How to start online shopping business in India

Online shopping in India is soaring. There’s never been a better time to launch an e-commerce business in India.

Here is a step by step guide to start online shopping business in India :

*PDF version is also available for download.

Step-1: Create a Business Plan
Step-2: Company Registration
Step-3: Tax Registration
Step-4: Bank Account
Step-5: Choose a suitable Ecommerce Platform (Software, Domain, Hosting)
Step-6: Payment Gateway registration
Step-7: Logistics

1. Create a Business Plan:

A proper business plan would be key to the success of your ecommerce venture. Here are some key sections that your business plan must focus on:

Executive Summary: Explain what products you plan to sell, how it will be different, what advantages it will have, financial projections, funding needs, management team.

Target Market & competitors: How big is your target market? Is it growing or stagnant? What makes you think there will be a gap in the market in the future?

Marketing & Sales: Consider how your product will meet the needs of the consumer. Is anyone doing anything similar? If so, why will your product meet the needs of the consumer in a better way? List potential advertising channels such as online advertising (SEO, Google Adwords, Social Media Marketing, Youtube marketing, Affiliate Marketing) and offline advertising (PR, Email newsletters).

Management Team: Explain the skills that your management team possess. What are your strengths and weaknesses? What is the background of each individual? How is this relevant? How are you going to cover the vital areas of the business?

Operations: List the assets and the operations that will exist in your company. Will you require a warehouse? Who will you source your products from? How long will you keep your stock for? How many staff will you need?

Sales Forecast: How long do you estimate to get your first sale? How will you capture your leads? What will be your projected lead conversion %?

Financial Forecast: What will your projected monthly income? What will be your monthly cash burn?

Risk Assessment: Assess the potential areas, where your business could go wrong. For example: Could you expand too quickly and then lose customers? Could you lose a large amount of staff all at the same time? What contingency plans are in place for these issues?

Here are a few links to download some Ecommerce business plan templates to start an online shopping business.

2. Company Registration:

Selection of business entity is among the first legal decisions taken by an Entrepreneur while starting a new business. Therefore, it is important for the Entrepreneur or Promoter to understand the pros and cons of each of the business entity and choose the right one. The choices available are Proprietorship, Partnership, Limited Liability Partnership, One Person Company, Private Limited Company and Limited Company. So, which one should you choose?

Comparison of Proprietorship vs Partnership vs LLP vs Private Limited Company vs One Person Company.

Type Proprietorship Partnership LLP Private Limited Company One Person Company (OPC)
Registration No formal registration for Proprietorship. Registration is optional. LLP will be registered with the Ministry of Corporate Affairs under the Limited Liability Partnership Act, 2008. Private Limited Company will be registered with the Ministry of Corporate Affairs under the Companies Act, 2013. One Person Company will be registered with the Ministry of Corporate Affairs under the Companies Act, 2013.
Naming Promoter’s choice of name can be used for the Proprietorship. No approval is necessary for using the name. Promoter’s choice of name can be used for the Partnership. No approval is necessary for using the name. The choice of name provided by the Promoter must be approved by the Registrar of Companies. Only names that are not identical / similar to an existing company or LLP name and names that are not offensive or illegal would be allowed. The choice of name provided by the Promoter must be approved by the Registrar of Companies Only names that are not identical / similar to an existing company or LLP name and names that are not offensive or illegal would be allowed. The choice of name provided by the Promoter must be approved by the Registrar of Companies. Only names that are not identical / similar to an existing company or LLP name and names that are not offensive or illegal would be allowed.
Member’s Liability Proprietor has unlimited liability and is responsible for all the liabilities of the Proprietorship. Partners have unlimited liability and is responsible for all the liabilities of the Partnership. Partners have limited liability and is liable only to the extent of their contribution to the LLP. Shareholders have limited liability and is liable only to the extent of their share capital. Director and Nominee Director have limited liability and is liable only to the extent of his/her share capital.
Min/Max # of Members Can have only one person as member. A minimum of two persons are required to start a Partnership. The maximum number of partners can be only 20. A minimum of two persons are required to start a LLP. An LLP can have unlimited number of Partners. A Private Limited Company can only have a maximum of 200 shareholders or members. A minimum of two persons are required to start a One Person Company, viz. Director and Nominee Director. A One Person Company can have only two people, viz. Director and Nominee Director.
Foreign Ownership Not allowed Not allowed Foreigners are allowed to invest in a LLP only with prior approval of Reserve Bank of India and Foreign Investment Promotion Board (FIPB) approval. Foreigners are allowed to invest in a Private Limited Company under the Automatic Approval route in most sectors. Director and Nominee Director cannot be Foreigners.
Taxation Taxed as individual, based on the total income of the Proprietor. Taxed at 30% plus surcharge and cess as applicable. Taxed at 30% plus surcharge and cess as applicable. Taxed at 30% plus surcharge and cess as applicable. Taxed at 30% plus surcharge and cess as applicable.
Transferability Not transferable. Not transferable. Ownership can be transferred. Ownership can be transferred by way of share transfer. Ownership can be transferred.
Reasons to choose this type When you have a low budget and want to test your business idea by yourself. When you have a low budget and want to test your business idea, with your partners. When you and your partners need to limit liability and protect your entity’s name. Best for entrepreneurs looking to attract investors. ESOPs, Limited liability & funding are the key attractions. When you need company legal status as single Founder and 100% control of the company.
Costs

