E-Commerce and Cross-Border E-Commerce in The United Arab Emirates - WORLDEF (2022)

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E-Commerce and Cross-Border E-Commerce in The United Arab Emirates - WORLDEF (3)

The United Arab Emirates has various options for e-commerce and cross-border e-commerce in an expanding market. The country is a shopping heaven and there are tens of stores or retail stores of more than 1.200 brands. Dubai which is one of the largest and best shopping malls in the world is one of the 5 emirates of The United Arab Emirates. There are different shopping malls, plazas and sales points of world-famous brands in Dubai.

Cross-Border E-Commerce in The United Arab Emirates

In recent years, The United Arab Emirates has various options for e-commerce and cross-border e-commerce in an expanding market. It is estimated that e-commerce sales in the UAE will be a total of 20 billion dollars in 2020. An annual increase of 23 per cent in e-commerce is estimated between 2018 and 2022. Electronics and fashion are the most popular product categories in e-commerce in the UAE. The most popular marketplaces in these categories can be listed as Amazon.ae, Noon.com and Namshi.com.

Online Marketplaces in the The United Arab Emirates

E-Commerce and Cross-Border E-Commerce in The United Arab Emirates - WORLDEF (4)

Amazon.ae or previously known as Souq.com, is an online marketplace that offers health and beauty products, toys, furniture, electronics and much more. It has become a leading online shopping retailer by offering deals in various products. E-commerce sales and discount are common in this marketplace. Deals are generally updated daily. There are high-level customer services. It offers secure and satisfactory systems for shopping. Amazon is known for offering branded products cheaper than most retailers.

  • Noon
E-Commerce and Cross-Border E-Commerce in The United Arab Emirates - WORLDEF (5)

Noon is an important marketplace in The United Arab Emirates for e-commerce and cross-border e-commerce. This is a local e-commerce platform that forms the majority of online sales. Noon was established in 2017 and showed and aggressive growth to ensure a reliable, predictable and efficient marketing experience. Various products such as fashion, electronics, beauty, home and kitchen are among the best sellers on the website.

  • Namshi
E-Commerce and Cross-Border E-Commerce in The United Arab Emirates - WORLDEF (6)

Namshi broke like a storm in Gulf countries and the Middle East and especially in Dubai. This online store has everything from sports clothing to formal clothing. The customer audience is customers in their 20s. It gathers some famous brands like Topshop and Forever21. Namshi offers fashionable and affordable products. Therefore, this marketplace is popular among young adults. Additionally, it is commonly preferred due to free delivery and free return options.

E-Commerce in The United Arab Emirates

The United Arab Emirates has the most common e-commerce in the region. The country has 7 emirates and 45% of the users shop online. In 2019, 99% of the population of The United Arab Emirates was active on social media. 92% of these people were mobile social media users. Consumer behaviours in The United Arab Emirates e-commerce market are influenced from the social media platforms. In March 2018-February 2019 period, daily e-commerce spending trend to general retail goods trend in The United Arab Emirates was 9%. It is estimated that e-commerce sales in The United Arab Emirates will increase by 23% between 2018 and 2022.

E-Commerce and Cross-Border E-Commerce in The United Arab Emirates - WORLDEF (7)

It is estimated that e-commerce revenue in The United Arab Emirates in 2020 will reach 5,746 million USD. It is estimated that the revenue will increase 16.3% per year (CAGR 2020-2024). This means, the market volume will be 10,504 million USD by 2024. Fashion is highlights as the largest segment of the market. It is estimated that fashion category will reach 1.682 million USD market volume in 2020. Unpredicted increase is expressed due to pandemic. It is estimated that e-commerce user penetration will be 67.8% by 2020 and 68% by 2024. The revenue per user is estimated as 856.79 USD. (Source: Statista)

Payment Methods in the The United Arab Emirates

Cash is the most popular payment method used in cross-border e-commerce and e-commerce in the The United Arab Emirates. Other than that, payment with Visa and MasterCard, digital wallets, PayPal, Google Pay and Apple Pay are popular.

