Indian e-commerce is growing rapidly, and smartphones and mobile data are spreading, attracting a lot of investment for e-commerce startups.
The Indian Brand Assets Foundation expects Indian e-commerce sales to reach $64 billion by 2020 and $200 billion by 2026. By 2034, India will surpass the US as the world’s second largest e-commerce market.
In other words, India is a tempting big cake, and sellers who want to eat should pay attention to the following three points.
First, choose a business model
There are two options for entering the Indian e-commerce market: building an independent station or joining an e-commerce platform.
1, independent station
If you have a unique product that you can only purchase, building a proprietary e-commerce store is a great way to enter the Indian market. Although this method is expensive and time consuming, the seller can create a brand name.
2, e-commerce platform
Joining the e-commerce platform is the easiest and fastest way to sell products online in India. Flipkart and its fashion brand, Myntra, are India’s leading platforms with a market share of 38.5%. Amazon India ranked second with a market share of 29%. Other platforms are Snapdeal, ShopClues and Paytm.
Non-Indian sellers can also join any of these markets and generally need to register a company, obtain a tax ID, and open a bank account.
Second, the registered company
You have three main options to register a company: a sole proprietorship, a private or public company, and a limited liability partnership. In most cases, starting a private company is the best option, especially for small sellers.
Due to strict foreign direct investment regulations, foreigners will face many obstacles in establishing limited liability partnerships in India. The annual income of a sole proprietorship cannot exceed 2 billion rupees. In addition, it is not possible to assign or transfer shares to others.
On the other hand, the registration process for private companies is relatively easy, the cost is low, and there is not much material needed. According to the regulations, at least two (no more than 200) non-transferable shareholders are required, the minimum share capital is 100,000 rupees (about 1,500 US dollars), and at least one director is required to be an Indian resident or live in India in the last financial year. More than 182 days.
Before you begin your registration, please have your ID and address proof ready, as well as a digitally signed certificate, a director identification number, a company registration certificate, and an approved company name.
After registration, the company must obtain a valid permanent account number, a Goods and Services Tax identification number, open a bank account, and set up a payment gateway. If required by the authorities, the company may also need to provide additional documentation on a case-by-case basis. This process is a bit complicated and sellers can hire a lawyer.
Third, understand logistics and payment
Indian e-commerce is still trying to solve the logistics and payment problems, and sellers should be prepared to face the difficulties caused by these two problems.
If you build a stand-alone station, logistics can be the biggest obstacle. Building a strong supply chain in India can be a difficult process, as infrastructure in most regions is still underdeveloped. But the platform will handle logistics for the seller.
International logistics companies such as FedEx and UPS operate in India, and DTDC Express is the nation’s leading domestic supplier, but all warehousing and infrastructure are limited. As a result, they have to rely on smaller, lower-priced third-party companies for delivery.
The problems in rural areas and small cities are even more serious. However, in general, the distribution aspect is getting better. For example, DHL recently launched an e-commerce logistics division in India and will soon begin operations.
Setting up a payment gateway is easy, but avoiding cash on delivery is almost impossible, and most Indian consumers prefer to pay in cash. In addition to the courier fee, the seller must also pay a variety of fees, if the customer refuses to accept the parcel, he still has to pay the return fee.
For cash on delivery, the seller must restock before the last sale reaches the bank account. In addition, carrying cash is risky.
Fortunately, digital payments are slowly gaining recognition. The Indian government is also acting, first reducing the amount of currency in circulation, and secondly from January 1, 2018, paying small businesses a two-year merchant account fee, encouraging them to accept debit cards and other digital payments.