start an eCommerce business in India

Start an eCommerce business in India 2022 | Simple 9 Steps Guide [PDF]

If you are thinking of starting an eCommerce business in India then there’s no better time than now! For the last 5 years, the eCommerce industry in India has been thriving under the next wave of change in the Indian economy. The success of Amazon, Flipkart, BigBasket, Nykaa, Myntra, and Tata 1Mg all showed us that eCommerce is the present and future.

Well, that’s right. But with a great vision, these steps to start your own successful eCommerce business just might help:

Step 1: Business plan and eCommerce model

The first step to starting any business is to have a business plan and an eCommerce business is no exception. Develop a business plan and decide which eCommerce business model you want to opt for. It doesn’t have to be a formal and long business plan. It could be just as simple as a single page detailing your products, vendors, locations, ideal customers, and financial projections.

The first step is to decide whether your products are B2B or B2C eCommerce. 

What are the main types of eCommerce?

B2C/D2C eCommerce:

Business-to-Consumer (B2C) eCommerce, also known as retail eCommerce, is a business model that involves sales between an online business and consumers. Famous examples of B2C eCommerce platforms are Amazon, Myntra, Zara, etc.

B2B eCommerce:

Business-to-Business (B2B) eCommerce can be described as an online transaction that takes place between businesses. Since orders are processed online, it helps improve buying efficiency for wholesalers, manufacturers, distributors, or B2B sellers.

A popular example is Alibaba.

Sometimes your store could serve B2C as well as B2B customers. For example Amazon and Amazon Business.

Now you know whether your products are b2b or b2c let’s dive deep into popular eCommerce vendor models.

Sometimes your store could serve B2C as well as B2B customers. For example Amazon and Amazon Business.

Now you know whether your products are b2b or b2c let’s dive deep into popular eCommerce vendor models.

Mainly there are two types of eCommerce vendor models:

  1. Single vendor eCommerce store
  2. Multi-vendor eCommerce Marketplace

If you’re not sure which one suits you. Let’s find out the difference!

1. Single-vendor store:

A single vendor eCommerce that has a single seller (ie. vendor) who sells its products or services to multiple customers directly. Thus, it involves only two parties in this buying and selling process – the seller and the buyer. 

The key advantage of this marketplace is that it is easy to maintain the quality of products and overall shopping experience. Most businesses fall into this type category.

Examples of single vendor stores are Man Matters, Teplo Tea

2. Multi-vendor marketplace:

As the name suggests, a multi-vendor marketplace is one that has multiple vendors selling their products to multiple customers, but all the vendors are required to be registered with your eCommerce site. 

Here you could be an enabler of the marketplace providing vendors and customers to register on your platform or list your products to established eCommerce marketplaces like Amazon, eBay, Alibaba, and Flipkart.

We will focus more on the first option considering you want to run your own multivendor marketplace like Amazon.

The main advantage here is that you don’t have to have your own products to sell. 

You charge sellers commission fees on each sale or when they list their products on your site.

Another important thing to note here is that as many sellers are involved maintaining the quality of the products and service becomes more challenging. So you may need to have quality standards for sellers in place before you onboard them.

Single vendor V Multi-vendor eCommerce marketplace comparison:

ListSingle VendorMulti-vendor
Design ComplexityLower. Handled by the vendorHigher. Handled by Marketplace provider
Running costLowerHigher
Implementation ChallengesLowHigh
Product ProcurementLowerHigher
LogisticsLess complex. Handled by Vendor/ Logistic Partners like FedEx, Delhivery.More complex. Handled by vendors or marketplace providers.
Quality Control over products and experienceMoreLess
eCommerce vendor models comparison

Step 2: Build your brand

Now that you’ve got a business plan and idea of whether to sell B2C or B2B using a single or multi-vendor store, the next step is to start to build your brand from scratch.

Brand building is a long process that often starts with a brand name. 

Your brand name must be:

  • Unique and easy to remember
  • Reflection on your brand

Once the name is finalized, it’s time to create your company logo and brand that will distinguish your brand from that of competitors. You could hire professional eCommerce Agencies like Sorted or freelancers on Fiverr to do the job. 

Along with the logo and other design assets, request brand guidelines from the designer as you will be needing those in the future.

Step 3: Choose a legal structure for the business

Registration of Ecommerce Business in India depends on the type of your business model and many other things. Depending on whether you wish to run your company independently or with partners, you can decide the legal structure that suits you.

In India, the most popular types of companies are:

  • Sole Proprietorship 
  • Limited Liability Company (LLP)
  • Private Limited Company (Pvt Ltd) 

Each type has its own advantages and disadvantages. Proprietorships are usually easy to form than companies and also come with fewer compliances. However, the main disadvantage of a proprietorship is that the owner has unlimited liability. And unlike a Private Limited company, you cannot issue shares to raise any investments in the company. 

