A Complete Guide on How to Start an Ecommerce business in India 2022

Parnas Ghosh Parnas Ghosh Anik Banerjee Anik Banerjee
Jun 14, 2022 18 min read
A Complete Guide on How to Start an Ecommerce business in India 2022

If you are looking to start your own e-commerce business in India like Amazon, Flipkart, then this is the way to go. To start with, eCommerce is an online process of buying or selling goods and services. There is no paperwork involved in making any transaction here.

One of the best things that most of us like about an e-commerce startup is that we can update and modify it the way we want and make it attractive and appealing to the eyes of the audience. Your customer will have access to your services 24x7 and you donโ€™t need to come out of your door for marketing and other stuff if you are doing it at a small level.

According to a report, in 2019, ecommerce sales accounted for 14.1% of all retail sales worldwide. However, there are some things that you need to care about in your eCommerce business plan for 2022.

How to Start an Ecommerce Business in India? (A 10-Step Business Plan)
How to Build an Ecommerce Startup?
How to Compete in the E-commerce Market?
How do E-commerce Sites Make Money?

How to Start an Ecommerce Business in India? (A 10-Step Business Plan)

Starting an ecommerce website might sound challenging, but with this easy 10-step business plan, it would hardly be tough. So, let's dive into the steps:

Step 1: Define your business name

Business names are always important as they give you an identity after identifying what you want to sell. A business name will be the legal identity of your business. This opens a room for marketing your product with ease. The name that you choose should be simple and unique. It is always better to research extensively before you decide upon a particular name for your business. This will let you be safe and secure, and thus, is really important for everyone who would be starting an eCommerce website.

Step 2: Set a domain name

Ideally, there is always diversity in business. The business name acts as the domain name. A domain name system (DNS) stipulates the website address that your business wants to keep.

One of the important factors for an eCommerce business plan is a website. A website can be useful in developing different marketing strategies. It acts as a point of contact between you and your customers.

A website is accessible to many people at any given time and creates a climate of trust (credibility). Churning out a website is really convenient as it tells the customers that you exist. Furthermore, the website and the domain name are some of the core steps to proceed with before one can go about launching an ecommerce business.

Step 3: Identify the type of business and register

People engage with businesses as the sole proprietorship, partnership, or cooperation. Each of these has an advantage and disadvantage attached to it. For example, operating as a sole proprietor always subjects you to numerous risks.

You need to weigh before deciding upon a particular type of business that suits you. The income removal system (IRS) allows you to file the structure of your business on your own or get a different filing company to help you.

Step 4: Employer Identification Number (EIN)

You can not operate an e-commerce business without a bank account. To get a bank account you need for your business you need EIN. This number you are given acts as identification. You use it to file taxes for the business. It is always a requirement whether you will operate alone or employ people.

Every country has its own policies and procedures that every citizen must adhere to. This is also one of the things you must keep in priority while creating an eCommerce business plan. If you fail to do that, the government has the mandate to declare your business illegal, after which numerous penalties might be imposed.

Licenses for the business and work permit should be obtained. Confirm with your state what type of taxes you are required to pay in order to operate. Also, you need to Apply for Goods and Service Tax (GST) certification and Shops and Establishment Licence.

Step 6: Source for vendors

It is not possible to operate without vendors. Everyone needs to identify and keep in contact with different vendors. This way you can derive the best quality and prices for the materials you need to make your products. Conduct a thorough and serious search of the vendors to help you identify who you want to work with.

Step 7: Early marketing

Media platforms are paramount in e-commerce. However, it is also necessary that you have an eCommerce business plan prior to that. Alert customers that there is something good coming up so they can create interest to know. You can even decide to introduce blogging as a tool.

Step 8: Get effective software

E-commerce cannot work without making use of technology. Put every system in place before launching the product. Effective software is what you simply cannot compromise when it comes to building e-commerce websites in India.

Step 9: Keep a smart inventory

Inventory will help you track the information that you need. Ensure the warehouse (store) has enough products so that the customers donโ€™t miss out on what they want. You may not be in a position to tell what will be needed and when but is always safe to keep a decent stock. This will help keep track of the orders you make in the future.

Step 10: Be compliant

Always be smart with deadlines in terms of taxes, licenses and permits needed. Always ensure you abide by the law of the land. Staying compliant is the key to starting an eCommerce store or an online business and making it successful.

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How to Build an Ecommerce Startup?

The Ecommerce industry is on the boom for the past few years, and why not? It is ultimately a sector with big opportunities and low barriers to entry. The total valuation of the e-commerce industry in India was last recorded at $46.2 million, and is expected to rise t0 $188 billion by 2025. Such a sector that is ever so growing, certainly consists of a lot of opportunities.

