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It's 2019 and the ecommerce wave is getting bigger and bigger. As you know, it's been all over the news for the past few years, and it doesn't look like it’s stopping anytime soon. With the millions of Indians expected to enter the world of online shopping in the next 10 years, the future of this industry looks brilliant.
This short ecommerce startup guide is meant for Indian SME's. It’s a quick overview of the different aspects you will need to consider to be successful on ecommerce marketplaces and on your own online store. It's an easy read, with many articles from around the globe as well.
TABLE OF CONTENTS
The various companies you will be working with, such as payment gateways, shipping providers, marketplaces, etc will need to see your documents before working with you. So if you are setting up a new business, it is important to get this done as soon as possible.
The same laws which apply for offline retail, would apply here as well. The simplest way to start selling online is by registering a Sole Proprietorship, along with VAT. This type of registration has the lowest number of formalities, and is easy to run on a day-to-day basis. But there are other registrations which offer more legal protection and other benefits like a One Person Company (OPC), Limited Liability Partnership (LLP), or a Private Limited Company. It is best to speak to a legal professional to understand what your business needs would be.
A few things to consider:
- Business Registration
Sales Tax Registration
- Vendor/Supplier Agreements
- Website Terms & Conditions
- Website Privacy Poilicy
Choosing a Form of Business Organisation
How to register an ecommerce business as a sole proprietorship?
Starting A Business In India – New Simple Step-By-Step Process
Know These Legal Requirements Before Starting an Online Business in India
How to start an ecommerce business in India
Ecommerce Marketplaces can be compared to shopping malls. They are established sites, which allow different store/brand owners to list their products and start selling to the crowds that they attract. It is generally the first step a retailer would take to start selling online. Its quick and easy.
You don’t need to spend on building your own site, and your marketing is already taken care of, since they bring in the crowd. All you need are good products, available at competitive prices. There are many established and upcoming marketplaces in India, and it is good idea to get listed in as many as possible.
Benefits of Ecommerce Marketplaces
- Minimal startup expenses.
- Gain visibility with zero marketing expense.
- Your marketing cost is a fixed percentage, since you only pay per sale.
- Get discounted photography and shipping fees by using their tie-ups with service providers.
- Receive shipping and packaging support, including pick-up and returns.
- You have the option to place ads within the marketplace for even more visibility.
- You have the option to completely outsource your warehousing and shipping over to them.
- It can be hard to build your own brand name.
- Sales commissions reduce your profit margins.
- It can be very price competitive, unless you have a unique product.
- The returns, exchange, and dispute processes have to adhere to the marketplace guidelines.
- Need to wait for their payment cycles, to receive your revenue.
- You are forced to compete with similar products from other sellers.
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It is a great idea to start with the marketplaces, because of the main advantages of lower cost and the faster speed to market. Building your own ecommerce store takes a certain amount of commitment and patience on your part in order to make it work. A lot of your success depends on your previous customers loyalty to your brand, and of course, good marketing to bring in new sales.
Benefits of Having your Own Store
- Much higher branding capabilities, and adds credibility.
- You don’t pay any sales commissions; so all the profit is yours.
- Better payment cycles, since you will deal directly with the payment gateways and COD shipping providers.
- Make your own rules regarding returns and exchanges.
- Freedom to display your products any way you want, for eg: using product videos, interesting web design or creative photography.
- Sell customizable products. For eg: take custom measurements for clothing, etc.
- You will build your own customer database and own it.
- Build a newsletter email list of your site visitors so that you can convert them to customers in the future.
- Cross-promote your own products, instead of having to compete with the related and similar products of other retailers.
- Get a much better understanding of your customer demographics, and usage patterns.
- Customize your packaging material to suit your brand.
- You will need to build the store, maintain it, and market it. And this requires a certain amount of knowledge, time, and capital.
- You might need software/tech support, depending on the type of store you build. But you can overcome this if you go with a cloud-hosted platform like we recommend below.