Depending upon which format you opt for and the state you want to register the business, there are different documents required: 

General Documents Required for Incorporation: 

  1. Identity and Address Proof– Adhar Card, PAN Card, Driving License or Passport (of the person on who’s name company is to be registered
  2. 2 passport-size photographs
  3. A copy of the Bank Statement or a canceled cheque
  4. Rent Agreement, Electricity Bill, or No Objection Certificate (NOC) to the property where business is to be conducted
  5. Memorandum of Association (MOA) (for a private company)
  6. Articles of Association (AOA) (for a private company)

etc.

You can check with any nearby advisors for the latest process and documents needed as per the structure of your business. 

Or use online services like Startupwala to get your business registered.

The business registration process usually takes 8-10 days. 

Additional contracts required to start an eCommerce business:

Once your eCommerce business is registered legally. You may need the following contracts to get your eCommerce business going:

  • Shipping Policy
  • Return Policy
  • Vendor Agreements (in case of multi-vendor or external suppliers)
  • Service Level Agreements (if applicable)

Step 4: eCommerce licenses and compliance

Once your company is officially registered, you can open a bank account for the business. You’ll need copies of your PAN Card, MOA, AOA, Certificate of Incorporation (for private limited), and any other document requested by your preferred bank.

Based on the nature of your eCommerce products as well as your company type and state under which it is registered there are certain licenses you may need to obtain:

For instance, you may need:

  • Startup India (not mandatory)
  • MSME Registration (not mandatory)
  • IEC Registration (if it involves import-export of products/services)
  • GST Registration (Mandatory if annual turnover is > Rs. 18lakhs)

Registering under startup India or MSME schemes may provide you with various benefits. However, this is not a complete list. For your state and industry, you may need further licenses. 

For instance, if you sell food products you may need to obtain a food safety and standards license. 

  • FSSAI

Similarly, once you start hiring employees, you need to consider employment and labor laws in your respective states. This may include

  • Shop Act Registration 
  • EPF and ESIC Registration 
  • Profession Tax (PT)

These are some of the important licenses and registrations you may need to obtain. However, not all of these may be applicable in your case right from the first day. In most cases, all the mandatory licenses are obtained while registration of your company. 

The process of obtaining all the requirements could be overwhelming and tedious. There are advisors and online services available to help you obtain all the necessary licenses so we suggest you make use of their services.

Now that you have everything to start your operations. You also need to be aware of the various compliance and filing when it comes to running an eCommerce business. Again these compliances depend on the type of business you have registered. 

For instance, for a proprietor business, you may only need to consider annual income tax filing as well as your GST returns.

In the case of a private limited company, there are several compliances including

  • Income Tax Return
  • Annual MCA Compliances including details of company activities and financials 
  • GST Returns

Here’s a list of complete annual compliances for eCommerce businesses registered as Private Limited companies. 

Step 5: Developing an eCommerce Website

Phew! Now, most of the legal stuff is taken care of. Let’s dive into more cool stuff.

To design and develop your eCommerce website there are several options based on your requirements and budget. You can either choose to do it yourself, go with a pre-built platform, or make your online store from scratch.

The benefit of using an eCommerce platform such as Shopify (recommended by Sorted), WooCommerce, or Magento is that they have built-in eCommerce features such as a cart, user accounts, and checkout to save a lot of development time. 

However, sometimes entrepreneurs opt for a custom solution when these platforms don’t offer enough flexibility to integrate unique business cases. 

You could either try to self-host the store or hire a professional team with experience in growing eCommerce brands while you focus on running your business.

No matter which solution you choose to opt for, it is important to make sure that your eCommerce website has the following features:

  1. User and Mobile-friendly 
  2. Easy to navigate, search and order
  3. Distraction-free checkout process
  4. Professional product images
  5. Multiple payment options
  6. Flexible shipping options
  7. eCommerce analytics
  8. Google and Facebook store integration
  9. Customer review system, etc

We have created a complete checklist of items you need to consider to launch your eCommerce website successfully.

How much does it cost to build an eCommerce website in 2022?

The eCommerce website prices vary based on your design and functional requirements, the experience of the team you hire, your choice of eCommerce platform, the number of products, website features, and customization requirements. 

On average basic e-commerce website may cost around ₹1 to 10 lakhs (or $2k to 15k) including the design and complete development. 

And advanced headless eCommerce store development could go up to ₹50 lakhs (or $80k).

For more details. Feel free to schedule a call to speak with our team. 

Step 6: Payment Solutions

Now that you have a store you need a payment solution to accept the payments from your customers. Payment solutions or Payment Gateways offer you a facility to accept the payments from your customers and transfer them to your bank account.

You must opt for a payment gateway that offers popular payment processing options for your customers including credit cards and debit cards (Visa MasterCard and Rupay ), UPI and Google Pay, net banking or cash transactions, and international payments if required.

You are required to submit the following documents to get payment gateways approved for your eCommerce business.