Within this framework:

  • It is possible to cash on delivery, American Express, MasterCard and Visa on Amazon.
  • Credit card or debit card, cash on delivery and Apply Pay for some countries are accepted on Noon.
  • Credit card, PayPal or Apple Pay are accepted payment methods on Namshi.

Customs Operations in The United Arab Emirates

In The United Arab Emirates, traditional economic indicators are good other than e-commerce and cross-border e-commerce. Import in UAE generally has 5% customs tax. The customs tax is calculated and collected on product CIF value. Certain food products, fresh fruits and vegetables and livestock are exempt of import tax. However, there is 50% tax on alcoholic beverages and 100% customs tax on tobacco. Gulf Arab Countries Cooperation Council countries, does not impose tax on Great Arab Free Trade Area countries, Iceland, Liechtenstein, Norway, Singapore and Switzerland for import.

Logistic in The United Arab Emirates

When selling a product to The United Arab Emirates with cross-border e-commerce, there are multiple logistic scenarios. It is possible to directly ship from Turkey to The United Arab Emirates. Goods shipped with delivery firms such as PTT, DHL and UPS with Electronic Trade Customs Declaration authorisation can be shipped from Turkey without any problem. Cross-border e-commerce customs procedures in The United Arab Emirates are not as hard as Turkey. There is a low chance to experience problem.

Fulfillment in The United Arab Emirates

There are fulfillment torwarehouse/handling services for firms that want to do cross-border e-commerce and e-commerce with The United Arab Emirates. These services enable firms to save on time, money and labour over the long run.

  • Amazon, Noon and Namshi marketplaces have their own fulfillment services. Companies can ship the products to the warehouses of these firms and these firms store, pack and deliver the goods in 1 day. Amazon Fulfillment services are globally known. Amazon deals with all sales-related procedures. The only thing that the companies must do is to send their goods to Amazon warehouses! Amazon delivers the products to customers in 1 day.
  • Noon Fulfillment service enables same day delivery for all orders placed in the morning for Dubai. The orders from the other parts of the emirates are delivered in 24 hours after ordering. When orders are received with “Back to Back” sales model depending on the company’s selection, the products are delivered from warehouses to customers.
  • Namshi Fulfillment delivers the products from warehouses in certain locations to customers. They are closely interested in customer satisfaction. The greatest advantage to use this service is to minimise the late delivery from Turkey due to transportation and customs. Namshi Fulfillment service eliminates this problem.

Establishing an E-Commerce Company in UAE

E-Commerce and Cross-Border E-Commerce in The United Arab Emirates - WORLDEF (8)

E-commerce activity volume in UAE is upwards. You need to operate as a licensed company for e-commerce in The United Arab Emirates and other commercial activities. Government institutions, Dubai International Finance Centre (DIFC) offer a business-friendly environment for e-commerce companies. Dubai Financial Service Authority that provides licenses for financial services in DIFC ensures full-support service (e-payment service) for e-commerce businesses. Additionally, a framework is provided for activity development. E-commerce operations in UAE (data protection, certain electronic operations and e-commerce laws) has a wide legal framework. How can you establish an e-commerce company in UAE?

The main things to consider for e-commerce and cross-border e-commerce in The United Arab Emirates are as follows:

Choose the format of the legal entity:The basic thing to consider when structuring a business in UAE is to have all necessary licences for a commercial business type to operate in the desired commercial activities. Additionally, foreign property limitations must be considered. The Emirates citizens must have the 51% of the capital. Foreign property limitations are valid for companies with limited liability registration and licenced by the Electronic Development Department.

Choose the right commercial activity:E-commerce is a general term including all aspects of online commercial activities and services. The Ministry of Economic Development and Free Zone officials have developed license categories that include e-commerce in addition to traditional trade activities. Any company that plans to be in e-commerce in UAE must select the most suitable activity and get the suitable license.

