Growth of warehousing over the years:
A warehouse is a large building where raw materials, manufactured goods are stored before distributed in the market. Logistics include many aspects like product handling, packaging, inventory management, transportation in addition to warehousing, which is the most important part of the logistic industry. Average annual online spending per person in the UAE is $300 as compared to $90 in Saudi Arabia and $94 in France as per statistics from UK-based consultancy firm Business Monitor International (BMI). UAE has proved itself to be a leading market player in the logistics industry and ranks first in the Gulf region and third globally, according to the latest Emerging Markets Logistics Index. In UAE, Dubai seen highest demand for warehousing facilities due to increased online trade activities. The Dubai Industrial Park is the major warehousing location in the Emirate with warehouse spaces ranging from 5,000 to 10,000 sq.ft.
Over the past few years we have seen the exponential boom in the increase of start ups, particularly in the field of e-commerce. We see the number of online shoppers growing and making various purchases online. Businesses across the UAE are enjoying the benefits that come along with using cards over cash for all kinds of transactions. The UAE’s e-commerce industry is estimated to be worth $27.1 billion in the year 2022. We can see a positive response from the consumers in the UAE towards the e-commerce and online activities which is enhancing in building the trust on various online payments. In general, e-commerce industry highly associates with warehouses where goods and parcels are stored, processed and shipped out. So, it is obvious that the rise of the e-commerce industry would increase the demand for logistics properties or warehouses.
How e-commerce boost the warehousing business?
Business Insider Intelligence also observes that the logistics industry is expected to reach $15.5 trillion by 2023, up from $8.1 trillion in 2015 and the market for blockchain technology in supply chain management expected to grow at annual growth rate of 49 per cent from $41 million in 2017 to $667 million in 2024. Also many e-commerce giants have identified the importance of a reliable, efficient and timely logistics system which is an absolute necessity for their own success. For example, Amazon and Noon in the UAE, have established their own warehouses and delivery network. Recently the sale and leaseback of Transworld Group’s logistics facility in Jebel Ali Free Zone which is high-quality warehouse spanning over 204,515 sq. ft. proves the potential of warehouse business in UAE.
All above facts and numbers and below mentioned realities showed that growth of E-commerce is boosting warehouse business in UAE.
- Recently, a significant increase has been observed in demand for warehouses and opportunities do exist in the sector particularly for investors whose clients are eager to sign longer leases
- As popularity of online shopping and same day delivery continues, the demand for high-quality space continues to rise, especially in Dubai South
- Implementation of 100% foreign business ownership, dual licensing and long term visa laws for investors will also boost the commercial property industry
Growth of E-commerce over the years
According to the data collected and published by Visa, cards are continuing to gain popularity over cash. When it comes to digital transactions, card transactions were recorded at 70% in UAE for the year 2018, compared to 68% in 2017. Cash on delivery, during the same period, came down to 15% in 2018 from 22% in 2017. As we know that Expo 2020 is approaching, we can expect an optimistic and sustained growth in the payments volume and the card payments are expected to continue to be in trend for the years 2019 and 2020. The growth of e-commerce marketplaces, such as Amazon and Noon has resulted increased confidence among shoppers to buy online.
What is boosting the E-commerce growth?
Consumers across the globe are happy that they are able to connect to all major brands to buy online. Some of the main reasons for the growth of E-commerce are:
- Mobile Additivity– With people being so connected to their phones and tablets we notice that the online sellers are making the most advantage of it. Advance websites and mobile apps are created to make the shopping an exciting experience, such that even a person who is on the move can take out sometime to log into the portal and purchase goods.
- Convenience– Sometimes visiting the store physically may not be possible due to the busy work schedule or involvement into business. However with online promotions happening in the social media for the availability of wide range of products, a person feels more convenient to purchase their things online.
- Greater range of offerings– We see there are lots of discounts provided for online shopping, hence people looking for more varieties will choose those platforms offering them the best deals.
- 24/7 availability– For purchasing online, you don’t need to be online on specific time. As long as the phone/ tablets/laptops are available with internet, a person is not required to care about time to order products.
General warehousing license in Dubai
The e-commerce activity includes firms engaged in the wholesale of goods and products to retailers, to industrial, commercial and professional users. This activity demands storage of goods in warehouses. General warehousing license activity in Dubai will help you to rent out a warehouse on your own for e-commerce warehousing purpose and further to sublet the space to other retailers if the space is big enough, on an agreed amount of rent for the usable space.
Cost and time frame for general warehousing license
The cost for the license will be approx. AED 17000 – 18000 plus the 2.5% of the rent of warehouse as the market fees. A corporate or an individual UAE National can be the 51% shareholder in the license and the remaining 49% can be held by the expat. Trade license can be issued on a warehouse and time-frame to get the license is 7 to 10 working days.
This blog written by Ms. Florine, Senior Business Advisor at Flyingcolour business setup, Accounting & Tax Services in Dubai & across UAE . Feel free to call us for more details. You can also send your inquiry to info[at]flyingcolour[dot]com or call +971 4 4542366