How to Set up an E-commerce Business in the UAE

Author: Hanoof Al Naama
Published: March 12, 2024
Category: Business Activity

Overview of UAE E-commerce Market

E-commerce entrepreneurship in the United Arab Emirates opens the door to a thriving market, set to reach a substantial $9.4 billion by 2028. The electronic commerce market is characterised by widespread internet and mobile phone use, a tech-savvy population, and robust governmental efforts to propel the nation into a digital economy.

Market Players

Global Players:

Regional Heavyweights:

Market Characteristics:

E-commerce Business License from SPC Free Zone

SPC Free Zone offers an e-commerce business license that allows up to five business activities under a single license.

License Considerations

Important Note: The choice between having a general trading activity alongside your e-commerce venture, or solely pursuing the e-commerce activity depends on the nature of the products you're selling.

When General Trading License is Required:

Standard E-commerce License:

Customs Code Services

For Sharjah Ports:

For Dubai Ports:

Payment Gateway Integration

With an SPC Free Zone license, integrating a payment gateway into your e-commerce website does not require a No Objection Certificate (NOC) or special permission. You are free to seamlessly incorporate a payment gateway.

Six E-commerce Business Activities

1. Business Activity 4791.01 – Retail Sale of Any Kind of Product by Mail Order

Description

This category encompasses retail sale activities where customers make their purchases through mail orders. Buyers typically make their selections based on advertisements, catalogues, or information provided through various advertising means. The ordering process occurs via traditional mail, phone calls, or online means, usually through dedicated websites.

Product Delivery Options

Market Context

The traditional catalogue-based shopping model still exists in some parts of the world, but it's becoming increasingly rare in developed economies like the UAE due to the dominance of e-commerce platforms and the preference for online shopping.

Examples of Companies Using This Model

Sharaf DG:

Marka:

Regulatory Requirements

Requirement Status
Third-party Approval Not required
Filing of Economic Substance Return Exempt
Anti-Money Laundering Compliance Exempt

2. Business Activity 4791.02 – Retail Sale of Any Kind of Product over the Internet

Description

This classification covers retail sale activities conducted exclusively over the Internet. Buyers make their choices based on various online resources such as advertisements, catalogues, or website information, and transactions occur through online channels, where customers place orders using dedicated features provided by the seller's e-commerce website.

Product Types

Characteristics

Prime Examples

Noon.com:

Amazon.ae:

Namshi:

Supermart.ae:

Regulatory Requirements

Requirement Status
Third-party Approval Not required
Filing of Economic Substance Return Exempt
Anti-Money Laundering Compliance Exempt

3. Business Activity 4791.03 – Direct Sale via Television, Radio and Telephone

Description

Direct sales through television, radio, and telephone refer to retail activities where purchases are made directly through these communication channels. Customers are enticed by promotional broadcasts on television or radio and can place orders by calling a designated telephone number. This method eliminates the need for physical storefronts, allowing sellers to reach a broader audience through these mass media platforms.

Examples

Home Shopping Channels:

Radio Infomercials:

Telephone Sales:

Regulatory Requirements

Requirement Status
Third-party Approval Not required
Filing of Economic Substance Return Exempt
Anti-Money Laundering Compliance Exempt

4. Business Activity 4791.05 – Foodstuff E-trading

Description

Foodstuff e-trading involves the online retail sale of food products. This could include the purchase of groceries, fresh produce, or speciality food items through Internet platforms. Customers can browse through digital catalogues, place orders online, and have the foodstuff delivered to their doorstep.

Market Trend

The convenience of online grocery shopping and grocery delivery aligns with the broader trends in e-commerce, offering consumers a seamless way to access a variety of food products from the comfort of their homes.

Examples of Online Grocery Delivery Businesses

elGrocer:

InstaShop:

Talabat:

Regulatory Requirements

Requirement Status
Third-party Approval Not required
Filing of Economic Substance Return Exempt
Anti-Money Laundering Compliance Exempt

5. Business Activity 4791.06 – E-Commerce Through Websites

Description

E-commerce through websites refers to the process of buying and selling goods or services online through dedicated websites. This involves retail sale activities where customers browse through advertisements, catalogues, or information provided on a website to make their purchasing decisions. Once they've chosen their desired products or services, they place their orders electronically, typically via a website's ordering system.

Forms of E-commerce Through Websites

Online Retail Sales:

Digital Products:

Internet Retail Auctions:

Regulatory Requirements

Requirement Status
Third-party Approval Not required
Filing of Economic Substance Return Exempt
Anti-Money Laundering Compliance Exempt

6. Business Activity 4791.07 – E-Commerce Through Social Media

Description

E-commerce through social media refers to the process of buying and selling goods or services directly through social media platforms. This method involves retail sale activities where buyers are influenced by advertisements, catalogues, or information provided on social media channels, leading them to make purchasing decisions within the same platform. Once customers decide on their desired products or services, they can place orders directly through social media features, such as messaging or shopping functionalities.

Social Media Platform Features

Facebook:

Instagram:

Pinterest:

X (Formerly Twitter):

Snapchat:

TikTok:

Benefits

This integration of e-commerce within social media environments simplifies the purchasing process for customers and enhances convenience. Social media platforms are continuously introducing new features and tools to facilitate e-commerce transactions.

Regulatory Requirements

Requirement Status
Third-party Approval Not required
Filing of Economic Substance Return Exempt
Anti-Money Laundering Compliance Exempt

Summary of All E-commerce Business Activities

Activity Code Activity Name Third-party Approval Economic Substance Return AML Compliance
4791.01 Retail Sale of Any Kind of Product by Mail Order Not required Exempt Exempt
4791.02 Retail Sale of Any Kind of Product over the Internet Not required Exempt Exempt
4791.03 Direct Sale via Television, Radio and Telephone Not required Exempt Exempt
4791.05 Foodstuff E-trading Not required Exempt Exempt
4791.06 E-Commerce Through Websites Not required Exempt Exempt
4791.07 E-Commerce Through Social Media Not required Exempt Exempt

Additional Resources

Explore More Guides

Related Topics

Contact Information

For more information about setting up your e-commerce business in the UAE with SPC Free Zone, visit the official website or use the cost calculator to estimate your business setup costs.