Amazon is one of the most trusted marketplaces in the world, and it is no different in the United Arab Emirates. According to a recent survey, some 43.6% of online shoppers have purchased from Amazon UAE. Of these, 26% shop on Amazon UAE every week and about 64% spend more than AED 100 each time they shop on Amazon UAE. Globally, sellers on Amazon sell anything between $1000 and $25,000 worth of inventory every month. You can see why e-commerce company registration in Dubai makes sense.
Selling on Amazon UAE can be a lucrative proposition. You don’t have to develop your own e-commerce website. Amazon UAE gives you instant access to wide market. It is estimated that 28 million users visit the Amazon UAE website every month. Amazon UAE is now the top online marketplace in the United Arab Emirates. The United Arab Emirates is the most developed e-commerce market in the Middle East-North Africa region, and sales for the region are estimated to reach $28.5 billion in 2022.
The e-commerce sector is growing at a rate of 25% every year, and the COVID-19 pandemic has only made online shopping more popular. Customers in Saudi Arabia, Oman, Bahrain, and Kuwait can also shop on Amazon UAE and have the items shipped to their addresses, making it all the more popular. The product pages show if an item is deliverable to the customer’s location, and if yes, how many business days it will take for the item to be delivered.
Amazon UAE also offers multiple payment options, catering to a large audience with a variety of payment preferences. 20% of sellers on Amazon achieve profitability within the first three months, which makes it even more appealing.
In order to register as a seller on Amazon UAE, you need to provide your business information. For this, you need to register a company in the United Arab Emirates and obtain an E-Commerce License.
How to Register an E-Commerce Company in the United Arab Emirates
The first step is to zero in where you would like your e-commerce company to be located. You can choose to set up your company on the mainland or in a free zone. A free zone is recommended for an e-commerce business, because you can scale up easily without changing your registered office address. Companies in free zones also enjoy 100% exemption from import and export duties.
You need to select a name for your e-commerce company. There are certain rules pertaining to company nomenclature in the United Arab Emirates. For instance, the name of your e-commerce company cannot begin with terms like ‘Global’ or ‘International’. Religious names are not allowed in the United Arab Emirates. The name of a country cannot be a part of the trade name, although nationalities are permitted. You can use a first name anywhere in your trade name if it is the first name of one of the shareholders.
For more information, it is recommended that you get in touch with a business setup consultant, who will also help you draw up the relevant company formation documents. The company formation documents outline the name of the company, the purpose it is being set up for, and who the shareholders are.
If there is only a single owner for the e-commerce company, the company formation documents may be known as the Memorandum of Association. It may also be known as the Articles of Association if there are multiple owners for the company.
E-commerce companies that have only a single owner may be set up as a Sole Establishment (this is the same as a Sole Proprietorship). In case there is more than one owner, the company could be registered as a Limited Liability Company. The minimum number of shareholders required for a Limited Liability Company is two and the maximum number is 50. In a Limited Liability Company, all the shareholders hold equal stake in the company.
If you wanted to have minority shareholders and majority shareholders, you could look at setting up your e-commerce company as a Private Joint Stock Company. If you want your e-commerce company in the United Arab Emirates to be owned by another company, this is also possible. The e-commerce company in the United Arab Emirates needs to be registered as the Branch Office of the parent company, which will own 100% of the shares in the newly formed e-commerce company.
So there are a lot of options, and a company formation document can advise you on the best company structure for your business, keeping your business model in mind. He/She will help you get the company formation documents notarized by a Notary Public so that they become legally valid in the United Arab Emirates.
The next step is to apply for company registration and an e-commerce license. If you are establishing your e-commerce company on the mainland, you need to submit a copy of the Tenancy Contract for the commercial space you have leased for your e-commerce operations. It is to be noted that an office cannot be used as a warehouse. So if you plan to stock in bulk the items you plan to sell on Amazon UAE, you will most likely need a dedicated warehouse.
The address of the commercial space you have leased becomes the registered office address of your e-commerce company. This is where a free zone holds the advantage. In a free zone, you can move into a bigger warehouse as expand – or scale down to save on costs – without changing your address. This is because your address is a PO Box at the free zone
If you are opening an e-commerce company in a free zone in the United Arab Emirates, you also need to provide a copy of the Lease Agreement with the Free Zone Authority that manages the free zone. Free zones offer a lot of flexibility. They provide warehouses of all sizes, and you can choose something suited for your e-commerce operations with the option of moving into a larger warehouse or a smaller warehouse at any time.
You can change the registered office address only once during a year, when you apply for renewal of your e-commerce license. So it is harder for an e-commerce company on the mainland to move out of its original address.
List of Documents Required for E-commerce Company Registration in UAE
- A copy of your passport
- A copy of your visa, if already in the United Arab Emirates
- A copy of your Emirates ID, if a resident of the United Arab Emirates
- Proof of residency in your country of residence, if not a resident of the UAE
- Articles of Incorporation / Company Formation Documents
- A copy of the Tenancy Contract or Lease Agreement for the commercial space leased
Please note that this is only an indicative list and not exhaustive in nature. For example, if you are planning to register your e-commerce company as a Branch Office, then you may also be required to provide the company formation documents of the parent company, duly translated if in a foreign language.
Once company registration and an e-commerce license are granted, you can proceed to open a corporate bank account for making and receiving payments with ease. Owing to strict anti-money laundering regulations, it is not easy to open a bank account in the United Arab Emirates, but we make it possible.
You can then register as a seller on Amazon UAE, uploading the necessary documentation while registering your seller account. You can also choose how you would like your products to be shipped to your customers. You can choose to ship it yourself, using the logistics provider of your choice. Some third-party logistics providers in the United Arab Emirates also pick up the package(s) from your location, making it a very smooth affair.
Or you could use Amazon Logistics for the same, where the minimum delivery charge is AED 13 for each package. You are allowed to collect up to AED 10 from a customer for every shipment.
There is another option of Fulfillment by Amazon, where you entrust your inventory to Amazon. Amazon stores your inventory at a Fulfillment Centre, from where they are able to ship to customers who may have ordered same-day delivery or next-day delivery. Amazon charges you AED 5 for each order fulfilled through a Fulfillment Centre, with storage costs being calculated on cubic foot basis every month. Long-term storage fees may be levied for inventory kept at a Fulfillment Centre for more than a year.
Amazon UAE generally charges you between 4% and 15% of the product value for every item sold. All these charges are separate from the 5% Value Added Tax in the United Arab Emirates. If the value of your imports exceeds AED 187,500 or your business turnover reaches AED 375,000 you are required to register for VAT in the United Arab Emirates and provide Amazon UAE with your VAT registration.
Why Choose A&A Associate LLC for Opening an E-Commerce Company in UAE?
At A&A Associate, we have years of experience helping open e-commerce companies on the mainland and in free zones. We can tell you which free zone would be best for your e-commerce business, based on your business model. We are transparent about the total costs involved. So if you wanted to know how much business setup in Dubai would cost, we would be more than happy to let you know. We take care of all the paperwork involved, so that you don’t have to.
We have been of professional assistance to clients from 100 countries around the world, and have an excellent client satisfaction rate so far. For more details on how you can get started, please call +971 56 408 6728 or use the contact form below.