A completely new paradigm for the business world has turned out to be transforming the e-commerce sector. As today, people-customers and sellers and distributors-are inclined towards digital platforms to capture the attention of a wider audience, the way of doing business has changed completely.
Everyone jumps on this bandwagon to gain more clients, from small companies to international multinational corporations.
This change in the way of doing business has not only altered the company's buying patterns but has also created new ways for other, less obvious business sectors to make a profit.
The warehouse industry, which is presently an integral and inseparable part of the e-commerce sector, is an example of such an obscure industry.
Warehouse demand is rising in proportion to the growing demand and growth of the e-commerce business.
As e-commerce and online shopping popularity continues to increase, the demand for warehouses is exponentially growing in the UAE. Despite the rise in order, the country's supply of storage space remains low.
The relevance of a stable, useful and timely logistics system has been recognised by many e-commerce giants, which is an absolute prerequisite for their success. Amazon and Noon, for example, have developed their warehouses and distribution networks in the UAE.
Growth of E-commerce is boosting warehouse business in UAE. There has recently been a significant increase in demand for warehouses, and there are opportunities in the sector, particularly for investors whose customers are eager to sign longer leases. As online shopping and same-day delivery continue to be popular, the demand for high-quality space continues to grow, especially in Dubai South. The implementation of 100% foreign business ownership, dual licencing and long-term investor visa laws would also improve the commercial property market.
Growth of E-commerce Over the Years
Cards are continuing to gain popularity over cash, according to the information collected and published by Visa. When it comes to digital transactions, card transactions were recorded at 70% in UAE for 2018, compared to 68% in 2017. Cash on delivery fell to 15 per cent in 2018 from 22 per cent in 2017 over the same period. As we know that Expo 2020 is approaching, we can foresee a positive and sustained increase in the number of payments, and it is predicted that card payments will continue to be trendy in 2019 and 2020. The rise of e-commerce markets, such as Amazon and Noon, has led to increased faith in online shopping by shoppers.
What is Boosting E-commerce Growth?
Consumers worldwide are delighted that they can connect to all major brands to shop online. Some of the critical reasons for e-commerce growth include:
We notice that online sellers make the most of it because people connect to their phones and tablets. Advanced websites and mobile apps are developed to make shopping an exciting experience so that even a person on the move can log into the portal and purchase stuff at some time.
Due to the busy working time or involvement in business, visiting physical stores may sometimes not be possible. However, with online promotions for offering a broad range of social media products, individuals feel more convenient to buy their stuff online.
Greater Range of Offerings
We see that online shopping provides plenty of discounts, so customers searching for more varieties will select those sites that give them the best deals.
For purchasing online, you don’t need to be online at a specific time. As long as the phone/ tablets/laptops are available on the internet, they must not care about ordering products.
Correlation Between Warehouse and E-commerce
Demand for warehouses in the UAE is expected to increase, reinforced by the increasing popularity of online shopping and e-commerce.
The business e-commerce division provides its customers with a unique and unparalleled experience that has resulted in many entrepreneurs, international and local investment in this market. Thus, the UAE government recently introduced a dedicated e-commerce free zone to boost the e-commerce industry.
On-time delivery, quick processing, and quality goods are advantages of online shopping that offer consumers versatility in their every day orders unthinkable even a decade ago.
The e-commerce industry is lifting the warehouse industry with it, as previously said, and it has contributed a great deal to moulding this industry. Warehouses need to store their raw materials, finished goods, and everything in between for the e-commerce sector. The warehouses are efficiently operated so that company operations can perform smoothly.
Over the years, several types of new warehouses have been created. Each of the newly created warehouse focus on a different business aspect, namely:
- Centralised return centres
- Customer Facing
- Flow Warehouses
- High Ceiling Facilities
- On-demand Warehouses
The Lootah Real Estate Development in Dubai has launched the UAE’s first lease-to-own industrial warehouses with a projection of an increase in the e-commerce business in the future. Businesses can quickly lease an industrial warehouse via this, hence developing e-commerce companies in the UAE.
