E-commerce license – which one is right for you?
Setting up an ecommerce business seems to be the thing these days. But navigating the dos and don’ts can be a bit daunting. We have put together some things for you to consider before you get your e-commerce and what steps you need to take.
E-commerce opens up a wider audience for your business. That’s a cliché but with businesses struggling to stay afloat, this is a lifeline for some. And not just for the B2C space but in the B2B space as well. Whatever your product or service, make sure you have the right license for you.
Here are the questions you need to ask yourself before you embrace e-commerce:
Products and services: Depending on what kind of products or services you offer, this might be as easy as just checking for e-commerce licenses and the options and just applying. However, if your products or services fall into categories that need additional approvals, you might not be eligible and would need to check on more approvals and licenses. So do your research.
Platforms: This might sound perplexing but if you are doing social selling (selling on social media), your options might be different from having a full-fledged storefront online like a traditional e-commerce site. The E-trader licence in Dubai was introduced by the Department of Economic Development (DED) and is aimed at home entrepreneurs doing business over social media. The E-Trader licence will make it easier for individuals or single-owner businesses to sell their services and products on social media. Check to see what you really need and how deep you want to get into the e-commerce business or is it just an add-on to your regular business and your current website and license will do.
Register your business: Look at the options of whether you want to do business as a company or as an individual. In Dubai, for example, for certain criteria, all you need to do social selling is your EID and your home location. But there are restrictions. There are legal implications for certain types of businesses. If you’re in a partnership with others, make sure that you have all the relevant legal papers in place.
Pick a trade name: The trade name can be used as your domain name so that people can easily find your company online. Make sure that your domain name does not resemble that of any other existing company as it may lead to legal complication.
Jurisdictions: Choosing between a Free Zone and the Mainland authority will entirely depend on the nature of your online business. This also applies to the different Emirates. Before you pick the one that is right for you, focus on where and to whom you want to sell to. Where are they based and what are the rules of business of setting up in one and doing business in another. A mainland license in Dubai, for example, gives you the freedom to trade or sell your products and services directly to the local market while a free zone license will require you to work with a local distributor. In this case, consider the factors from which your business can benefit more in terms of market reach and scalability.
Documents you need: Your set-up agency or jurisdiction will probably help you but mainly will require Passport/visa copies of the shareholders; Copy of sponsors passport/ emirates ID (in case of dependants), Local service agreement/ Civil works agreement, NOC from the relevant authority and a Memorandum of Agreement.
Office locations: Whatever your license, you need a physical office space for everything including getting the license and opening a bank account. Mainland licences will require a physical presence with minimum office space requirements which vary upon activities. With most free zones, you can use a flexi-desk or virtual office arrangement in the early stages, at least if the physical space is not required and you have a limited number of staff visa requirements. You may also need to consider how the delivery and stock of your products will be managed. Will you require a warehouse to store products? Both Mainland and certain Free Zone Authorities can offer such facilities for logistic management.
All of this becomes easier if you go with and start off by finding agencies that help you navigate this maze of rules and regulations, not to mention the associated costs. Do a search and find the right partner to help you navigate through this.