In an era where people wish to spend more time at home rather than at malls and stores, getting an e-commerce license in Dubai is assuming more significance. E-commerce, an already growing business model, posted incredible growth in the UAE when the COVID-19 pandemic forced people to ditch their habit of hanging out and adopt online shopping.
As a result, e-commerce is now the most promising business model in Dubai, UAE at the moment and is likely to continue to be so in the years ahead as well. The new boom in the sector has led to a slew of new entrepreneurs jumping on the e-commerce bandwagon but they need to watch out for some common pitfalls to ensure a successful company formation in Dubai.
Related: 10 Sunrise Sectors Post COVID-19 Series | Dawn of E-Commerce Business in the UAE
Let’s analyze the top mistakes the e-commerce entrepreneurs must avoid at any cost:
1. Failing to Understand the Segments in Demand
It is true that starting an e-commerce firm is a profitable avenue of business setup in Dubai but that doesn’t mean that you should concentrate on every product segment. The COVID-19 pandemic is kicking and alive and you can’t expect the consumers to make a splurge on every item as they did before. Focus on niche segments and see to it that such products are in demand despite the consumers restricting their spending. Essential items are in high demand and will be so forever. Also due to the new trend in remote working and e-learning classes, electronics goods are also a sought after segment.
2. Choosing the Wrong Licensing Jurisdiction in Dubai
Company incorporation in Dubai is not much of a complex process but it is a strategic decision as you have to choose between the two main jurisdictions: ‘the mainland and the free zones’. For an e-commerce business setup in Dubai, the jurisdiction is of crucial significance as you can trade anywhere in the UAE directly if the mainland is your choice.
As per the law, you are not allowed to do business in the UAE if you form a company within the free zone. But if you are setting up an e-commerce platform in the free zone, you can partner with an agent to sell the products in the UAE. If you want to know which jurisdiction serves your purpose better, then consult the best business setup consultants in Dubai.
3. Choosing the Wrong Facilities
Business set up consultants in Dubai recommend that the free zones are best suited for e-commerce companies due to the easy business setup procedure, lower costs, and state-of-the-art facilities. However, you should have a good understanding of the facilities you actually need to set up the company in Dubai free zones.
Conduct a study about the facilities offered by each free zone and makes the best decision. If your company is just a ‘drop shipper’ that is a web platform that facilitates the selling of goods between the manufacturer and the customer, then you won’t need to rent a big office space and warehouses. The free zones offer co-working spaces or Flexi desks with all the facilities, which would better suit your business.
Related: Pros & Cons of Setting up a Business With Flexi Desk Facility in UAE Free Zones
4. Going Solo for Company Formation in Dubai
Considering the ease of setting up a business, the e-commerce entrepreneurs may be tempted to go as a lone wolf for company incorporation in Dubai. However, from obtaining the trade license to completing the incorporation process, you need to undergo different legal procedures for which you need professional assistance. The procedures may vary depending upon the jurisdiction and having reputed business setup consultants as your trusted guide in the process eases the process of business setup in Dubai.
Any laxity in complying with the legal requirements may lead to hefty penalties and the business setup consultants in Dubai help you avoid this. Further, the consultants would come in handy for services like license timely license renewal, sponsoring the visa for dependents, etc.
5. Failing to Comply with Regulations
Overlooking the regulatory requirements is a big ‘no’ while setting up a business in Dubai. The UAE has enacted a few great laws to align the economy in line with the global standards and the entrepreneurs need to be aware of this. There are regulations such as Value Added Tax (VAT), Economic Substance Regulations, Anti-Money Laundering (AML) Law, which you need to consider during company formation in Dubai. Consult with experienced business setup consultants in Dubai to determine whether or not you come under the scope of such regulations to ensure compliance.
Why Choose Jitendra Business Consultants?
The process of e-commerce business setup in Dubai is cost-effective and straightforward if you are highly informed about the legal requirements and procedures. Once you find the answer to the right jurisdiction for your business, the rest of the process is not so complex. However, this is a strategic decision as to the mainland and free zone business setup in Dubai vary drastically in terms of ownership and restrictions on activities.
The mainland provides a great opportunity for trading anywhere in the UAE while the free zones don’t offer this benefit. However, by incorporating a company in the free zones you can have 100% ownership which the mainland can’t provide you. You need to have the professional assistance of reputed business setup consultants in Dubai to make this strategic decision.
Jitendra Business Consultants has years of experience in assisting entrepreneurs set up their companies in Dubai, UAE. We have a team of highly qualified business setup consultants who are well-versed in UAE laws including labour laws, and immigration laws. We assist you in obtaining the trade license in Dubai by effectively dealing with the respective mainland and free zone authority on your behalf. JBC provides you services including company registration in Dubai, visa processing, sponsoring of dependents, accounting & audit, VAT registration, etc.