How to start an E-Commerce Business in India?

The Indian E-Commerce Industry is witnessing some major boom backed by the rapid growth in the High-Speed Internet and Smartphone Industry. And it is expected to grow by $850 billion by the end of 2020. A growth of such massive scale has opened the doors to entrepreneurship for many aspiring entrepreneurs and already established businesses. We see a massive number of people getting into this industry and making a fortune out of it. Flipkart, Myntra, Bewakoof, Shopclues, and the list for Indian E-Commerce giants just go on and on. So considering the fact that E-commerce is one of the prime choices for many aspiring entrepreneurs, here we have the details you need to know about starting a successful E-Commerce business in India.

Setting Up an E-Commerce Business

Business conducted over the medium of the Internet is called as E-Commerce. In recent years, m-commerce or mobile commerce (i.e. Business conducted over mobile phones) has become very popular. So for any seller, there are two main modes to starting an E-Commerce business, a proprietary E-Commerce website or joining an established marketplace. So you need to decide on which mode you want to start your commerce business with.

Creating a Proprietary E-Commerce Website

Creating a proprietary E-Commerce website can be challenging. It requires a lot of efforts and time. You need to work on the web development, online marketing, inventory management and payment gateways. Starting a proprietary E-Commerce website is a long-term initiative and requires a good amount of investment in terms of money and effort to build up a successful business.

Selling Products at Established Platforms.

Joining an established marketplace is possibly the easiest route to join the E-Commerce league. You can list all your products/services on the established platforms and make use of their technology development, marketing, payment gateway, logistics, marketing strategies, promotions etc. Joining an E-Commerce marketplace often requires just a Bank account and GST registration. But in some cases, even Trademark registration is required. In addition to that, there’s no restriction on joining more than one marketplace (except for exclusive products). This widens your target area and prospective customer base. Some of the popular E-Commerce marketplaces are:

• Flipkart
• Amazon
• Myntra
• eBay
• Shopclues
• PayTM

Legal Formalities to Start an E-Commerce Business

For a Proprietary E-Commerce Business here are the required registrations

Company or LLP Registration
It is always advisable to start your E-Commerce venture with a registered Company or LLP, however, there is no law prohibiting the entry of a sole proprietor or partnership in the E-commerce Industry. A registered Company or LLP ensures the protection of the business and its interests and also safeguards the owners from unlimited liability. Also, it eases the process of opening a Bank account and obtaining GST registration for the business. A registered company or LLP for a proprietary E-Commerce website also contributing factor in case the owner is looking for angel funding or equity funding in future.

GST Registration
Goods and service tax Registration is mandatory for e-commerce operators, aggregators or businesses supplying their goods or services through e-commerce aggregators.

Bank Account
Post the Incorporation, it’s very easy for you to open a current account in the name of your business. You can approach any bank of your choice (based on personal considering factors) and start the procedure by providing the required documents. For Sole proprietor and partnership form of business PAN Card, Partnership Deed, GST Registration (not mandatory) are required to open a bank account. A bank account is necessary for an E-Commerce website to get payment gateway integrated.

Payment Gateway
Payment Gateway is usually a third party service that automates the transactions between the customer and the merchant. A payment gateway is a system that processes, verifies and accepts the online transactions on behalf your behalf. Business owners are able to accept all kinds of electronic payment through these secure internet connections. Once, a payment is received from the customer, the payment is sent to the bank account of the business by the payment gateway provided in one or two to four business days. In case of selling through online marketplaces, the marketplace would accept the payment through their payment gateway and credit the money to the bank account of the seller directly. Hence, a payment gateway is not required and only a bank account is necessary.

Trademark Registration
It is important but not mandatory to get Trademark Registered in order to do business under E-Commerce. Although, there are some E-commerce platforms like Amazon, Flipkart, etc which needs the brand to registered. This is because Amazon, Flipkart has a widespread business and deals all over the world and If the Brand is not registered then anyone can copy the brand and sell it to the customers which will make an impact on the Goodwill of this E-commerce Website.

Legal Documents
It is important to protect the business and its promoters through proper use of terms and conditions document and privacy policy while selling stuff online. A proprietary E-Commerce website needs to draft the terms and conditions, disclaimer and privacy policy of the business based on the nature of its activities and products sold online. If the business sells through online marketplaces, then the legal document or seller’s agreement is provided by the marketplace and the seller must abide by the seller’s agreement. You can download the templates of the given legal documents by clicking on it.

• Privacy Policy
• Website Terms and Conditions
• Website Disclaimer

Also, if you wish Tradeviser to prepare a customized set of legal documents, then click here.