Do you need to establish limited liability company?This depends on the business plan and commercial activities of the company. As a general rule, licensing in UAE means legal jurisdiction outside the free zones to operate in any Emirates. A license by the Department of Economic Development is necessary. For example, a company that plans to supply goods or services to a customer living in Dubai must obtain a license from Dubai Department of Economic Development. This includes having a UAE-citizen to the corporate structure as a shareholder and a limited liability company.

Logistics and storing in e-commerce:Logistics, storage and delivery activities are critical in an e-commerce business. Customer experience is important for a competitive market and all consumer expect seamless services for online purchasing decision, payment channel integration and delivery to door. An e-commerce business has options to outsource the logistic or work with third-party logistic providers (3PL).

What are the basic legal issues?

In UAE, important legal issues such as forming any legal entity should be considered. Visa quote is necessary to employ foreign workers under the employment law. For this purpose, approval from UAE Ministry of Human Resources and Orders is necessary. All corporate entities in UAE must have a workplace (office or warehouse/industrial facility). Therefore, an office or a warehouse must be rented as a part of incorporation. If legal entities estimate to exceed taxable supply of 375,000 AED per year, the entity must be registered to Federal Tax Office. The registration is optional if the supplied goods will be above 187,500 AED and below 375,000 AED.

UAE and especially Dubai continues to be the fastest growing e-commerce country. UAE has high internet penetration. Adopting and supporting e-payment platforms make the task easy for the customers. Thus, the trust in e-commerce and e-payment platforms are increasing. Logistic infrastructure is designed with high-standard. Brick and mortar retailers adopt their own e-commerce and e-payment platforms. UAE government supports start-ups and entrepreneurship with incubation centres (FinTech Hive, Dubai Future Foundation). Therefore, e-commerce and cross-border e-commerce in The United Arab Emirates spread to emirates countries. It is time to do e-commerce and cross-border e-commerce in UAE!

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FAQs

What is the meaning of cross-border e-commerce? ›

What is “Cross-Border eCommerce”? Cross-border eCommerce is international eCommerce. It is literally “selling across a border using eCommerce,” as opposed to domestic eCommerce transactions. Business to business (B2B) eCommerce transactions are made between businesses, where a supplier sells in bulk.

What is the most important thing in cross-border e-commerce? ›

A critical success factor for your cross-border Ecommerce plan will be ensuring you have a watertight international Ecommerce logistics strategy in place.
...
Cross-border Ecommerce logistics
  1. Be transparent with customers: ...
  2. Follow the rules: ...
  3. Speak the customer's language:

How does cross-border eCommerce affect one country's consumers? ›

Cross-border e-commerce not only shortens the distance between products from manufacturers to foreign consumers, but also has an impact on the value chain of foreign trade, trade market and its market subject, production mode and cost, which as a result changed the traditional modes of foreign trades.

What are the challenges of cross-border eCommerce? ›

The world is your new customer base
  • The language, currency and cultural divide. ...
  • Marketing to a market you don't fully understand. ...
  • Logistics, logistics, logistics. ...
  • Pricing complexity: guaranteed landed cost. ...
  • Paperwork complexity: compliance, regulations and taxes. ...
  • Fraud without borders. ...
  • The cost of doing cross-border business.

Why is cross border e-commerce important? ›

Cross-border eCommerce benefits both sellers and brands in that there is access to new markets. No matter how healthy your sales volume is at the moment, cross-border selling can skyrocket it higher by opening your online storefront to more untapped markets.

Why cross border e-commerce is the future of e-commerce? ›

Today, cross-border eCommerce allows brands and retailers to reach markets with potentially challenging local operational conditions. By expanding internationally through eCommerce, retailers can increase the reach of their brand, making more customer connections and ultimately increasing revenue.

What are the benefits of cross border trade? ›

Why You Should Consider Cross-Border Trade
  • Reach new markets. Selling internationally can expand your customer base and increase your brand awareness into new markets. ...
  • Increase in revenue. ...
  • Specialised product interest. ...
  • Cut out the middleman.

What is the main purpose of cross border training? ›

Cross-border tertiary (higher) education

This presents many new opportunities such as improved access to higher education, strategic alliances between countries and regions, as well as the expansion of human resource and institutional capacity.