Currently, there are hundreds of e-commerce sites selling products and services and thousands are on the way. Probably you also want to have one. Well, the e-commerce industry is so dynamic now, that you need to be agile and alert. So, keep monitoring the activities, events, discussions, and changes going on in your niche.

Now e-commerce is not about selling a product but a solution. Your potential customer must see the clear benefit of buying from you. Here are some tips to follow if you are starting up or already have an existing startup in the e-commerce domain.

Find a niche

You get an idea for e-commerce, there is a fair chance that many startups are operating in that niche and many are coming up. That is why it is important to break the initial idea, segment them a little further or get a niche that is not explored yet and work on that with full focus.

If you think you can compete against Flipkart or Snapdeal that's not going to happen if you plan to start with the same business model.

Take sandal. When the company launched, it was an online portal for deals and coupons. This was a very focused play. They didnโ€™t immediately start selling physical goods. Make your unique selling proposition, find your target "junta" or customers, and sell your product to them.

Experiment

As you have started out, the world seems very new to you. Nobody except you can tell what works best for you. So, experiment with different Pitches, Distribution channels, and more. Do this until you find out a solid sales strategy.

Listen to your customer

As it is always said worship customers like gods. Always remember that if there is any service you want to provide, then that should always be a customer satisfaction service. Your behavior towards the customer after the sale would make all the difference.

This will help you in customer retention and thus make more sales. Once a sale is made. Talk to them, get feedback and see what changes they want. Even if it doesnโ€™t comply with want you want just change it.

Learn from the mistakes of competitors

Do you have lots of competitors? Having too many competitors is not so good news for businesses but every bad thing has got something good in it. So, if you have quite some competitors already in the same space where you would be starting your own ecommerce business, you can try to analyze their website design, pricing, and marketing strategies on a regular basis to get useful insights for the future action. Go through their social media profile to see what activities have helped them gain traction a lot and what has failed for them. In this way, pick up all that they have done good, and try to avoid all the mistakes that they have done.

Use digital marketing

74% of adults who are online, use social networking sites, and among them, it has been found that 71% of the online adults use Facebook. Being a startup you donโ€™t have much marketing budget. Here, starting off with the social media platforms for marketing purposes will indeed be of great help. Optimising the content and regularly sharing them on social platforms certainly is rewarding for brands and businesses. This will not only let you reach to large audience economically but also help you to get analytics to learn about the users. It is also a great way to listen to what customers are saying about your brand.

Number of social network users in India from 2015 to 2020
Number of social network users in India from 2015 to 2020

Operation

Make sure you always have enough inventory of the highest selling product. Make sure that you keep a track of all the products that belong to the highest-selling and lowest-selling categories. Figure out what is making the highest product sell the highest and what makes the others the lowest-selling products. This will help you a great deal!


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Choose the right web hosting ย 

Looking at what similar companies are using. Add a mascot on the site that guides the users about the site and the products, is an interesting way to get the attention of customers (like Zendesk). Use only those plugins that are necessary.


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Consumer support

Hire trained customer care executives to resolve customer queries over call and email. A toll-free number and support email is crucial too. Solve the problems that the customer is facing, to ensure the efficiency of the website.

Content marketing

The content is important for an e-commerce website and is good for marketing the brand. Putting up a blog or posts will surely bring up more traffic than ever. Content marketing will stand as one of the primary requisites as soon as you start an ecommerce store or an ecommerce website in India.

Social Media Marketing

Social media is the key to climbing the ladder and getting the exposure one wants in the public eye, so creating social media accounts is the key to helping the brand reach the eyes of the world. Keep the followers updated with new products and give ways to get more followers. Meme marketing is also a great way to engage your customers (Millennials).

Influencer's utilization ย 

The influencers are the best people in the game especially, in terms of product branding and making the future of a product. Hence, hire some influencers who are the best in the marketing game, which your brand focuses on, and pay them to put the ad on their social media. This will help increase your brand reach, thereby helping it to reach thousands and millions, who would then be able to see what your brand and its products are all about and people will pop up on the website for sure, giving you more website traffic and multiplying your revenues for sure.

How to Compete in the E-commerce Market?

Every day is new and brings changes in peopleโ€™s needs and desires. Luckily, this is where small and upcoming startups can still win in the midst of other e-commerce giants. Here, is how to compete in the E-commerce market.

We are aware of how Amazon and eBay have driven many small and medium companies to extinction. But the other side of the reality is also that new interventions are always abundant and there's always a new idea, product concept, or methodology that can topple the market leaders as we know them, or at least create a comfortably sweet spot in the market for themselves-which is just where your startup needs to reach.

If your startup is introducing a new product or service altogether, there is a very different approach you might need to take as compared to a start-up that is re-offering the existing product or service to bridge the demand-supply gap.

