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What is E-Commerce? How to Start E-Commerce Business?

  • Posted By SuperCA
  • On 24 May

What is E-Commerce? How to Start E-Commerce Business?

With the advancement of the internet, smartphones and technology in India, E-commerce businesses are booming at an unbelievable rate. India is quite an easy and favourable place for millions of entrepreneurs who are young and passionate about their startups and businesses. This is because of the fact that the capital requirement of the Indian market is comparatively less and hence, India is one of the most ideal choices. In this blog, we will go through the meaning of E-Commerce and how we can start an ECommerce Business.

E Commerce is a combined term for a multitude of activities that include buying and selling of goods and services via an online platform. Some common examples of E commerce are online shopping, internet banking, online auctions, etc.


Models of Ecommerce Business

A business model is the first stepping stone for an ecommerce business. The entrepreneur must choose a proper business model before starting to think about how to start an ecommerce business in the market.There are two basic ways that can help you in launching your ecommerce business, the first one includes becoming a seller ecommerce business platform that is known to consumers and is trusted by them and the second way includes the process of creating a new ecommerce business website.

The most ideal choice that entrepreneurs make to start their ecommerce business is to go with the first way of launching i.e. they decide that it is more beneficial to become a seller on a more recognised and established ecommerce business platform. Some of the prime examples of ecommerce platforms that are widely used nowadays are Snapdeal, Amazon, Flipkart and more. Businesses need to register themselves with the frameworks of these established ecommerce business platforms in order to sell on their platform while utilising their marketing efforts, technology and their delivery abilities. This process of becoming a seller on some already established ecommerce business platform is easier and effective as it does not require any effort for digital marketing, website development and its management etc.

However, the second way of launching your ecommerce business is also effective and needs you to create your own website. This method may be effective but it requires a lot of effort, time and is a bit complicated. Various easy-to-use tools are available on the internet but the main problem is the marketing of your site and the acquisition of visitors for your ecommerce business. Hence, the process of starting an ecommerce business by launching your own website is suggested and is more beneficial for those entrepreneurs who have a long-term growth plan and can work with patience. This process can help your ecommerce business achieve immeasurable heights.


Business Registration for your E-Commerce Business

Once a business model has been decided by the entrepreneur for his ecommerce business, business registration is the next step towards turning an entrepreneur’s dream into a reality. It has been seen that most of the ecommerce businesses use a lot of capital to start and operate their ecommerce business and the Banks in India are not too open to giving out loans to ecommerce business startups.

Therefore, starting your ecommerce business as a private limited company is one of the best options. Being a private limited company avails you a lot of benefits like protection of limited liability, the ease of transferability, the ability to possess private equity investors or equity partners for your ecommerce business and a separate legalised entity. The company can be registered easily using an authorised capital of Rs. 1 lakh and this amount can be increased afterwards in the form of private equity or bank loan.

However, the professionals do not recommend starting an ecommerce business under One person company(OPC) or Limited Liability Partnership(LLP). This is because LLPs do not permit any sort of equity investment in your ecommerce business and OPCs permit only one promoter.

This concludes that the most idealistic business entity registration for your ecommerce business is the private limited company.


To open a Bank Account

In order to start an ecommerce business, the next step after ecommerce business registration is the opening of a bank account. In the case of a private limited company being incorporated, then the process of opening a bank account in the name of the business is quite easy. The documents that you need for opening a bank account are copies of PAN Card, Articles of Association, Memorandum of Association and the company’s Certificate of Incorporation.


Tax Registration of your Ecommerce Business

Once you have obtained a PAN Card for your ecommerce business and opened a bank account, The required/specified tax registration must be acquired for your ecommerce business. If your ecommerce business plans to sell various goods or products in our country, then the taxes that must be obtained from the state’s Sales Tax Department are VAT/TIN. If your ecommerce business plans to provide various services, then the registration for service tax should be acquired.

If the business targets selling on online marketplaces like Snapdeal, Amazon or Flipkart, then in order to complete your seller registration process, VAT/TIN registration should be acquired. Once you have performed the TIn registration, then you will have to submit a copy of  a few documents like cancelled cheques, PAN Card and Certificate of Company Incorporation in order to start the online selling process of your ecommerce business.



Establishing a Payment Gateway for your Ecommerce Business

An online payment gateway is quite necessary for your online ecommerce business. This gateway allows easy and fast processing of credit and debit card transactions, net banking and cash card transactions via your ecommerce business website. The documents that you need to equip your ecommerce business website with a payment gateway are listed below:

  • PAN Card for your ecommerce business
  • Bank account in name of your ecommerce business
  • An Incorporation Certificate
  • A Memorandum of Association
  • An Article of Association
  • ID Proof
  • Address Proof
  • Terms of Use of Your website
  • Privacy Policy of your Website

After the submission of the above mentioned documents, you will be availed of a payment gateway for your ecommerce business in order to enable online payments.