What is the most important part of cross border transaction? ›

Bank transfers

The correspondent bank is an essential component of the global payment system for cross border transactions.

What is cross border trade example? ›

The act of selling a product from one country to the buyer of another via B2C is cross-border trade. In simple words, buyers who want deals and offers that are available across the border, buy products from sellers of that country, and this is cross-border trade.

Which country is best for ecommerce? ›

10 Best Countries for Opening an E-Commerce Business
  • Singapore.
  • South Korea.
  • Hong Kong.
  • United States.
  • Canada.
  • United Kingdom.
  • Switzerland.
  • Germany.
6 Jan 2022

What is the impact of e-commerce on international trade? ›

Internet will promote international trade much as lifting other trade barriers would. Thus, the volume of international trade will increase via e-commerce. The countries open to imports from high-income economies will benefit from knowledge spillovers. E-commerce can also have a significant impact on trade in services.

What are the challenges with cross border payments? ›

  • High costs. Cross-border payments are notoriously expensive due to the number of intermediaries involved in transferring money from one country to another, all of which charge fees for their services. ...
  • Slow transactions. ...
  • Security issues. ...
  • A lack of transparency.

What are the factors affecting cross border merger and acquisition? ›

Some of the factors that need to be considered when initiating and implementing cross border mergers and acquisitions. These include 1) proper management, 2) cultural integration, 3) business policies, 4) taxation, and 5) general business conditions in the country.

What are the challenges facing e commerce today and their solutions? ›

  • Cyber & Data Security. When it comes to eCommerce, one of the biggest challenges faced is security breaches. ...
  • Online Identity Verification. ...
  • Attracting the Perfect Customer. ...
  • Customer Loyalty. ...
  • Converting Shoppers into Paying Customers. ...
  • Competition & Competitor Analysis. ...
  • Price & Shipping. ...
  • Product Return & Refund Policies.
19 Jul 2022

How do I start cross-border e commerce? ›

Steps to Succeeding in Cross-Border Ecommerce
  1. Identify and sort potential markets for your products. ...
  2. Check for product restrictions in the foreign markets you're interested in. ...
  3. Determine a pricing and tax strategy that fits the market you want to reach. ...
  4. Consider partnering with a third-party logistics service.
14 Jun 2022

What is a cross-border strategy? ›

Cross-border e-commerce strategy is the market strategy laid by a business to conduct online selling of their products to international customers efficiently.

What does a cross-border mean? ›

/ˌkrɒsˈbɔː.dər/ us. /ˌkrɑːsˈbɔːr.dɚ/ between different countries, or involving people from different countries: cross-border trade. International relations: international politics & government.

Which country is No 1 in E-commerce? ›

1. China. China is the world's biggest e-commerce market, led by e-commerce subsidiaries of the Alibaba group – Taobao, Alibaba.com and Tmall. With an annual growth rate of 21%, China is also one of the fastest-growing e-commerce markets.

What are 5 advantages of e-commerce? ›

Understanding the advantages of ecommerce
  • Faster buying process.
  • Store and product listing creation.
  • Cost reduction.
  • Affordable advertising and marketing.
  • Flexibility for customers.
  • No reach limitations.
  • Product and price comparison.
  • Faster response to buyer/market demands.

What is the future of cross border payments? ›

CBDCs have the potential to revolutionise cross-border payments, as they would allow businesses to make international payments using a digital currency that is backed by a central bank. This would simplify the process, improve the speed and eliminate the need for intermediaries.

What are the 4 pillars of cross border selling? ›

Selling Cross Border, Simplified!
  • Market & Channel. Identification. ...
  • Logistics & Fulfillment. ...
  • Marketing Activation.

What is cross border transactions and how it happens? ›

Cross-border payments are transactions where the payee and the transaction recipient are based in separate countries. The transactions can be between individuals, companies or banking institutions who are looking to transfer funds across territories.

