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eCommerce in Dubai and the UAE has experienced significant growth in recent years, fueled by the region's rapidly growing digital economy and a young, tech-savvy population. According to the EcommerceDB, the annual growth rate of UAE ecommerce revenue will be 8.6% during the following three years (2023–2027), growing faster than most European countries.
With the overall growth of global ecommerce popularity, more and more technical capabilities, and deep support from the UAE government, ecommerce businesses are going to thrive in the UAE, which means a great chance for everyone who wants to start their own ecommerce to profit from starting a business in the UAE. In this article, we have collected reasons why starting the UAE ecommerce business now is a great idea, what to start with, and how to choose the best ecommerce platform for your business.
According to Mordor Intelligence's forecast, the CAGR will be even higher in the following five years: the UAE's growth will reach 15.27% by 2028 (the study is based on data collected in 2018–2022). This is possible due to the growing number of internet subscriptions (1.35 million in 2017 and 3.27 million in 2021), the increase in online shopping sales (expected to reach $9.2 billion in 2026), and the general trend of more people buying online. In addition, studies show that the number of online shoppers in the UAE has almost doubled in the last five years.
Statistics and forecasts on the UAE ecommerce market growth
eCommerce is evolving globally, but the UAE provides some of the greatest growth opportunities for online stores. And here are the main reasons why this market is growing so rapidly:
1. Literally everyone uses the internet
Dubai and the UAE have some of the world's highest internet and mobile penetration rates, with around 99% of the population having access to the internet and using smartphones. This has created a massive market for ecommerce businesses.
2. Strong Logistics and Infrastructure
Dubai and the UAE have invested heavily in building world-class logistics and infrastructure networks, making it easier and faster to deliver goods to customers across the region.
3. Favorable Government Policies
The UAE government has introduced several initiatives to support the growth of the ecommerce sector, including the launch of the Dubai CommerCity. This dedicated ecommerce free zone provides services to businesses operating in the sector.
4. Growing Consumer Demand and Purchasing Power
With a population of over 10 million, the UAE represents a significant market for ecommerce businesses. Moreover, the country's young, affluent, and tech-savvy population is increasingly turning to online shopping, driving the growth of the ecommerce sector.
5. COVID-19 Pandemic
The Pandemic has accelerated the growth of ecommerce globally, and the UAE is no exception. With lockdowns and social distancing measures in place, consumers turned to online shopping in record numbers, leading to a surge in demand for ecommerce businesses.
Dubai's potential as a hub for ecommerce growth in the Middle East is further boosted by the city's world-class infrastructure, logistics capabilities, and business-friendly policies. The city is home to one of the world's largest logistics hubs, Dubai Logistics City, which provides advanced logistics services and facilitates the seamless delivery of goods across the region.
Moreover, the Dubai government launched the Dubai ecommerce strategy to establish Dubai as the global logistics hub. The main idea is to attract more foreign direct investment in the ecommerce sector and increase Dubai-based firms' market share in local and regional distribution. The main ideas of the strategy are as follows:
According to Chambers and Partners, the UAE ecommerce is regulated by the Electronic Transactions Law (the Federal Decree-Law No. 46 of 2021), which means that you have to follow some legal demands. A qualified lawyer can help to go deeper in all the details, but to make your work easier, we provide some general regulations related to the UAE ecommerce businesses.
When starting your ecommerce business in Dubai, you have to get a DED trader license. It costs around AED 1400 ($380) and fits for LLCs, LLC-SOs (Single Owner), Sole Establishments and Civil Companies.
To process online transactions, ecommerce businesses in Dubai must integrate with a secure and authorized payment gateway. You have to choose a payment gateway that is secure and authorized by the UAE Central Bank, complies with local regulations, is easy to integrate with their platform, and has reasonable fees for transactions, setup, and other charges. Some examples of payment gateways available for ecommerce businesses in Dubai are Telr, Payfort, 2Checkout, and Checkout.com.
In Dubai, ecommerce businesses must comply with local customs and taxation regulations. if the ecommerce platform operates as an independent retailer, then the platform is required to charge VAT on the sale of goods and services at the applicable rate of 5%. eCommerce businesses are also required to register for VAT if their annual turnover exceeds the VAT threshold of AED 375,000. Failure to comply with the VAT regulations can result in hefty penalties and fines
eCommerce business in the UAE is easy to establish; however, new companies can still face some challenges when launching their project. We list some of them below:
eCommerce businesses must comply with various local laws, including commercial rules, consumer protection laws, data protection laws, and ecommerce regulations. Non-compliance with these laws can lead to legal penalties, fines, and criminal liability.
eCommerce businesses may face intellectual property disputes, such as copyright infringement or trademark violations if they use images, logos, or other copyrighted material without permission.
Companies must ensure secure payment processing and prevent fraud. Payment processing issues can lead to legal disputes, while fraud can result in financial losses and damage to the business's reputation.
