If you have been considering tapping into the burgeoning ecommerce sector in India, then the time is right to begin a company. The ecommerce industry will bring about the next wave of change for the Indian economy.
Amazon, Flipkart, and Snapdeal have all proven that ecommerce is the future. The only reason they became as big as they have is because they realized and experimented with the enormous potential of ecommerce.
“At that time, Binny Bansal and Sachin Bansal, co-founders of Flipkart, were not thinking about the numbers. But we knew something big could be built from ecommerce,” Binny Bansal said.
Want a stronger argument? Let’s examine the numbers.
Economic Survey of 2017-2018 reports that e-commerce in India grew by 19.1% in 2017-2018.
The Business Standard reported that Nasscom’s 2018 Strategic Review estimated the Indian e-commerce market at $33 billion in 2017-2018 and $38.5 billion in 2018-2019. This represents a growth rate of about 17 percent.
Who knows? You might end up creating the next Alibaba. These numbers should inspire you to start your own ecommerce business in India.
Ultimately, it takes a great vision to set up a successful ecommerce business, as Jack Ma puts it. I always dreamt of founding my own ecommerce company. In 1999, I spoke for two hours about my vision to 18 people in my apartment. They all contributed $60,000. “I wanted my company to be a global company, so I chose a global name.” he said.
Are you ready to start your own e-commerce company in India? Here’s a guide with step-by-step instructions on how to do so.
Step 1: Choose the right business plan and model for your business
In order to start an ecommerce business, you need to think long and hard about the perfect business model and business plan.
You can choose between two types of business models: the single-vendor ecommerce store and the multi-vendor ecommerce store.
Based on the budget you have set for yourself for your ecommerce business, you can choose to have a single product line or a number of products lines.
Marketplace with a single vendor
A single seller selling their product to multiple customers is the only entity involved in this type of ecommerce business model. The advantage of this model is that it involves only two entities. As a result, you can keep track of both entities’ transactions more easily, administrative costs are lower when you pay a single supplier, and you can have better control over inventory.
Marketplace with multiple vendors
This model requires vendors to register with your site in order to sell their products to multiple customers.
A major advantage of following such an ecommerce business model is the security it provides when it comes to making a sale – for instance, if one of your suppliers can’t sell their products for whatever reason, you’ve got other options. In addition to addressing demand fluctuations, this helps you prevent supply process disruptions as well.
Furthermore, it’s important to note that, within this too, you are given the choice either to sell your own unique product directly, or to allow others to sell their products on your site.
Depending on the type of product that you’re selling, you could earn high margins. Depending on the type of product that you’re selling, you could earn a commission each time one of your sellers makes a sale.
Step 2: Establish your brand
Having chosen the business model you wish to use for your ecommerce business and narrowed it down to the product or products you wish to sell, as well as the target audience you want to reach, you are now ready to come up with a brand name.
Now, you are probably wondering – “What’s in a name?”.”
Whether you own a business or not, personal branding is about managing your name in a world of misinformation, disinformation, and semi-permanent Google records, says Tim Ferriss. If you’re going out on a date, it’s likely your “blind” date Googled your name. If you’re going to a job interview, the same thing could happen.”
The name of your brand should be:
- Easily recognizable and short
- Branding that reflects your brand
- In other languages, the meaning is not the same
As part of this process, you’ll also need to design a logo for your business.
The next step is forming your company once you have chosen a name and a logo for your brand. In India, there are normally four types of companies:
- Limited liability company (no limitations on liability)
- A company with only one employee
- Ltd. Partnerships (LLPs)
- A private company
If you intend to run the company on your own, or want to bring in more partners, then the kind of formation you choose will depend on that. A tax identification number and tax return are required if you choose to form a corporation or partnership. In order to file business taxes for the next financial year, online businesses of this model require an Employer Identification Number (EIN) in order to open a bank account for them. A business’ EIN is a unique identifier.
You are not required to have a tax ID number, however, if you have opted for the sole proprietorship model. Instead, you can use your assigned Social Security number.
Step 3: Register your e-commerce company
Registrating and completing all the legal formalities is one of the most crucial steps in starting an ecommerce business in India.
- You can download the Director’s Identification Number (DIN) application (DIN 3 form) from the official website of the Ministry of Corporate Affairs. You can also apply DIN online by attaching and uploading the required documents.
- You will need your Permanent Account Number (PAN) and Digital Signature Certificate.
- In addition to the DIN, you can also check on the official website of the Ministry of Corporate Affairs to see whether the name you have chosen for your company is available.
- The company name can be confirmed within six months of application, and you can renew the name after a certain period by paying a fee.
- In order to integrate a Payment Gateway, you will need to apply for Goods and Service Tax (GST) certification, Shops and Establishment Licence (Necessary in the Payment Gateway Integration process), and Professional Tax (PT).
- The Provident Fund Organization must be contacted to open a Provident Fund (PF); your employees must be enrolled with the Employees’ State Insurance Corporation for medical insurance, and finally your company must apply for a Certificate of Incorporation to be registered under the Company Act, 2013.
Step 4: Open an account at the bank
The act requires you to open a bank account for your company once it is officially registered. You can open the account with any bank but it must be opened in the name of the company.
In order to open a bank account in the name of your online business if you have selected the proprietorship model, you will need to obtain GST registration.
If you are ready to accept payments, you need to list your products on your e-commerce website, and then get a payment gateway so you can accept them.
Step 5: Develop your e-commerce site
Building a website from scratch is usually more preferred than using a pre-built platform. Both have distinct advantages.
Utilizing a pre-built platform
The advantage of pre-built platforms like WordPress and Wix is that they offer you readymade templates that are specifically designed for the type of online business you wish to run.