What is cross border trade in globalization? ›

Cross-border trade in goods and services is defined by the OCDE as the transactions in goods and services between residents and non-residents. It is measured in USD, as a percentage of GDP for net trade (the value of exports minus the value of imports), and also in annual growth for imports and exports.

What are the benefits of border control? ›

Protecting our borders from the illegal movement of weapons, drugs, contraband, and people, while promoting lawful entry and exit, is essential to homeland security, economic prosperity, and national sovereignty.

Why the border management is important for any country? ›

Fugitives cross borders to escape justice. Effective border security is an essential part of combating transnational crime. Criminals and terrorists often travel using falsified identity documents. We give our member countries access to range of databases against which they can check people, passports and vehicles.

How do you manage cross border team? ›

Consider these six strategies:
  1. Be Flexible. ...
  2. Understand The People Who Join Your Team Or Work With You. ...
  3. Treat Everyone As An Individual. ...
  4. Make Sure The Team Has A Clear Charter And Concrete Objectives. ...
  5. Appreciate That The Common Language Isn't So Common. ...
  6. Pick The Best Cross-Border Teammates.
30 Jun 2014

How are cross border transactions made easier? ›

Cross-border payment automation gives you a single platform to make both domestic and international money transfers. This streamlines the AP workflow and provides better AP transparency. You'll also be able to view payments in real time, including those that have been reconciled and those that are still due.

How do you increase cross border trade? ›

  1. Increase your presence. Make your products available in as many territories as possible. ...
  2. List your products on a trusted online marketplace. Sell through a high-profile online marketplace to reach more customers. ...
  3. Leverage logistics expertise. ...
  4. Crunch those numbers. ...
  5. Target success. ...
  6. Final takeaway.

What are cross border products? ›

As a retailer, Cross-Border e-Commerce is defined as selling goods from a website of a national store in another country to another party. Cross-border e-Commerce can be between a retailer or brand and a consumer (B2C), or between two businesses (B2B), or between two private persons (C2C).

Who uses e-commerce the most? ›

China continues to lead the global ecommerce market, accounting for 52.1% of all retail ecommerce sales worldwide, with total online sales just over the $2 trillion mark in 2021. It also has the world's most digital buyers, 824.5 million, representing 38.5% of the global total.

Where is E-Commerce used? ›

Independent freelancers, small businesses, and large corporations have all benefited from ecommerce, which enables them to sell their goods and services at a scale that was not possible with traditional offline retail.

Why is e-commerce popular? ›

E-commerce is quick and hassle free and its convenience makes it a much better and bigger option in 2022 than physical stores. Customers can read reviews online and compare offers and sales at the click of a few buttons without having to walk from shop to shop.

How can e-commerce improve the economy of a country? ›

Done right, e-commerce can facilitate trade across borders to drive economic growth, create employment and livelihood opportunities for women and people with disabilities among other underrepresented groups, and ensure continuity of services even amid unexpected disruptions like the pandemic.

What is the importance e-commerce in Globalization? ›

The fast-developing e-commerce ecosystem, which includes marketplaces, payment gateways and online logistics, is helping to reduce barriers to trade across borders. Export participation rates for traditional small businesses (those that typically do not sell online) range between 2-28% in most countries.

What are the benefits and impacts of e-commerce? ›

E-commerce also saves time, as well as the process of selection and payment in online shopping, is quite short. There is no requirement to go to offline stores, so here you can save travel time too. Lower Prices: In offline stores, many middlemen were involved due to these consumers have to pay more.

Who pays the cross-border fee? ›

In short, it's an assessment charged to a merchant when a customer pays with a credit card issued by an international bank. Put more simply, it's a fee instituted when a merchant in one country (e.g., the United States) accepts payment from a customer whose card originates from another country (e.g., China).

Why do cross-border transactions take so long? ›

Sources of friction in cross-border payments

Firstly, not all account balances can be updated outside the operating hours of local settlement systems. Delays can also arise if compliance checks need to be carried out, especially when a payment passes through different countries and jurisdictions.

How do cross-border payments work? ›

In every cross-border payment, banks and a group of varying domestic entities work together to transfer funds. When a purchase is made, a “correspondent bank,” or the entity requesting the money, speaks with the “respondent bank,” which represents the entity buying something.

