How to start an online clothing and apparel business in the UAE
The global apparel industry is on track to experience tremendous growth in the coming years. In 2020, the industry was valued at $1.5 trillion. By the year 2025, it’s expected to exceed $2.25 trillion. Hence, the way people purchase clothing is changing. With internet access more prevalent than ever and increased usage of smartphones, brands are flocking to the online marketplace to expand their global footprint. Five years ago, online sales only accounted for 14 percent of all fashion purchases. Today, a quarter of all clothing purchases are made online.
With fewer physical boundaries, clothing and apparel companies can be more flexible with where their business is operated. Many are choosing business-friendly countries like the United Arab Emirates (UAE) to establish their clothing businesses. If you are looking to start an online clothing business in the UAE, it’s critical to understand the rules and regulations that apply to these types of businesses.
Why the UAE is a Great Place to Start a Clothing Business
There are many benefits that come from starting a clothing business in the UAE. First, Dubai is the fashion capital of the Middle East, especially when it comes to high-end fashion and specialty designers.
The UAE also has a unique location at the crossroads of the European and Asian fashion markets, making it a great place to import and export clothing, shoes, and other accessories. The UAE exports approximately $4.5 billion worth of textiles and apparel, mostly to other Middle Eastern countries like Saudi Arabia, Iran, Kuwait, Oman, and Bahrain. The UAE imports approximately $7 billion from European and Asian countries including China, India, Bangladesh, Turkey, and Italy.
The UAE is also a great place to have products manufactured. The country has a large textile industry with many companies that produce a wide range of textile products including curtains, luggage, and clothing. In terms of size, the clothing industry generates more income and employment than any other Emirati industry, except for oil.
Setting Up Your E-Commerce Clothing Business
The following are some of the key considerations for setting up your business correctly and ensuring you are compliant with all local rules and regulations.
- Step 1: Select a Location
In the UAE, there are two types of locations where your business can be operated — Mainland or Free Zone. The country recently eased rules that required mainland-operated businesses to be owned by UAE nationals, such as a minimum 51% ownership. Now, companies can be 100% foreign-owned in both Mainland and Free Zones.
The mainland is overseen by the Department of Economic Development (DED), while free zones are operated independently by their own regulatory groups. Each has its own rules and benefits, so you should examine each carefully to decide which is best for your clothing business.
One important advantage of operating on the mainland is that you can sell your clothing and other products directly to local markets. This is different to free zone operators who must go through an independent distributor to reach the local market.
- Step 2: Register Your Company Name
Once you have chosen a location, you need to register your company name. This process is relatively straightforward and can be granted by the DED or free zone, depending on the jurisdiction in which your company is incorporated. The important thing to note is that business names are strictly regulated in the UAE. You must be very careful not to use any words or references that could be considered offensive including profanity, sexual obscenities, or references to Allah.
It is not uncommon to be asked for several proposed names on your application as this can expedite the process if one is rejected or already in use by another entity.
- Step 3: Apply for an E-Commerce Trade License
Even if you are operating 100% online, you still need to obtain an e-commerce license from the DED or your chosen free zone. Some areas may have several to select from, so be sure to choose one that meets the needs of your business.
- Step 4: Secure an Office Location
The government of Dubai requires businesses, even e-commerce businesses, to be registered to a physical location. In terms of office space, free zones have the advantage over the mainland because of the availability of shared office spaces or flexi-desks. These options are significantly cheaper than leasing a permanent office space.
Note: The DED does have a special eTrader licence that provides exemption from the requirement of obtaining a permanent office space. There are two versions of this licence — Commercial and Professional Services. The commercial version is required for manufacturing products like clothing. However, this is only available for UAE nationals.
- (Optional) Step 5: Register with Ports and Customs
If you plan to import or export any of your clothing products, you will also need to register with the Customs Office of Dubai. Free zones do not fall under the jurisdiction of the Customs Office, so you will only need to register if you plan to import or export from the mainland. Businesses that operate in a free zone can import and export goods to international markets or other free zones without this licence.
How can PRO Partner Group help?
Operating an online clothing business in the UAE is a potentially lucrative business. However, the process of establishing the company can be overwhelming. We can help you decide which is the best licence for your business, process all work visas and other necessary documentation, and help you through all other aspects of your company setup.
If you need guidance on setting up an online clothing business in the UAE or any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or Saudi Arabia then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.