magento excels at scalability and performance, which is why it accounts for over a quarter of the e-commerce market. Magento is used by companies such as Burger King, Huawei and Liverpool Football Club.
For enterprise-level online shops, this platform is regarded as the most suitable ecommerce platform. As is the case at the enterprise level, Magento is not a simple platform. You will need the help of developers to build and run a Magento store.
BigCommerce now has over 55,000 online stores and is the closest rival to Shopify for features and ease-of-use.
A comparison between the Basic Shopify plan and BigCommerce Standard plan pricing will reveal the features inclusions available in each. These are the respective “entry-level” plans and have their own choice of inclusions and exclusions.
How to Choose
Chances are that if you are reading this guide, you don’t run an enterprise-level online store so we can probably rule out Magento in the beginning.
When creating a new online business, the deciding factor is your aptitude for technical work and “doing-it-yourself”. If a low-cost platform is important and you don’t mind getting your hands dirty, WooCommerce is the way to go
On the other hand, if you are like most online entrepreneurs and favour ease-of-use, functionality and a self-managed solution, we recommend that you choose between Shopify and BigCommerce.
While they are both great, our favourite is definitely Shopify. The intuitive UI, great documentation, community support, app marketplace and amazing themes make it the superior choice for most people starting an online business.
6. Get your brand designed
Unless you have graphic design skills, we advise you not to look for shortcuts when it comes to your branding. In fact, we can’t understate how important it is to develop a great brand. In 2022 and beyond, it’s everything. Even Google says so!
Your brand represents your business’s ‘personality’, values and philosophy. It is a social construct that communicates, both visually and with tone of voice, who you are and who your people are! You want your online business to feel like somewhere shoppers want to be. You get a very short period of time to create the right impression online and your brand is the answer to keeping shoppers’ attention spans long enough to convert them into customers.
7. Build a website
Once you have strong branding, it’s time to actually build a website on the ecommerce platform you have chosen! Depending on what platform you have chosen, this may be something you can achieve yourself, however we will stress again that, unless you know what you are doing, it is almost always best to hire professionals.
There is a lot that goes into designing a professional, modern website and it’s very easy to create a poor user experience. You’ll want to understand:
- Website speed
- Image optimisation
- User flows
If you can’t afford a custom build, we recommend that you buy a premade theme. Expect to spend a few hundred AED on a good theme. If you choose wisely, it will pay you back many times over in the flexibility it offers.
8. Digital Marketing – Drive visitors to your online business in Dubai
So you now have an online business in Dubai! What’s next? Customers would be nice! So, how do you get customers? Well, the answer is Digital Marketing and it can be the make-or-break of your online success.
Creating high-quality content is essential if you want to sell online. Think about it from your customers’ perspective: they want to know why they should buy from you! Content marketing is how we communicate this message.
Good content plays many crucial roles when growing an online store:
- It attracts potential buyers to your site
- It demonstrates your authority on the subject, building up trust
- It helps search engines to understand your site, what it is about, and what keywords it should rank for. You can’t drive organic traffic with poor, thin content: it just won’t happen.
Make sure you post content that is relevant to your target audience and through the right channel, in order to keep your community engaged. After all, content marketing is about building a relationship with your audience and creating an accessible avenue of communication, so you can build loyalty and trust among your target customers.
What is web content?
Web content includes any
- infographics or
that you purposely create for your visitors. It is crucial that your content is unique and not copied from somewhere else. You can receive a penalty from search engines if you duplicate other sites’ content.
Spend some time making your content actually valuable. Accurately describe your products, describe their quality and take professional photos and even videos to demonstrate their benefits.
Surveys show that 97% of consumers find bad content negatively affecting their trust in brands. Building trust is everything online since, without a physical presence to help sell your brand, your content is all that customers have when choosing whether to buy from you.
SEO stands for Search Engine Optimisation. It is the collection of practices that help search engines to discover, assess and rank your content higher than your competitors.
SEO is often considered to be mysterious and complex, however, in reality it can be thought of as nothing more than the art of making the best possible website that your customers might want to use. If your website answers a customer’s question better than other websites do, and if Google’s bots (software that crawls and analyses your site) discover a healthy codebase and site architecture, you will do well in SEO.
SEO and content marketing go hand in hand. As your content starts to cover a range of topics, you will naturally begin to rise in SERPS (Search Engine Result Pages). As your site grows in authority, so do your rankings.
SEO can become one of the highest-ROI (return-on-investment) activities that you can do for your online business in Dubai.
For businesses wanting to scale quickly, advertising is a must in 2022 and beyond. While SEO is reliable over the long run, it takes at least 6 months for it to kick in and start producing tangible results. So what do you do about getting traffic, customers, product reviews and revenue now?
Your answer is advertising, both in the form of PPC (Pay Per Click) and paid social. Advertising is particularly important in the beginning to get your business quickly off the ground. While ad costs are going up and up, you will likely want to factor them into your margins as an investment into your long term success.
Given that 71% of adults are on social media, the odds are good that you’ll be able to contact your target market via Facebook, Twitter, YouTube, or other social media platforms.
Because social networking is such a powerful way to spread the news about your brand, events and promotions, it’s one of the most highly-suggested e-commerce website marketing techniques.
It’s inexpensive and high impact if you understand how to use the channels correctly, and you can create a stream of content to let people know about your products and services and why they’re unique.
Email marketing is a wonderful means to communicate your latest updates, products, offers and link to your socials and website. Creating a shoppable environment through targeted, personalised newsletters is a great way to ensure that your audience feels valued by your brand. This is also a great opportunity for feedback.
Things to know before setting up an e-commerce business in Dubai
1. Choose the right business structure
Determining the structure of your company is one of the most critical steps in setting up a new business in Dubai. This primarily depends on your activities and preferences (e.g., if you want 100% ownership or prefer having a local sponsor or partner).
In the case of e-commerce businesses, the ideal company structure would be a Limited Liability Company and a Free Zone Company. Getting advice from a business setup consultant can help you determine the right structure for your e-commerce company.
2. Set up in the right jurisdiction
You can register your company in a free zone or in the mainland, but it will depend on the nature of your e-commerce business.
A mainland licence gives you the freedom to trade or sell your products and services directly to the local market, while registering your company in a free zone will require you to work with a local distributor.
Furthermore, there are more than 30 free zones in Dubai, with each one offering complete foreign ownership and the ability to trade internationally.
In choosing a jurisdiction, consider the factors that will benefit your business more in terms of building market share and scalability.
3. Open a business bank account
Once you’ve successfully applied for your e-commerce licence and established your business, you should set up your business bank account to manage and keep track of your finances.
You may be tempted to simply use your personal bank account for convenience and to avoid additional fees. However, it’s important to note that revenues from your business can be much more difficult to track when it is combined with your personal finances.
It can also create confusion when determining the tax liabilities and cash flow of your business, leading to inaccurate bookkeeping.
Now that you have a better idea of the key aspects involved in establishing an ecommerce business in Dubai, the next step is to get everything prepared so you can get started with the help of a reputed business setup partner, like Virtuzone.
Build your online business in Dubai with Virtuzone
Since 2009, Virtuzone has assisted over 45,000 entrepreneurs in establishing their companies in the UAE. We are the most trusted company formation specialists in Dubai and the UAE, with in-depth knowledge of the complete business setup process.
We have more than a decade of experience setting up all types of businesses in the country, including free zone and mainland companies, as well as providing business support services that help our clients succeed – from branding, PRO and mail management, to IT support, accounting, VAT and payroll.
If you are interested in business setup in Dubai or anywhere in the UAE, please fill out the form below and our team will contact you shortly.