Starting an ecommerce business

How to start an ecommerce business in India

Guides » Business Startup Guide » How to start an ecommerce business in India

How to start an ecommerce business in India

The e-commerce industry is witnessing a tremendous growth in India backed by increasing smartphone and internet penetration. With further increase in internet service providers and the launch of 3G and 4G services, at affordable prices – the e-commerce and m-commerce industries are set to record even higher growth. In this article, we look at the procedure for starting a successful ecommerce business in India.

Setting up an ecommerce business

Business conducted over the internet is called ecommerce. In recent years, m-commerce or mobile commerce – business conducted through smart phones has become very popular. Currently there are two main modes to starting an ecommerce business, a proprietary ecommerce website or joining an established marketplace.

Creating a proprietary (own) ecommerce website

Creating a proprietary ecommerce wbesite is one of the hardest method of starting an ecommerce business. Starting a proprietary ecommerce business requires a web development team, online marketing team and a payment gateway for receiving payments. Starting a proprietary ecommerce 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.

Joining an established marketplace

Joining an established marketplace is an easy way to start an ecommerce business or sell products/services online. Joining an ecommerce marketplace as a seller often requires only a bank account and VAT registration, making the process easy and simple. Further, on an ecommerce or mcommerce platform aspects such as technology development, marketing, payment gateway, logistics, etc., are taken care of by the marketplace platform, reducing the workload on the seller. In addition, sellers can often join multiple marketplaces and sell their products, making it the easiest way to start an online or ecommerce business.

Some of the popular ecommerce or mcommerce marketplaces are:

  • Flipkart
  • Amazon
  • Snapdeal
  • Shopclues
  • PayTM

The following articles provide more information about selling on popular ecommerce marketplaces:

Legal Formalities for Starting an Ecommerce Business

To start an ecommerce business, proprietary ecommerce website or become a seller on a marketplace, the following registration are required:

Company or LLP Registration

While starting an ecommerce venture it good to have a company or LLP to have limited liability protection and improve the ease of doing business. Having a company or LLP would ensure that opening of bank accounts in the name of business or obtaining a VAT / Service tax registration are easy and fast.

Almost all marketplaces allow Proprietorships and Partnership firms to sell on their website. However, there would be no limited liability protection in case of a litigation. Hence, it is best to start selling with a LLP or Company.

In case the promoters wish to start a proprietary ecommerce website, then it is best to start with a Company, as it is the only type of entity that can allow for angel funding or equity funding – a must for successful ecommerce ventures.

VAT Registration

A VAT registration is a must for becoming a seller on a ecommerce portal or while starting a proprietary ecommerce website. VAT registration is required for anyone selling goods or products in India and must be obtained from the State’s Sales Tax Department. IndiaFilings can help you obtain VAT registration in India.

Bank Account

Once the Company or LLP is incorporated, a bank account can easily be opened in the name of the business by contacting a Bank. In case of Proprietorship firm, VAT registration must first be obtained to open a bank account in the name of the business. Opening of bank account is essential to list on a ecommerce marketplace or obtain payment gateway for a proprietary ecommerce website.

Payment Gateway

A payment gateway would be required for a proprietary ecommerce website to process customer payments. Payment gateway provides allow for the website to accept credit card, debit card, net banking, internet banking payments from multiple banks and credit card companies. Therefore, one payment gateway is sufficient to accept many forms of online payments. Once, a payment is received from the customer, the payment is sent to the bank account of the business by the payment gateway provide in one or two business days. Read the article on “how to get a payment gateway” to know more.

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.

Legal Documents

While selling online, it is important to protect the business and the promoters of the business through proper use of terms and conditions document and privacy policy. In case of a proprietary ecommerce website, the terms and conditions, disclaimer and privacy policy would have to be drafted by 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 sellers agreement is provided by the marketplace and the seller must abide by the sellers agreement. It is important for any business to read the sellers agreements before agreeing to the agreement. You can create the following legal documents required for an ecommerce website easily through IndiaFilings LiveEdit feature on iCFO Platform:

Want to Consult a Incorporation Expert?

IndiaFilings provides the entire range of services required to register a business in India. We can help you register a Proprietorship, LLP, Indian company or USA company. Please provide your information to consult an Incorporation Expert for free.


Income Tax eFiling

We have made the Income Tax eFiling, simple and easy. File your income tax return online with the dedicated Tax Experts support from IndiaFilings.


Authorised eReturn Intermediary

IndiaFilings.com (ERI ID: ERIA100945) is an Income Tax Department authorised eReturn Intermediary.



Comments (9)

Kriti

Oct 08, 2015 at 8:07 PM

I wish to start online business by Joining an established marketplace. Please suggest me how to apply for schemes running by Government for women entrepreneurship.

Reply

Mk

Oct 17, 2015 at 9:30 AM

Very Helpful Article for startups

Reply

Siddhartha Gupta

Oct 23, 2015 at 12:39 AM

I am planning to start my own ecommerce website. I am already having a sole proprietorship firm . I want to know that I can start my website in my existing firm only or I should go for a private limited company.

Reply

shantanu vaibhav

Oct 28, 2015 at 3:46 AM

Sir
I am planning to start a online e commerce website like flipkart , snapdeal. I want to sell books & stationary products online . I have not any stores . So i have contacted some vendors and they aggrees to sell products online through us.Intially i will add only cash on delivery payment mode. So i want to know what type of registration is needed to start my buisness ? What type of legal formalites is intially required ?

Reply

umakant

Apr 05, 2017 at 11:19 AM

Great, you can make it easy for everyone to start ecommerce business simply

Reply

Aryan Gupta

Apr 18, 2017 at 10:39 AM

Sir, I want to start e commerce like Groffer .
Kindly help regarding full procedure.

Reply

Atit hembram

Apr 24, 2017 at 7:59 PM

what are the legel procedures is to be taken to start an e commerce business, where i can sell the products like books and stationary items from my local vendors to my local customers,,,,,,,plz reply soon sir

Reply

Rohit Makwana

Jan 23, 2018 at 7:35 PM

Sir,I love this article but I have one dought how to buy and sell products

Reply

GAURAV GURBAXANI

Jan 04, 2019 at 11:12 AM

I want to grow my blog onlinebusiness.org along with some affiliate marketing. What corporation would you suggest?

Reply

Leave a comment