Be very clear as to who you are, what your offer is, and what your target is. Make sure that your core team and your entire organization have this understanding to ensure that the combined effort of the entire workforce maximizes the results.

It is a hopeful time to be as Amazon and the likes do cater everything to everyone. But the digital age has made it possible for everyone to co-exist as peopleโ€™s tastes are ever-evolving and start-ups targeting the niche will be able to carve out their own space.

Read on for the sage advice on how you can stand out in a crowded marketplace and reap the maximum benefit of being a newcomer to the industry.

Create Your Own Service

Your chance to be victorious in the game is to be an innovator and make your own market rather than depending on the existing marketplace. It is a harder approach to what you are already doing but will take you miles ahead of others.

Take MeUndies for example. It is an underwear-only brand that uses โ€˜micro-modal fibers in its underwear and offers monthly subscriptions to deliver a new pair to your doorstep. Catch? It is only 16$ a pair and is taking the internet by storm with its quirky patterns and colors.

At no added cost, it is suddenly more than just underwear. Some of the biggest brands are still in the thoughts of people, and you can turn the idea into a thriving opportunity with the right backing.

MeUndies Website
MeUndies Website

See a Need, Fill a Need

We have seen time and again that certain brands launch big after years of testing and planning, however, once the brand is not received well they start to fizzle out. The ones who make it successfully are often seen using the feedback from the customers and dedicate some resources to perfecting common complaints and difficulties consumers are experiencing. They donโ€™t quit, rather, they use the real-time data as the major source of what the next step is inspired.

In fact, building on what the customer conveyed as your shortcoming can also forge a trustworthy and loyal bond with them, which is a great way to market yourself. Instead of resisting the feedback, be open to them and make your way to their hearts by listening and acting on it. Create your own trend rather than following the norm.

Champion the Mobile App

Make sure that your customer is having a seamless mobile experience on your app and is likely to checkout under 60 seconds after preparing the cart or choosing the service without any in-built interruptions. Fast times require faster solutions! In addition, make sure your startup belongs on platforms like Snapchat and Instagram that have made the visual world fun and directly accessible.


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User-Centric Approach

Design Thinking promotes that design is an elementary part of any system. Design your product, service, or systems within the organization always prioritizing the user needs and user practices.

Get inside not just the mind of the end-user, but also their daily lifestyle, their influences, their dreams and aspirations, their environment, and their culture, depending on the nature of your services.

A customer is more likely to trust your brand if they think you thought of them specifically while making the product or service. This gives them confidence that you will understand them and will stand as a good choice for them.

Better Incentive Programs

Your incentives can come in the form of discounts, rebates, points earned toward a discount, points earned toward prizes, or any of many other plans. The worst-designed incentive plans have ambiguity in the stated rules.

An incentive is likely to shape your customerโ€™s behavior and drive them to your desired action. These incentives are thus, really valuable for an ecommerce company, especially if you are wanting to start an online store in India. If they are rewarded for their purchase, they feel like they โ€˜earnedโ€™ it. Keep a close eye on what other e-commerce companies in India are offering and if you are to compete with them, you must outdo their offer every time.

Better Customer Service

A common Amazon trait that has made it wildly popular in the e-commerce service is how they value each customer. Similarly, if you also want to start ecommerce business, then you must first start to value each and every customer the same. While you canโ€™t crush e-commerce giants given that they have bigger marketing budgets and bigger control of their product lines, operations and sales, it is certainly a trait you can imbibe in your company. Each satisfied customer means five people who will hear about you from him, which is great marketing for you at no actual cost.

Customer Data Is The Key to Ultimate Business Growth

A former Amazon company worker stated that Amazon has the ability to track both what people are buying as well as what they search for and canโ€™t find.

This is a part of their success story. Companies that use customer data to better their practices are more likely to increase their sales and their gross margins than those who ignore the data.

Even if you donโ€™t have big budgets to acquire data like e-com giants, do make absolute use of the behavioral data one already has in their database to improve customer satisfaction and customer retention.

How do E-commerce Sites Make Money?

Everyone wants an extra income to meet their needs and upkeep their standard of living. Furthermore, buying and selling goods and services via the Internet is the new trend to earn money, and the websites that make them possible are none other than the Ecommerce websites. The Ecommerce websites are offering a free platform for the sellers and the buyers to get in touch with each other.

One can easily list their products on e-commerce websites and potential buyers can buy the products hassle-free sitting in any part of the world. The whole online buying and selling chain appears to be a very easy and economical process.

Although, you must have wondered as they offer free services to the sellers and buyers then how these e-commerce websites like OLX, Quikr, Craigslist, and Gumtree make money online?

E-commerce websites, such as OLX, Quikr, and other leading sites provide an online portal to advertise your product or service offerings and find the buyer for them.

