Setup your E-Commerce Business in Dubai: Mainland or Free Zone

E Commerce is a booming business in the world right now. People like to buy things online from the comfort of their homes, rather than having to go to a physical outlet or store. With the advancement of technology and the Internet, all indications are towards a high climb for the E Commerce industry. Dubai, with its diverse crowd of locals and expats from all corners of the world, has always been a prime location for investors to start their business. The E Commerce industry in the UAE is said to be valued at $10 Billion by 2018 (Source: Gulf News). With the ever growing industry always in demand, this article tries to provide clarity towards starting an E Commerce business in Dubai, comparing Mainland and Free Zones. Let us try to understand some basic differences between Mainland and Free Zone. Mainland Dubai companies are governed by the Department of Economic Development (DED) Dubai while Free Zone companies are governed by the authority of the concerned Free Zone. While a Mainland Company can freely do business inside and outside UAE, a Free Zone company can only do business within the free zone area and import/re export. A Mainland company should have a local sponsor or service agent depending on the legality of the company, while a Free Zone company can have 100% foreign ownership.

Now, there are a number of factors to be considered before starting any business. Here, we consider some of the factors to be considered in an E Commerce business in Dubai.

A Physical Office:

Being a virtual industry, an E Commerce company may not require a physical office. In Mainland Dubai, it is necessary for all companies to have a physical office to be considered legal. Many E Commerce companies start in Mainland, even if they don’t require an office as when the business grows, it becomes imperative to have an office for several different reasons. Managing different orders, customer care centres, etc are some of the reasons which come to mind. In Free Zones, it is not necessary to have a physical office for an E Commerce company. However, offices, if needed, are also available in a Free Zone. Note: If you’re looking for support/funding from Banks, a Mainland company is more likely to receive it as compared to a Free Zone company with no office. Banks are more comfortable in supporting businesses with established physical spaces.

A Storage Warehouse:

If you plan to not only provide a platform, but also sell your own products and deliver them, a warehouse for the storage of those products becomes necessary. Such warehouses are available in both Mainland and Free Zones. In a Mainland company, the warehouse itself can be used for storage and office space.

Website Development: To set up an online business, you naturally need to prepare a website. This process remains the same, irrespective of whether it’s a Mainland or a Free Zone company. The following steps need to be taken when establishing your web presence: Registering a domain name: 1) You will need to choose and register a domain name. 2) This is the name or address you use for your website (often the company’s name). 3) A number of companies in the UAE offer domain name registration services. In order to acquire you can search it out on Google which is the best one available. If you are an online shopping portal, there are a few additional factors to consider: Online payment gateways: You need to set Secure Payment Gateway including credit card payment, cash on delivery and pre-paid card systems such as PayPal. Logistics:

One of the differences between Mainland and Free Zones are the restrictions on trading and the governing authority. While a Mainland company, governed by the Department of Economic Development (DED), has no restrictions on trading in any part of the world, a Free Zone company, governed by the concerned Free Zone authority, can only trade products within the Free Zone. Logistics is where starting your company in Mainland gets an edge over starting your company in a Free Zone. In this modern get-your-order-on-the-same-day industry, the quality of service and delivery is a very important factor. Dubai Mainland, with no restrictions on trading in any part of the world, makes it easier and more convenient to have better logistics for your E Commerce company. A Free Zone company may outsource third party logistics companies but any liability of customer complaints with the service and delivery, will lie with the E Commerce company and not the third party.

Cost:

Starting your company in Free Zone is always cheaper than starting your company in Mainland. If budget is an issue, a Free Zone company will always be preferred over a Mainland company. However, if budget is a secondary issue, the primary being the quality of service, a Mainland company is always preferable.

Flying Colour has helped to form several E-Commerce companies in both Dubai Mainland and Free Zones according to the customers’ needs. We provide services tailored to your needs, assisting you throughout the set up process. For any queries regarding the set up of your E-Commerce company, do give us a call at +971-4-4542366 or email us at info [@] flyingcolour [dot] com. Also, visit us at www.flyingcolour.net for more information