  • Business bank account statement or canceled cheque
  • Business PAN card
  • Certificate of Incorporation (for private limited company)
  • Memorandum of Association  (for private limited company)
  • Articles of Association  (for private limited company)
  • Identity proof
  • Address proof
  • Website terms & conditions
  • Website shipping policy

Once you submit all the relevant documents and get your details verified you can integrate the payment gateway to your eCommerce website. The whole approval process may take 5-10 days.

You also need to know that generally, the payment provider will charge a 1.5-2% processing fee on each transaction. You can request the provider to reduce the processing charge once you have sales in higher volumes. 

Here are some of the popular eCommerce payment gateways in India.

  • RazorPay (Recommended by Sorted) [It supports most of the popular payment options, including recurring and international payments. The best part is you can offer bank offers such as no-cost EMI for your customers without any further costs.]

Step 7: Logistics Management

Now that your store is ready to take orders. You need a logistics setup or partner who can fulfill the customer orders as well as handle returns.  

This is one of the challenging processes especially if you sell larger goods and products such as TVs or furniture and the products that have high returns such as clothes. 

This may involve:

  • Receiving and processing orders
  • Printing shipping labels
  • Picking and packaging products at the warehouse
  • Shipping the products to customers 
  • Managing return

Thus initially you may decide to handle everything in the house especially if you are shipping locally or nearby cities. However, as volume grows we suggest you opt for 3rd party logistics partner who could handle all of the hassles of shipping and returns for you. 

Before you move on to shipping solutions, choose the best shipping strategy for your store. Any successful online business implements several shipping methods into a complete strategy that works for their business. It is possible that you might be aware of these strategies, since a lot of popular online businesses, that we shop from, on a daily basis have been implementing these strategies already.

  • Free in-store pickup
  • Live rates
  • Same-day delivery
  • Free shipping
  • Flat rate and table rate shipping
  • Mixed and alternative strategies (this may include any combination of the above strategies)

Here are some of the best shipping companies in India for eCommerce businesses.

  • India Post
  • Aramex Shipping Company
  • Blue Dart
  • Delhivery
  • DTDC
  • FedEx

From our experience, no single company may provide the cheapest shipping rates and fast delivery at the same time to all your locations. You can signup for shipping aggregator platforms like ShipRocket that will decide which shipping to be used based on the products and customer location in real time to save shipping costs.

Step 8: Promoting your eCommerce business

Once your eCommerce business is launched, it is important to start promoting it to start generating sales. 

Here are some of the eCommerce marketing strategies you could utilize:

  1. Content Marketing
  2. Boost Your Social Media Presence
  3. Search Engine Optimization (SEO):
  4. Word of mouth
  5. Email Marketing:
  6. Google Shopping Advertisements
  7. Social Media Paid Campaigns
  8. Influencer Marketing
  9. Affiliate marketing

Step 9: Optimizing your eCommerce experience

Now that you have sales coming your way. It is time to take your store to the next level. Unlike physical stores, where people don’t meet you in person. So before they make a purchase decision they may be a little skeptical. 

You can address their skepticism by improving the overall eCommerce shopping experience in your store. From the ads or emails they find out about business to until your products are delivered to their doorsteps, their journey should be consistent in communicating the brand message and as easy as possible.

This may include:

  1. Personalize user experience 
  2. Loyalty rewards and offers
  3. Consistent and engaging Ads, sales, and website copy
  4. Website speed and mobile experience
  5. Conversion optimization
  6. Checkout experience 
  7. Email newsletters 
  8. Customer Support
  9. Consistent social media presence, etc.

So do you think launching an eCommerce store will be an easy task?

Sorted is India’s favorite eCommerce Agency to help businesses develop and improve their eCommerce experience.

Need tips? Schedule a free session now!

Bonus: Common Challenges in running an eCommerce business

We assume you now have an understanding of how to start your own eCommerce business. 

Here are a few challenges you might need to look out for while running it:

  1. Fast-changing eCommerce technologies
  2. Changing customer expectations (Ex. AI, voice-search, personalization, etc)
  3. Customer acquisition and retention 
  4. Customer Data Security
  5. Losses due to gaps in logistics, shipping/return

The right technology partner could help you overcome most of these challenges right from the beginning when you launch your eCommerce business.

TL,DR:

In short, if you’re looking for the answers to the question of whether is this the right time to start an eCommerce business? and how to start an eCommerce business in India. 

The short answers are yes this is the best time to launch an eCommerce business in India and the how part follows the 9 steps process outlined above. 

However, for many people, the whole process may be a little technical or overwhelming. Thus we suggest you connect with business advisors or accountants. They could help you in the process of registering the business as well as all the required licenses and compliances. 

Similarly to develop a top-class eCommerce experience and grow your business, connect with eCommerce agencies like Sorted. 

Download PDF

Leave a Comment

Your email address will not be published.