- Shipping and online payment gateway fees can be high if your sales volumes are low. Here again, this can be overcome if you take the advantage of the crowd, which will be explained below.
- Marketing cost can be high, depending on how good your brand loyalty and marketing strategy is. Though later on in this guide, you get a list of marketing methods to help you get started.
There are two ways to build your own store. The first method is using cloud-hosted platforms, and the second, is using a self-hosted platform. But for most companies which are just starting off with online retail, the cloud-hosted option is best.
Cloud-hosted platforms (which come under 'Software as a Service' companies, or SaaS) would take care of everything technical that you need, as well as an easy-to-use website builder, website security, and a lot more. Look at it as if you are renting out a ready-made store (with lots of design/branding/marketing options) which can be easily customized, rather that building and maintaining one from scratch. This is the easiest way to get your store up and running, using up very less capital, and without wasting much time.
You get all the popular features of an ecommerce store, along with the option to add advanced features if you want them. Keep in mind that these types of online stores are of very high quality, and are used by established online retailers all over the world. And the technology keeps getting better and better every year…
Benefits of a Cloud-Hosted Ecommerce Platform
- It’s quick to start off, since the technology backend has already been built, and you get a simple to use website builder to customize the store to suit your brand.
- You can have your own custom domain name for your store. You can buy any available domain like www.yourstore.com or www.yourstore.in from registrars like Big Rock and then link it to your account.
- Up-front and maintenance cost is low, and in most cases there is no setup fee. You can try out the platform with a free trial, then make your first payment and get going.
- The store management console is quite user friendly and easy to learn. It is designed for people who don’t know much about web development. And you can have separate user accounts for your staff as well.
- The platform is regularly updated to stay upto date with the latest needed features. Plus, you will have the option to easily add external tools to enhance functionality.
- You get in-built online payment and shipping support. So these two complicated aspects are much easier.
- You could also integrate your store inventory with your marketplace and offline inventory, which makes it much easier to manage multiple sales channels simultaneously.
- The success of your store depends on the efficiency of the company that runs the platform. Since they are handling everything themselves, a lot depends on them.
- Only the most commonly used features are available by default. Extra functionality can be added to the store, but will increase your cost.
- It can be hard to get all the customizations that you want. So you have to be specific about what you really need and check if the platform can support it before you start off.
Shopify is one of the most popular and the most time-tested cloud hosted ecommerce platforms worldwide. They power over 800,000 ecommerce stores, and have made over a $100 billion in sales across all stores on their platform since launch.
Price: Starting at INR 625 (approx) per month (billed yearly)
This is the other way to build your own store. Self-hosted ecommerce platforms give you full control, and complete flexibility to make your store work any which way you prefer. You can use an open source platform, like Magento, WordPress, etc, or a paid enterprise platform to build it.
This used to be the only way to create a good internet storefront. But now that cloud-hosted platforms have gotten better and more reliable, a self-hosted store is recommended only if you need very specialized functionality.
It is best to speak to a web design/development agency to discuss exactly what you need. They will be the ones who build and maintain it for you. There are many options, methods and details to choose from, and the right choice would depend entirely on what your specific needs are.
You could try asking a question for more guidance, if you will be taking this route.
If you are looking for reliable web hosting, please consider Amazon Web Services. They are the best in the business, and are highly recommended.
An often overlooked aspect on an online store is Conversion Rates. It simply means the percentage of visitors to a store who end up becoming your customers. It is critical to take this into account, since for eg: increasing your conversion rate from a mere 1% to 2% would literally double your sales!
Lets go through a few of the simple things you can do with your store which would make it a more effective sales machine.
Adding a live-chat option helps your visitors can get their answers immediately. It gives your visitors more confidence in you.
Give special emphasis to your email newsletter signup form. The bigger your email list, the more repeat visitors you can attract.
Make Products Easy to FInd
Add a product in multiple product categories if applicable. So that your visitors will be able to find them more easily.
Display Your Phone Number
Visitors would feel more comfortable buying if your phone number is displayed clearly. Preferably on the header.
