Step by step guide to starting an online business

Step by step guide to starting an online business

Recent years have seen a rise in technological advancement. This has made conducting e-commerce business easier. Investors in the UAE have seen this as a golden opportunity to start online businesses especially since this industry is supported by the government as well. Moreover, due to the pandemic online business has become even more popular. Some of the many advantages of conducting an online business include

Cost saving

An online company formation in UAE is relatively cost effective. This type of business can be conducted from anywhere and does not need a dedicated office. The low startup cost means that many individuals who possess the skills but did not have the financial means before can also start their own company.

Simple transactions

Unlike other businesses that require complex transactions and face to face interactions, online businesses can conduct their operations through the internet. Companies can set up a secure website highlighting their products and services and customers can choose at their own convenience.

Large profits

The e-commerce industry has the potential to make large profits. Due to the lack of any physical office online companies can target a large audience. Through digital marketing practices companies can target any market they choose to sell their products and services.

Flexible business

An online business provides a lot of flexibility to its owner in terms of working hours and conditions. Owners can also carry out an online business part time while they focus on other tasks.

Easy customer support

Online businesses can not only deliver niche products and services to a dedicated customer base but they are also able to provide better customer care and support. Business owners can respond to customer queries and questions quickly and effectively.

Investors wishing to start an online business have the option of choosing between Mainland company set up and free zone company formation in UAE. The UAE has many free zones that provide the option of online businesses, such as Dubai Commerce City. DCC is the leading free zone dedicated towards the growth of the ecommerce industry in the UAE. The free zone not only offers a hospitable environment for company set up but a pre-integrated and pre-configured platform with various business support options. The Department of Economic Development also provides an e-commerce license that is dedicated for companies wanting to start an online business. This license was launched by the UAE government in 2017 in order to promote online company formation in UAE. Through this license companies can market and sell their products online. All e-commerce licenses have to be approved by the Telecommunications Regulatory Authority, that is incharge of regulating the e-commerce framework in the country. The steps to avail an ecommerce license and start a business include

1. Applying for initial approval

The first step when starting an e-commerce license is to apply for an initial approval from the Department of Economic Development (DED). Investors are required to submit a few documents to the Department as well as submit an application.

2. Applying for the license

The second step is to apply for the license. For Mainland company set up each emirate in the UAE has a different e-commerce license

  • Etrader license in Dubai allows UAE and GCC national living in Dubai to carry out business activities through online mediums. The license is issued by a single owner who cannot open an office or shop under the license
  • Ecommerce license from Abu Dhabi is for entrepreneurs who wish to conduct online businesses in addition to their other business activities and also for new business owners. This license is for all UAE residents
  • Eitimad domestic license in Sharjah is for home based individuals wanting to conduct online businesses through social media platforms. The license does not allow the recruitment of employees.
  • The Virtual Merchant license from Ras Al Khaimah allows online trading over multiple mediums including websites, social media, and mobile applications. Although the license is only for the residents of Ras Al Khaimah it includes a large range of business activities.

3. Submitting the required documents

To obtain the license companies must submit a few documents to the Department of Economic Development (DED)  including;

  • Application form
  • Business plan
  • Passport copies of all the shareholders
  • No objection letter (NOC)
  • Passport sized photographs of all shareholders

4. Payment of license fee

The last step in starting an online business is to pay the license fee. The fee depends on the type of license and  Mainland or free zone company formation in UAE.

Recent years have seen a rise in e-commerce activities. While the industry is still a new one in the UAE, many investors and business owners are choosing to start online businesses due to its many advantages and UAE favorable policies.