E-commerce is a booming industry in India and has changed the way Indians shop in the country. The face of shopping in India has changed significantly in the recent years. Gone are those days when the customer had to go to the brick and mortar shops. The E-commerce industry is more than a decade old when IndiaPlaza.com started offering, music CD’s, books, watches, groceries way back in 1999. But when Flipkart entered the scene with its deep discount model and cash-on-delivery (COD), it revolutionized the online shopping industry in India. After that, many e-commerce ventures entered the market namely Amazon, Shopclues, Snapdeal to name a few. This industry seemed so lucrative that China’s Alibaba and Japan’s Rakuten are already in the process of starting their operations in India. It is predicted that the $14.5 billion ecommerce industry will eventually become a $60-$10 billion industry by 2025. There still appears to be a positive opportunity for an entrepreneur who wants to establish an e-commerce company. Hence, the first thing that comes to mind is: “How to start an e-commerce company in India?”
The laws pertaining to the e-commerce companies in India are evolving. Initially, there was a sense of pandemonium regarding the legal sanctity of such companies. However, to be clear, such companies have to work in accordance with the Information Technology Act, 2000.
The first step that one should do is figure out a name, which is unique, short, easy to pronounce and ‘catchy’ to attract the attention of the consumers. Having said that, the domain name needs to be registered. One can visit sites like ‘domain.com’, ‘register.com’ or ‘godaddy.com’ and register a domain name that offers them at best/reasonable price.
Register the venture as a formal entity
If one intends to make the venture a big entity, it is advisable to register it either as a proprietorship, partnership, One Person Company (if there are no employees) or even as a private limited company. It might cross one’s mind, is it necessary to register their startup? Even though it is not mandatory it is advisable he founder(s) register the same if they are looking for a long term plan with an aim to grow exponentially. In that case, they should register under private limited company. Also, if the company has more than one founder, they should go sign a co-founder’s agreement and register the same with the Registrar of Firms for defining each co-founder’s role in venture. Even though the term ‘co-founder’s agreement’ is self-explanatory, in short, this form of agreement pre-defines one’s roles and responsibilities, their liability, economic interests, performance criteria, and should include non-compete and non-disclosure clauses as well.
Build the online marketplace
After registering the domain name and your company, one needs to design the website and get the platform ready. The success of the venture would depend on the interface of the website and what it has to offer. Not everyone is well versed with programming/coding, hence, the project can be outsourced to freelancers or one can even hire people to do the same or can even use standard website templates from OpenCart, Magento, Wordpress, Joomla, Drupal, etc.
Add a Payment Gateway
For online transaction with consumers, the e-commerce website must set up a payment gateway. Possible options are:
To apply for a payment gateway in India, following documents may be required
Memorandum of Association (MoA)
Articles of Association (AoA)
Certificate of Incorporation
Bank A/C details (Should be in the name of the business)
Setup an Accounting System
An accounting system is essential to keep track of various transactions that the business will make with customers, suppliers, payment gateways, logistics partner, etc. It would give an idea of how much revenue the business is making, are you making any profits, what are the expenses. This information will help you to draw inferences and guide to make critical decisions for the startup venture.
Here are following free and paid services you can use to manage your accounts:
Setup the Terms & Conditions
It is very essential that every internet based commercial startup draft a T&Cs agreement. Such conditions give an indication to the users of their portal the legal conditions that limit the usage of information, sensitive data or personal details provided on the website.
Create Service Level Agreement (SLA)
This form of agreement with vendors and partners is crucial for the success of an e-commerce entity. Such an agreement should include provisions pertaining to issues like defects in product, delivery of product, remittance, late delivery, shipping etc. Such an agreement would ensure a cordial working relationship with the e-commerce entity and the vendor(s) concerned.
Partner with a Logistics Company
Delivering products on time is crucial for winning a customer’s trust. So it is important to choose a courier partner that has a long range of network (home and abroad) and has a good track record to deliver assignments on time. Once there is consensus between both the parties (courier company and the e-commerce startup), it is important to sign an agreement that should include courier rates, delivery time/period and billing period. The billing period can be on a weekly/fortnight or even monthly basis depending on the startup’s convenience and/or mutual agreement.
Here are the leading logistics companies you can tie-up with:
To grow the company, it is important to market the e-commerce startup and increase its brand image. As earlier mentioned, online marketing in India is growing at an exponential rate and people tend to buy online than stepping out. Potential buyers look out for better options. One can market their e-commerce portal either online or offline.
Online paid platforms like Google and Facebook can be used to market themselves. Having an active online presence on social platforms like Twitter, Google+, Facebook etc. can increase traffic on your e-commerce portal.
For offline marketing, the same can be outsourced to relevant marketing agencies that have a good reputation and can provide better marketing options that suit one’s budget.
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