Easy to Read
People don't read whole webpages, they just scan them. So highlight the important elements all over your website.
Add to Cart Button
The colour and size of the 'Add to Cart' button should stand out from the rest of your website. The extra attention helps.
Worth A Thousand Words
Make your pictures prominent on the product page. Great photos are the key to selling more of your products online.
360 Degree Photos
Showing 360 degree views of your products clears any confusion your visitor may have. It is known to ease their anxiety.
Photos of Variations
If a product has multiple colours or other variants, make sure to show these different product images clearly as well.
Think Like a Customer
While describing your product, use words your customers would use themselves, not what you would use with your suppliers.
Cut the Clutter
Product introductions should be brief, interesting and convincing. You have very little time to make a good impression.
Cross-sell related products with each other. Customers are more likely to buy if they find more of what they need.
Enable Customer Reviews
Customer reviews will allow your visitors to make a better decision. Thus reducing your cost of returns and exchanges.
Keep the checkout process quick, simple and easy to finish. Avoid complicated navigations with too many options and pages.
Enable Guest Checkout
Forcing customers to sign up before checkout is a hindrance to the buying process. Checking out as a guest makes it easier.
The online payments industry has really progressed in the last few years in India. These companies have been trying to keep up with the demand from consumers and e-tailers alike, and they are getting better and better.
If you are selling on marketplaces, then you don’t have to worry about accepting payments at all. Since it is completely taken care of by the marketplaces themselves. Whether it is Net Banking, Credit/Debit Cards, or Cash on Delivery. They will accept the payment from the customer through these various methods on your behalf, and transfer it to you regularly, after reducing their commission, shipping fees, and other charges. Different marketplaces have different procedures regarding their charges and timelines, so it is important to study them before you start working with them.
Your Own Store:
On your own store, you have a lot of options to choose from, but there are basically two ways to do it. The first way, is to get a payment gateway directly from the bank itself. These gateways tend to have a higher transaction success rates, and also have lower fees. But they might require a hefty upfront deposit from you, and there are time-consuming compliance related procedures that you will have to go through.
The second way is by using third party payment gateways, who act as intermediaries between financial institutions and your store. This is the preferred method for many ecommerce stores, since it is much easier and quicker to start accepting payments. Many of these gateways have a free setup plan, and their due diligence is also quick. But their transaction fees are higher, when compared to dealing with the banks directly. Just make sure to check which payment gateways are supported by your cloud or self-hosted ecommerce platform before you finalize on the gateway.
INVENTORY, SHIPPING & PACKAGING
The main principle, which defines good inventory management, is quite simple: You need to have enough stock to satisfy the demand from your customers, while making sure you don’t tie up too much of your capital while doing so. You need to anticipate the demand using your statistics and insight.
In an offline store, in most cases you need to have the stock in hand, but in an online store, you have more flexibility. Here are a few ways you can manage your ecommerce inventory:
You procure the product only after the customer places the order. This model will free up your capital and warehousing space. It does have the potential to cause problems with delays, but with proper planning and communication, you can get good results.
In this inventory model, the products which are in your possession, are still owned by your supplier. You pay your supplier only when you have sold the products to your customers. The obvious benefit here is that you free up your capital.
Ask the wholesaler or manufacturer to ship it directly to the customer. Here you don’t handle inventory at all, so it is very cost effective and doesn’t take up any of your time, or warehousing space. But you give away complete control over the quality of the products, the packaging, and delivery speeds.
As you can see, each of these inventory management models have their advantages and disadvantages. So it’s a good idea to use a combination of them and then see what works well for your business over time.
This has been among the biggest pain points in the industry over the past few years. If you have been in business for a while, you would know that India has always had very few courier companies and they were either expensive, hardly reliable, or had lesser coverage across small towns and villages.
But things are changing fast. Recent venture funding has poured into logistics companies that are specialized in ecommerce, and the older established courier companies have started their own ecommerce divisions as well. So they are now much more suited for online retail, by offering support for Cash on Delivery payments, quicker shipping times, pick up and drop facilities, and much more.