*Rs.1499 – MyOnlineCA.in

*Rs.1999 + Govt. fees (PDF) – Vakil Search

*Rs.2199 + Registration Fees – Legal Raasta

*Rs.2499 – MyOnlineCA.in

*Vakilsearch – Rs.5,999 + Govt. fees (PDF)

*Rs.8619 – Legal Raasta.com

*Rs.4,999 – Vakilsearch

*Rs.10,999 – MyOnlineCA.in

*Rs.4,999 + Govt. fees (PDF) – Vakil Search

*Rs.9,999 – MyOnlineCA.in

  *Note: Prices as on July 2018. It may vary.

3. Tax Registration:

GST registration is compulsory if you are selling goods online through E-commerce portals maintained by E-commerce operators. Also it is to be noted that anyone who makes an interstate supply has to obtain registration, so if you are selling goods / services, to other state you must take GST registration. There is a minimum limit of Rs. 20 lakhs, before you reach this limit there is not compulsion to take registration. However. if you make an interstate supply or you are registered on any online portal to make supplies through it, this minimum limit of Rs.20 lakhs does not apply. You can register online for GST via services for Rs.2499 via services like MyOnlineCA.

4. Bank Account

Sign up for a current a/c for your business at any reliable bank. Certain banks like HDFC offer E-comm current accounts with some added features for online businesses.

5. Choose a suitable Ecommerce Platform (Software, Domain, Hosting)

There are numerous options available. You can build an Ecommerce web site or app from scratch or use an opensource software like Magento or WooCommerce. This however will take approx. 1-2 months to get your business online.

Instead, you can opt for a readymade omni channel ecommerce platform like Tarjima, which can get your business online in just 2 weeks. You can opt for a one time purchase or opt for a rental plan at a fraction of the cost of custom ecommerce development. Tarjima can be used on web, mobile as well as in-store as a POS (Point of Sales) billing platform. Every aspect from software to domain registration, hosting, payment gateway integration and strategy consulting is offered as a turnkey solution, allowing you to concentrate on your core business and not worry about technology.

6. Payment Gateway Integration:

There are numerous payment gateways in India like CC Avenue, EBS, RazorPay, Instamojo & PayPal. In our experience, we found Instamojo the most convenient & hassle free. It provides a wide range of payment options – Credit/Debit cards, Net-banking, EMI, Wallets and UPI. Instamojo supports Rupay, VISA, MasterCard and AMEX cards. Sign up usually is completed within 48 hours.

7. Ecommerce Logistics:

You can choose to ship your products to customers on your own, if you operate out of a small town/city. If not, you can choose an individual courier company like DHL, Blue Dart, or a logistics aggregator like Zepo or Ship Rocket. A logistics aggregator will allow you to choose from multiple courier operators, offer competitive pricing, efficient order tracking via SMS and Email notifications, etc.

Hope you found this article useful. If you have any further questions, please use the form below to contact us or call us at the phones numbers mentioned below.

About Us

We are Tarjima, leading Ecommerce consultants In India, offering ecommerce consulting and turnkey Ecommerce solutions for small and medium businesses. We also offer an omni channel ecommerce solution, which can be used seamlessly across web mobile & in-store (POS billing).

Tarjima Ecommerce Web Site & Mobile Apps are available for as low as Rs.19,900 per year (including software cost, domain, hosting, annual maintenance + free digital strategy consulting). Visit our pricing page for ecommerce cost comparison of our various packages.

For details, please call us at +91 9446075840 or email us at .

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