Almost all the emerging e-commerce websites offer free services to users. However, they still make high-tech TV commercials and disburse lucrative salaries to their employees. How? So, letโ€™s get the answer by analyzing the revenue-generating strategies of a few leading e-commerce websites and comparing their revenue plan with others.

Olx

OLX is one of the popular and well-structured e-commerce websites. It offers a variety of features to its users, such as sellers can directly chat with a buyer, can easily bargain, etc. eBay is one of its competitors of OLX. OLX opts for the following methods to earn money:

Google AdSense Banner Ads

Google offers to all bloggers and website owners a very easy platform to get the advertisements on their site. Google AdSense is a platform where you can register your website and after verification, Google will show related advertisements. Hence, OLX ย effectively runs Google ads to reach its target audience. The earning through ads depends, upon the number of clicks they get which is called CPC (cost per click model).

OLX offers a featured listing option to the sellers. Featured links are those links that you see on the top, whereas, in a normal listing Ads are placed in OLX depending on how recent the Ad has been placed.

Featured Ads will always appear on top of the list irrespective of any factors. Ideally all such should be mentioned as featured/sponsored/ads so that users donโ€™t get an illusion. In a featured listing, your ad will show up at the top of the search list and your ad will be shown first to the buyers whenever they search for anything on OLX. The sponsored links appear depending on the keywords targeted by the advertisers. Being at the top of the list gives advertisers a way to get more leads.

Quikr

Quikr is yet another e-commerce, which is very popular in India and somehow looks and works similar to OLX. While the featured listing is one way to make money Quikr also follows a different route here.

They also generate revenue by generating leads for businesses. It makes a gainful amount of money for Quikr. Recently Quikr has acquired a few startups to diversify in different fields like Jobs, Spa, and salons where they provide leads to these service providers.

Craigslist

Craigslist is also a popular rental listing website. It is mainly popular in the USA. But the company doesnโ€™t earn as much revenue when compared to other websites. The company only makes revenue equal to its operation charges.

It charges $10 for a rental listing in New York and $25 for a job listing to occur in any of the major U.S cities. If in the San Francisco area, you need to pay a $75 fee for a job to be listed.

The company is trying to consider Google AdSense and paid advertisements to generate more revenue, but it is still worried about the quality and clutter on the website due to ads, which is the main priority of the company.


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Other E-commerce Websites

There are other similar e-commerce websites present, like Gumtree and BookSellBuy. They also earn through a basic business model, that is, by providing premium membership Ads wherein the features depend on their own model, by featured ads and paid listings. So, almost every website uses paid ads to generate money.

Conclusion

Now, building an eCommerce website is the trend. It definitely takes a lot of effort and hard work, but once created and branded properly, it will surely open a whole lot of doors for growth. It is not an easy task to run an e-commerce business in India in the current age of competition. Starting an eCommerce company or an eCommerce business in India is certainly achievable if one has the focus and grit to understand the customer and the people who are in the organization.

Use your data efficiently and always make the customers happy at the end of each transaction. Comment on your favorite e-commerce site or your story of launching your own e-commerce site in the comment down below.

FAQs

What are the 3 types of e-commerce?

The three types of Ecommerce are Business-to-Business (B2B), Business-to-Consumer (B2C), and Mobile Commerce (M-Commerce).

What is the future of e-commerce?

The ecommerce industry was last valued at $46.2 bn in 2020 and is expected to rise to $188 billion by 2025, and would soar to become $350 billion by 2030.

Which is the largest e-commerce company in the world?

Amazon is the largest e-commerce company in the world.

How much does it cost to start an e-commerce business in India?

To start an e-commerce business in India you need approximately at least 5 - 10 lacs of investment.

How to start an ecommerce website, store, or an ecommerce business?

Whether you want to start an ecommerce store/site or an ecommerce business, it is evident that you first need to research the industry and the market potential before starting up. Starting an ecommerce company in India would need you to:

  • Build a fast, comprehensive, and informative website
  • Create a viable business and revenue model
  • Decide a relevant domain name
  • Host the website properly
  • Market your website, its products, and services
  • Monitor the performance

What are some of the ecommerce business ideas?

Some of the best ideas if you want to create an eCommerce website or an eCommerce business in India would include grocery delivery, cosmetic and beauty products eCommerce business, refurbished or second-hand products business, fashion, jewellery, foodtech and more.

What are some things that you should never forget while trying to set up ecommerce business in India?

Setting up an ecommerce business in India is the dream of many, but only some ecommerce businesses in India actually see the light of the day. Here are some of the easiest steps that you need to remember while setting up an ecommerce company in India:

  • Chalking out a workable business and revenue model
  • Branding your brand well
  • Registering the business
  • Opening a bank account and linking the business to the same
  • Creating and launching a simple but secure ecommerce website
  • Installing payment gateways
  • Monitoring and improving the logistics

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