The high shipping fees are still a concern for many retailers though. Especially when you take into account the charges for returns and exchanges, coupled with COD. But with the growth expected in the ecommerce industry in the coming years, the scale of operations, and new innovations are expected to bring the prices down sooner or later.
If you are selling on marketplaces, they will basically handle almost everything. They setup pick up and returns, and you get good rates because of their scale of operations.
On your own store, you will need to tie up with logistics partners directly and negotiate your rates.
Most new etailers don’t give much attention to packaging. Many resort to the old and overused style of brown paper with a lot of duct tape, but there is so much more we can do. You should realize that your package is the first point of physical contact between you and your customer, and it leaves a big impression on them.
Choose your packaging material based on 3 factors:
It is critical to pack your product depending on how fragile and valuable it is. Since once you ship the product, you have no control over how people handle it before it reaches the customer. There are many different types of packaging materials you can use, like corrugated boxes, bubble bags, air packets, etc.
Pilferage and thefts during shipment do happen occasionally, and it is wise to take precautions. The packaging industry in India is evolving, largely because of the growth of ecommerce, and now there are better options to choose from, such as ‘anti-theft’ packaging.
Consider how you can use the packaging as an extension of your brand. The easiest thing to do is to add your logo, but there are many more creative ways to enhance the customer experience and promote your store.
MARKETING YOUR STORE
So here we are. You now know how to build a great store which can bring in a lot of orders. But now comes the hard part - which is promoting it 🙂
This guide is too small to thoroughly explain a massive and dynamic subject such as online marketing. But what it can give you is a simple overview of a few of the most popular methods of promotion. What you are going to read below will come into use when you are speaking to online marketing specialists, who you will probably be working with sooner or later.
The first thing you should realize, is that unlike the offline world, nobody is going to ‘pass by’ your store every now and then. You don’t have a physical location, so customers are not going to simply notice you and walk in to your store. This means that you have to make the effort to get in front of them, and make your presence felt.
There are various ways to attract visitors, and all of them have their advantages. The ideal marketing plan involves picking around 3-5 of the methods mentioned below and executing them consistently over a period of time, while making sure you test your results and adapt accordingly.
Search Engine Optimization (SEO)
This is one of the most powerful ways to attract visitors. These are the visitors who come from the free and natural search engine results. A large percentage of users will head to Google or Bing to research and find a product they are looking for. So if your ranking strategy is executed well, you can expect a steady stream of on-going, and very targeted traffic.
These search engines spend millions of dollars every year trying to make sure that their secret algorithms find the best content possible for their users. They measure many factors such as originality of content, keywords, speed of the site, the amount of time the user spends on the site, the quality of links pointing to a site from other sites, and many more such factors. It's important to understand that their goal is to display the most relevant and reputed websites to their users. So you will need to play by their rules, or they will push you down the rankings.
- Increases your brand recognition, since people are generally more loyal to websites on the first page of the results.
- Investment in SEO keeps keeps on giving. Once you get up there, it is easier to stay there.
- You gain customers naturally who are searching for a specific product online, therefore your sales conversion rate would be high.
- Be careful in targeting the right keywords. There is no point being #1 for a particular keyword if not many people are searching for it.
- It is a long term game, and your efforts will take time to take effect.
- You will need to work on it consistently to maintain your rankings, since you are competing with others in your industry who are moving up the rankings as well.
Pay Per Click (PPC)
Both Google and Facebook are the two of the largest internet companies today, and they bring in billions of dollars in revenue every year. Do you know how most of their income is earned? It's through Pay Per Click advertising. This tells you how effective and popular this type of marketing is for businesses all across the world. It's called Google Adwords, and Facebook Ads.
These are the advertisements you find along side the search engine results, and on your social network timelines. It follows an auction based format, where other advertisers in your industry bid for higher placement of their ads for specific target markets. Both Google and Facebook make efforts to help these ads get visibility, so you can be sure that it will get noticed and bring you traffic.