You must protect customer data and prevent data breaches. Failure to do so can result in legal penalties and damage to the business's reputation.
eCommerce companies must comply with shipping and logistics regulations and ensure the timely and safe delivery of products. Failure to do so can lead to legal disputes and financial losses.
You must comply with local taxation and customs duties regulations. Failure to do so can result in legal penalties and financial losses.
Ounass.ae is a luxury ecommerce platform that has achieved significant success in the Middle East.
Market share: > US$1m (2021)
Here are the reasons why the platform is good:
Amazon is the world's largest ecommerce platform and the most dominant player in the ecommerce sector.
Market share: US$520.1m (2021)
Here is why Amazon is so successful in the UAE:
Groupon.ae is an ecommerce platform that offers daily deals and discounts on a variety of products and services in the UAE.
Market share: US$7.5m (2022)
The reasons of Groupon success are listed here:
To bring some examples od ecommerce companies in UAE that have become popular really quick, we have chosen three startups:
YouGotaGift is a popular e-gifting platform in Dubai that offers a unique and convenient way to send personalized gifts to friends, family, and colleagues. One of the main reasons for its popularity is the wide range of options available on the platform.
Namshi has a wide range of fashion and lifestyle products, offers a seamless and convenient shopping experience with fast and reliable shipping, flexible payment options, and easy returns.
Ranked as the top ecommerce company based in the UAE, Souq.com is a popular online retailer in the Middle East. This ecommerce company in Dubai is believed to be the number one.
Market share: $82.4m (2021)
There are several factors that have contributed to the success of Souq.com, including:
In addition to these factors, Souq.com has also employed unique features and strategies such as Souq Fulfilled by Souq (FBS), a mobile app, and daily deals and flash sales, which have set it apart from other ecommerce platforms in the region.
Market share: $28 million
Here are some reasons why Dubizzle.com is popular in Dubai:
Awok.com is an online marketplace based in Dubai, UAE that offers a wide range of products at affordable prices, including electronics, fashion, household items, beauty products, and more.
Market share: $153 millionIt is a popular platform, and for a reason:
Choosing the right ecommerce solution provider in Dubai and UAE is essential for businesses to succeed in the digital market. The ecommerce platform can impact the customer experience, sales performance, and overall efficiency of the business. Here, we have collected a few tips on how to make sure your platform is the best choice.
There are several factors to consider when choosing an ecommerce platform for your online business. These include:
The ecommerce platform should be user-friendly and easy to navigate, with simple tools for managing products, orders, and customer data.
The payment gateway integrated into the ecommerce platform should be secure, authorized, and easy to integrate with your website.
The ecommerce platform should be able to accommodate growth and scale with your business needs, with the ability to add new products, features, and integrations as required.
The platform should offer reliable technical support and regular updates to ensure that the platform is up to date and functioning properly.
The cost of the ecommerce website in UAE should be reasonable and within your budget, with no hidden fees or charges.
When selecting an ecommerce platform, industry-specific requirements should also be taken into account. For example, a business in the fashion industry may require a platform with robust product visualization and sizing options, while a business in the food industry may require a platform with strong inventory management capabilities and the ability to handle perishable goods.
By considering these factors when choosing an ecommerce platform, you can ensure that you select the right platform that will meet the needs of your business and help you achieve your online sales goals.
Virto Commerce is an enterprise-level platform that offers advanced features and customization options for creating an ecommerce website (UAE). It is a good fit for businesses with complex ecommerce needs that require high flexibility and scalability.
Pricing models include:
Shopify is an ecommerce platform that offers a range of features and benefits, including easy setup and customization, secure payment processing, SEO optimization, and mobile responsiveness.
Pricing models include:Shopify's flexibility and customization options make it a popular choice for businesses of all sizes, from small startups to enterprise-level companies. Shopify may not be the best option for businesses with highly specific or complex needs, as it has limitations in terms of customization and flexibility. Additionally, the monthly subscription costs and transaction fees can be a drawback for small businesses with tight budgets.
WooCommerce is an open-source ecommerce plugin for WordPress ecommerce websites in UAE, designed to enable businesses of all sizes to sell products or services online. WooCommerce offers a free core platform for building an online store, but there are some costs associated with using the platform. These costs can include:
WooCommerce is suitable for small to medium-sized businesses looking for a cost-effective and customizable platform to sell their products or services online. WooCommerce may not be the best fit for businesses that have limited technical expertise or resources, as it requires some technical knowledge to set up and maintain.
Magento is an open-source ecommerce platform that provides businesses with a flexible and scalable solution for building online stores.
Magento offers three pricing models:
Starting your ecommerce business in the UAE is easier than it might seem to be. The most important steps to take are complying with all the legal requirements and choosing the right B2B ecommerce platform with relevant capabilities.