India Brand Equity Foundation, a federal agency, jobs Indian ecommerce sales to reach $64 billion by 2020 and $200 billion by 2026 from $38.5 billion in 2017. IBEF jobs India to surpass the U.S. to become the 2nd biggest ecommerce marketplace in the world by 2034.
India is an enticing opportunity, in other words. For merchants interested in entering this market, here are three tips.
1. Select a Business Model
The two options for entering the ecommerce marketplace in India are (a) build your own ecommerce website or (b) tap into a established market , such as Flipkart or Amazon.
- Ecommerce Website. Preparing a proprietary ecommerce shop is a fantastic way to go into the market when you’ve got a special product that you can supply. However, it’s time-consuming and expensive, requiring the setup of an internet shop, including a secure payment gateway, and constructing a logistics chain, among other tasks. However, this option lets you create a new name.
- Marketplaces. The market model is the simplest and quickest way to sell products on the internet in India. Flipkart, together with its trend arm Myntra, is the leading market in India with a 38.5 percent market share. Amazon India is next with a 29 percent market share. Additional marketplaces include Snapdeal, ShopClues, and Paytm.
Non-Indian merchants can join one or more of these marketplaces. It generally involves registering your company, acquiring a tax amount, and opening a bank account. The market will take care of logistics and payments.
2. Register Your Business
You have three main options for registering your company: a sole proprietorship, a public or private business, and a limited liability partnership. Beginning a private business is the best choice generally, particularly for smaller companies.
LLPs created by foreigners face roadblocks in India because of strict foreign direct investment regulations. A sole proprietorship can’t exceed two crore rupees in annual revenue — less than $300,000. Additionally, it can not allocate or transfer shares to other people.
The registration procedure for a private company, on the other hand, is relatively simple, more affordable, and requires fewer files. It specifies at least two (and no longer than 200) shareholders of non-transferable shares with a minimum share capital of INR100,000 (approximately $1,500). Additionally, it requires at least one director who is a resident of India or has lived in India for more than 182 days in the prior financial year.
Keep your identification and proof of address ready before the method begins. You’ll have to get a Digital Signature Certificate, Director Identification Number, certificate of incorporation or business registration certification, and approval of the company name.
Once registered, the corporation must get a legal Permanent Account Number, a Goods and Services Tax Identification Number, open a bank account, and set up a payment gateway. A business may also require additional documents on a case-to-case foundation if the government so demand. The process is somewhat complicated; hiring a lawyer is often wise.
3. Know Logistics, Payments
Indian ecommerce is still grappling with logistics and payments. Be ready to face difficulties surrounding both of these issues.
- Logistics will likely be your biggest obstacle if you start your own ecommerce shop. Building a strong supply chain can be an arduous process in India, since the infrastructure in many regions remains underdeveloped. A marketplace, though, will care for logistics for you.
International logistics players like FedEx and UPS operate in India. DTDC Express is a leading, nationwide domestic supplier. However, all have limited warehousing and infrastructure facilities. Because of this, they need to rely on smaller and more economical third party firms for delivery.
The issue worsens in rural areas and smaller cities. Butoverall, delivery choices are getting better (slowly ). By way of instance, DHL recently launched its ecommerce logistics department in India and will soon commence its operations. Including DHL SmarTrucking, a road-based transport system.
- Payments. Preparing a payment gateway is simple. But avoiding the cash-on-delivery version is practically impossible. Most Indian customers prefer to invest in money . Alas, the COD-based payment procedure is expensive. Merchants must pay several fees — along with the courier fees — and pay for the return if the client refuses to accept the package.
COD also delays receiving the cash. Merchants have to restock inventory prior to the money from the past earnings reaches your bank account. Moreover, carrying money is risky. Theft may result in irretrievable monetary losses for you and your courier spouse.
Happily, digital payments are gradually gaining acceptance. Two activities by the Indian authorities have helped. The government reduced the quantity of money in circulation, which hampered the ability of customers to withdraw money from ATMs to pay for COD purchases. Secondly, the government will pay the merchant account fees of smaller companies for two years beginning Jan. 1, 2018, encouraging those companies to take debit cards and other digital payments.
Additionally, the entry of global players into India’s digital payment area is predicted to grow the section by about five-fold from 2023, according to Credit Suisse, the international banking company.