What is cross border risk? ›

Cross-border risk is the risk that a firm will be unable to obtain payment from its customers on its contractual obligations because of measures taken by the government regarding the convertibility and transferability of funds denominated in a foreign currency.

What are the three stages of a cross border acquisition? ›

The three stages in question are pre-combination, combination (involving the integration of companies) and solidification and advancement (which forms the new entity). Pre-combinationrefers to processes that take place before the M&A is completely legal.

What do you mean by cross border merger? ›

Cross border Mergers and Acquisitions or M&A are deals between foreign companies and domestic firms in the target country. The trend of increasing cross border M&A has accelerated with the globalization of the world economy.

How online businesses can overcome the issues of their delivery system? ›

Enlist a Fulfillment Service

Enlisting the services of a fulfillment company is the most viable way of avoiding delivery delays. A fulfillment service is a third-party company that handles warehousing, packaging and delivery of orders on behalf of your e-commerce business.

What are the biggest challenges for eCommerce businesses in 2022? ›

11 Challenges for ecommerce in 2022
  • New consumption habits.
  • Omnichannel shopping.
  • Personalized experience.
  • Reliable and fast shipping.
  • Attractive product content.
  • Automation.
  • Ecommerce hubs.
  • International logistics.

What are the 3 types of e-commerce? ›

There are three main types of e-commerce: business-to-business (websites such as Shopify), business-to-consumer (websites such as Amazon), and consumer-to-consumer (websites such as eBay).

What is meant by cross border? ›

/ˌkrɑːsˈbɔːr.dɚ/ between different countries, or involving people from different countries: cross-border trade. International relations: international politics & government.

How do you cross border e-commerce? ›

Steps to Succeeding in Cross-Border Ecommerce
  1. Identify and sort potential markets for your products. ...
  2. Check for product restrictions in the foreign markets you're interested in. ...
  3. Determine a pricing and tax strategy that fits the market you want to reach. ...
  4. Consider partnering with a third-party logistics service.
14 Jun 2022

What is the meaning of cross border listing? ›

What is Cross Border Listing? Cross border listing involves companies that trade on the stock exchange of their home country and also on a stock exchange in another country. A Cross Border Listing gives rise to the possibility of arbitrage opportunities, as identical assets are trading in two different markets.

What is an example of a cross border crime? ›

Examples of cross border crimes include: human trafficking, smuggling/trafficking of goods (such as arms trafficking and drug trafficking and illegal animal and plant products and other goods prohibited on environmental grounds (e.g. banned ozone depleting substances), sex slavery, terrorism offences, torture and ...

Why border is so important? ›

Borders are political boundaries. They separate countries, states, provinces, counties, cities, and towns. A border outlines the area that a particular governing body controls. The government of a region can only create and enforce laws within its borders.

Why are cross border transactions important? ›

One of the greatest benefits of a cross-border transaction is the added degree of diversification that it can bring to the buyer in terms of customer base, product/service offerings, management team and other key parameters.

What are the 4 types of e-commerce? ›

The Most Common Types of Ecommerce Business Models
  • B2C (Business-to-consumer). B2C businesses sell directly to their end-users. ...
  • B2B (Business-to-business). ...
  • B2B2C (Business-to-business-to-consumer). ...
  • B2G (Business-to-government). ...
  • C2B (Consumer-to-business). ...
  • D2C (Direct-to-consumer). ...
  • C2C (Consumer-to-consumer).

How can cross border trade be improved? ›

  1. Increase your presence. Make your products available in as many territories as possible. ...
  2. List your products on a trusted online marketplace. Sell through a high-profile online marketplace to reach more customers. ...
  3. Leverage logistics expertise. ...
  4. Crunch those numbers. ...
  5. Target success. ...
  6. Final takeaway.

How are cross border transactions done? ›

Cross border payments are transactions between a payer and a payee, who are located in separate countries. They can be combinations of payments between individuals and banks or companies.

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