You will need a template that is colourful, has enough room for a lot of visual content, including a page to place orders if you are doing business in fashion.
The waste of time and resources you would have spent building this website from scratch can be avoided by playing around with the ready-made template to make it more suitable for the design you have in mind, and then adding all the necessary information.
Creating a website from scratch:
Most often, however, people opt for the custom-made platform option, since you are able to visualize your website exactly as you had imagined it in your mind.
Some of the most popular ecommerce platforms include Magento, Shopify, Zepo, and KartRocket.
Now you have to remember that your website is the frontrunner for the entire online business – representing your whole brand visually. In order for your brand to be credible, no detail is too small – from colors to fonts to images – everything should tell a part of its story.
Paul Cookson explained: “A website advertises you 24/7…an employee will not do that.”
While launching your company’s official website, there are a few things to consider:
- If you are considering self-hosting, or hiring a professional to take care of it on a daily basis, you need to decide.
- Whether it is images of your products or detailed information about the services your e-commerce business offers, you need to ensure that multiple posts are posted to your website every day.
Step 6: Gateways for payments
Your ecommerce website needs to integrate payment gateways, which allow you to process credit card, debit card, net banking, and cash card transactions.
You must submit the following documents in order to be granted a payment gateway for your ecommerce business:
- The business has a bank account in its name
- Business PAN card
- Incorporation certificate
- The Association’s Memorandum of Understanding
- Association Articles
- Proof of identity
- Address verification
- Terms and conditions of use
- Privacy statement for website
The payment gateway you receive will enable online payments for your online business once you submit these documents.
PayPal, PayU, and RazorPay are some of the popular payment gateways.
Step 7: Shipping
A successful ecommerce business in India depends on this step. Logistics is the process by which orders are shipped to customers or inventory is transported to merchants. It also keeps track of the shipped goods during transit until they are delivered to the customer.
A logistics manager locates and identifies distributors to cooperate with, since most ecommerce businesses prefer to outsource their logistics to a third-party company that specializes in storage and transportation.
In your ecommerce business, figuring out logistics is crucial because it means you have the ability to track the products at every step of the delivery process in a steady-fast manner. By doing so, you will prevent products from going missing and respond to customer queries regarding the expected delivery in a timely manner.
Here is a detailed explanation of the logistics process.
- As soon as your customers complete the order on your website, your inventory software (which most ecommerce businesses rely on) will send you a notification, which signifies that you need to ship the order.
- The best way to achieve this is to partner with a third party distributor and supply company, so that the third party is automatically notified when a customer makes a purchase, and can then send the package out immediately. This is the more organised approach, but usually applicable when your online business becomes slightly bigger and you gather enough resources to tie-up with a distribution company in the first place.
- The product in question should be packaged and sent directly to the buyer if your company is smaller – for example, if you run your website from home or a separate office and store inventory there. Using this approach will save you money compared to outsourcing your delivery process to a third party.
Step 8: Marketing your website to attract customers
As Former Walmart CEO Joel Anderson once said: “You can’t just open up a website and expect people to flood in. If you really want success, you have to drive traffic.”
The search engine optimization (SEO) marketing strategy is the way of the world right now and will remain so in the future.
Ecommerce businesses need to grab the attention of potential customers in order to succeed. SEO strategies help you get found on search engines. 44 percent of online shoppers start their search with a search engine, so it’s imperative that you’re visible to them.
Choosing the right keywords
There are 700,000 Google searches done in a minute, according to reports. To make sure your business appears in the search engine results, you need a targeted keyword list . There are different types of keywords that you need to use to make your online business appear in the search engines. The keywords between 0 and 26 characters are referred to as ‘head terms’. Those between 26-40 characters, on the other hand, are usually more specific.
You can track down on keywords that will help your content show up most on search engines by using tools like Google Keyword Planner, Google AutoSuggest, Keywordtool.io, Keyword Dominator and SEMrush.
Another way to grab the customer’s attention is to use advertising. You can use ‘paid ads’ on platforms like Facebook and Instagram and pay a certain amount to promote your advertisement. You’re responsible for converting users into customers after they click on your ad.
In the early stages of an ecommerce startup, this is not the most practical thing to offer, but promotions and sales sell like hotcakes in India. You could post about these on social media.
The purpose of retargeting is to place a cookie on your website’s visitors who visited your site once but left without making a purchase. When these online users visit another website that displays advertisements from the retargeting network, your ad will appear to them once the cookie has been placed. There is an expense associated with this route, but it usually results in positive results.
By word of mouth
If you don’t have the resources to invest in expensive routes such as advertising when you’re starting out, you can rely on the oldest practice of getting your business out there – word-of-mouth.
Consider getting professional bloggers to write and review your brand so that their reviews are able to drive more traffic to your website. You could also ask your customers to recommend your brand to their friends and family.
As well as trying a few other similar routes, you’ll always be able to communicate with potential customers – who are the make-or-break deciding factors for your online business – given the constant changes in the Indian ecommerce market and the growing influence of social media.
Considering the booming ecommerce market in India, launching an ecommerce business right now is a smart move. However, you need to be prepared for the fact that it won’t be all rainbows and butterflies.
Registration and legalization of your online business can be challenging. When you do succeed in getting your business recognized, you will face a fair share of competition, from people like you that want to become the next Jeff Bezos. But, you don’t have to be Jeff Bezos to do so. The only thing you need to succeed is your own vision, a near-foolproof plan to achieve that vision, and the patience and discipline to succeed.
Currently, India’s ecommerce world offers infinite opportunities. So, take full advantage of it now.