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Challenges Faced in the UAE E-Commerce Business

Allowing clients to buy goods and services via the Internet and pay with cash or a credit card is now a standard procedure for every self-respecting business, large or small.

Customers are drawn to e-commerce because of its accessibility, convenience of use, and ability to purchase things without leaving the comfort of their homes, making it a lucrative business.

However, it is not always a piece of cake to start an e-commerce business overseas, especially for foreigners becomes much more complicated. 

Read through the blog to know more about the challenges one might expect in the process.

UAE E-commerce Market

The United Arab Emirates was regarded as one of the most potential locations for e-commerce development among the Gulf countries. This is because the government has a well-developed infrastructure and well-informed and educated people. 

According to Global Media Insight's infographics, 91 per cent of the UAE population has access to the internet ("UAE Internet"). The overall number of users surpasses 8.8 million.

The UAE is the GCC's e-commerce leader, with sales of $3.9 billion in 2020, accounting for 10% of overall retail sales. A Covid digital changeover contributed significantly to this. 

According to the Dubai Chamber of Commerce and Industry, e-commerce will produce $8 billion in sales by 2025 because the UAE market has nearly 100% internet and mobile phone penetration.

So it is safe to state that the e-commerce industry is growing in the UAE. This is the time for you if you start an e-commerce business in the country. Learn more about the 5 steps to launching a successful e-commerce business.  

Challenges Faced in E-commerce Business in the UAE

If you want to run a successful business that sells its products and services broadly online, consider several factors. We'll go over some of the most important factors before establishing your e-commerce firm.

Security Issues

The first big problem is ensuring the security of both client transactions and personal effects. Because of the high level of hacker and virus activity in the region, a company would need to invest in costly security and anti-virus software and secure e-management systems and cloud services to offer backup files in a security breach. These costs add to the difficulty for SMEs in launching an E-commerce platform.

Payment Options

Most customers prefer pay-on-delivery. The widespread use of pay-on-delivery causes unneeded disruptions in the financial flow because payments take time to reach the company. Online prices are becoming more popular because they provide the company with immediate cash, allowing for fluid and responsive administration. This is especially true for pricey and large-scale delivery.

 Governmental Legislations

Aside from that, UAE law requires all local businesses to have a physical location to be recognized as lawful. This might be a problem for SMEs considering opening an online store. Other nations, unlike the UAE, do not need the establishment of physical offices to register E-commerce sites. Therefore, these businesses would have the edge over those originating in the UAE.

Logistical Issues

The regulations, customs, and restrictions imposed on E-commerce in the UAE provide logistical and legal issues for SMEs. For example, delivery expenses and shipping and importing items from other countries are all factors that influence the final pricing for buyers. In addition, obtaining a license from the Department of Economic Development (DED) to start a web-based business is a legislative obstacle.

Challenges in Obtaining E-commerce Business License in UAE

In order to start your e-commerce business, one must obtain a UAE e-commerce license. Learn more about e-commerce license Dubai.

For the mainland license, one has to go to the Department of Economic Development (DED). On the other hand, you have to approach the respective free zone authority if you obtain a free zone business license.

In the case of an individual, it becomes complicated to get the license from the authority, so it is advised that you get a business consultant and obtain their assistance.

Business Setup Worldwide is here to help you in your business setup process. Our business consultants are experienced with years of doing business. It will be easier for you to start your business in the UAE with the help of our team.

Contact us at any time; we’d be glad to assist you.

FAQs

1. What are the factors responsible for the e-commerce development in the UAE?

Increased Digital Adoption
Cashless payments
Portable Wallets Getting More Popular
Growing Opportunities for Online Shopping

2. Which businesses operate through online platforms?

Food Delivery Services
Electronics Retail
Business setup services
Fashion Retail
E-commerce Aggregator services
Travel and Transit services
Digital consultancy services
Accessories and Merchandise

3. How many e-commerce business licenses are there in Dubai?

Portal license
E-trader license
Virtual company license

4. What are the documents required for obtaining an e-commerce license?

Copies of shareholders' passports/visas
Passport copy of partner / Emirates ID
MOA
Local service contract / Civil work contract
NOC by the concerned authority

5. Which is the appropriate jurisdiction for starting an e-commerce business in the UAE?

UAE free zones.

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