It is excellent news for foreign investors and the UAE as a whole since the country is expected to attract more companies by the end of 2020, as World Expo 2020 is on its way, armed with a wealth of business and investment opportunities.
Moreover, in the MENA region and among the GCC nations, the UAE is the largest arena for e-commerce. The e-commerce industry is estimated at $16 billion, predicted to grow by the end of 2020 to an incredible $20 billion!
The scope to come forward and invest in the warehouse industry is also a lucrative ploy for business investors and entrepreneurs. The UAE government has made it much more straightforward and easy to set up a Dubai company as they are very keen on attracting foreign investors’ interest.
Investors have a tremendous opportunity to invest in the retail sector, ranging from an extensive business set-up to a small retail business. If you are looking forward to investing in Dubai, you can opt for the warehouse segment as it holds enormous potential and can fetch you high profits. Now, before you decide, let’s take a step ahead and understand why deep-diving into the warehouse business is a profitable one in Dubai.
The Top Locations for Starting a Warehouse Business
The top locations for warehouse business in Dubai are:
- Al Quoz
- Ras Al Khor
- Dubai Investment Park (DIP)
- Al Qusais
- Jebel Ali
Benefits of Investing in the UAE
The following are some of the benefits you will achieve from setting up a warehouse company in the UAE:
1. Tax-Free Environment
Its tax-free policies are one reason why so many global investors are attracting to the UAE and investing in this area. Such policies are particularly appropriate for entrepreneurs as there are no taxes on personal income received.
The country has recently launched VAT, but it's at much lower rates than its counterparts, a mere 5% compared to 20%.
2. Multiple Industries
You will have a wide range of clients to choose from since you will be in the warehouse business.
From hospitals to cafes to daycare, e-commerce sites dealing with different businesses and retailers, you can target each segment to provide them with the requisite services.
3. Low Expense, High Business-generating Revenue
The warehouse company is one of the few low-cost, high-income companies you can establish in Dubai. It offers several ways for you to gain better revenue. It will help get your company to raise your business sales by approaching various clients in different industries.
4. Easy Growth
You can easily extend your business here in the UAE or other neighbouring UAE countries such as Oman, Bahrain and Qatar, etc. Once you have started a business in the UAE and developed your roots there.
It will make it easier for you to tap into the global market and understand the stakes involved in working with foreign clients, and you will also excel in attracting more clients for your business.
General Warehousing License in Dubai
The practice of e-commerce involves companies engaged in the wholesale of goods and products to manufacturers, industrial, commercial and technical users. This service consists of the storage of items in warehouses. General warehousing licence operation in Dubai will help you rent a warehouse on your own for e-commerce warehousing and further subordinate the facility to other retailers on a negotiated amount of rent for the available space if the space is large enough.
Cost and Time Frame for General Warehousing License
The licencing costs will be approx. AED 17000-18000 plus the business fees for 2.5 per cent of the warehouse rent. The 51 percent shareholder in the licence may be a corporation or an individual UAE national, and the ex-pat may own the remaining 49 per cent. Trade licence is given in a warehouse, and the timeframe for receiving the right is 7 to 10 working days.
We are assured that you will now have an overall understanding of the warehouse industry’s development and investment prospects. It turns out to be a smart decision to select this company as your next business venture because you can see that you have many chances to enjoy it.
Going forward alone turns out to be a daunting task as the procedure includes paperwork and legal scenarios with legal jargon that is difficult for a layperson to fathom. Therefore, hiring a guide, i.e., a business setup consultant who is well-versed with business incorporation processes, turns out to be fruitful. The whole process is carried out in a hassle-free manner.
Commitbiz Consultants is one of the top UAE business consultants who have helped many entrepreneurs and professionals to integrate their business fields. We take care of all the basics, ranging from integrating to defining essential foundations such as accounting, taxation, legal, VAT.
It has never been more uncomplicated or more comfortable to set up your own company in Dubai or the rest of the UAE. Commitbiz takes care of all the tedious info to concentrate on what counts, making your business dream a reality!
Our business experts are well-experienced and provide tailored solutions meeting the business essentials to start a business in the UAE. If you want to set up a Dubai warehouse, do contact us-we’d be glad to assist.