There are other companies with whom you can promote through PPC as well, but Google and Facebook have the largest audience reach by far. So it is best to start with these two.
- It is quick traffic. You can be up and running within a day.
- Very targeted. You will bid for particular keywords or target markets only, so you can be sure the traffic is interested in what you are selling.
- You can also target any city, state or country in the world, along with age groups, gender, language etc.
- You will pay only for what you use, so your budget is very flexible.
- The bigger the market, the more expensive each visitor will be. But yes, you can bring the cost down by writing better ads and having better audience targeting.
- Easy to waste money very quickly, if you don't have knowledge of the strategies involved.
Emails have always been the most used aspect of the internet, and therefore it has always been one of the best ways for businesses to stay in touch with their audience. It is also well known that almost nobody would make a purchase on a website on their first visit. It usually takes around 5-10 visits before they decide whether they are going to buy from you or not. This makes it a great idea to start collecting email addresses as soon as you launch, since you can bring them back to your store later on.
You can either buy email marketing lists from the 3rd party vendors, or you can build your own email list on your store. It is recommended to build your own email list, because you can never be sure if the email list you are buying from someone else contain verified people who are interested in your products.
- A good way to gradually build brand awareness and connect with your audience.
- Very useful during sales promotions like discounts, new arrivals, etc.
- Quite cost effective when compared to other forms of marketing, since you built and own the database yourself.
- People can stay subscribed on your list for a very long time (many years), as long as you are useful to them.
- You can segment your list based on factors like age, gender, location, etc and send them targeted messages.
- As more and more stores are using email marketing, it is getting harder to attract attention.
- Takes time to build a large list of subscribers.
- Email providers like Gmail, now allow users to separate marketing messages from their regular mail, so the effectiveness is gradually reducing.
I’m sure you already know that ‘information’ is at the heart of the internet. Along with communication and shopping, it is one of the main uses for the vast majority of everyday users. And for a business owner, blogging is one of the best ways to publish content online. You should definitely consider adding a blog to your ecommerce store, and share knowledge about your industry, or anything else you think your target audience would be interested in.
As mentioned earlier, the search engines are always looking for good and original content to give their users, so a blog is a lot more suited for higher search engine rankings.
- Great for SEO, since the search engines love original content.
- It’s a great way to build your brand identity, since you can create any type of content you want. And it stays on the internet as long as you keep it there, so the effects are long term.
- Creates a sense of a community around your store, and it helps your prospects stay in touch with your latest news and updates.
- Easy for your readers to share it with their friends, and maybe even make it viral on social media.
- Needs to be regularly updated, otherwise it could give a bad impression.
- Your content is a reflection of your business so it needs to be done with care.
Social Media Content
Social Networking has taken the world by storm in the last 10 years. Now everyone is in on it, from kids to grandparents. And this makes it imperative that you be there too. Marketing on social networks is basically centered around the creation or sharing of content that attracts peoples attention and encourages them to engage with it, and share it with their own social circles.
You will have to really understand your customers to provide engaging content, and if done well, it can be a hugely beneficial to your brand visibility. This form of marketing is driven by word-of-mouth, which is why it is generally referred to as ‘earned media’ rather than ‘paid media’.
- Creating content can be a lot more economical than paying for ad space.
- Good content can result in exponential viral growth, in a really short time.
- Can be even more effective when used with the content from your blog.
- Great for customer service since many users will contact you on Facebook, Twitter, etc.
- The traffic will not be as targeted as other forms of marketing, since you have little control over who gets to see your content.
- People on social networks are not really in a shopping mood. They are just meeting their friends, and staying updated on what's happening in the world.
There are already a good number of established ecommerce stores by SME’s in India, and many more are starting up everyday. All of them share the same need as yours, which is to increase their web traffic. You need to always be on the lookout for stores which share the same target audience as yours, but at the same time don’t compete with you in terms of the types of products you offer. Then get in touch with them and figure out a way to cross promote each other, so that both of you can benefit from each others traffic.
You could place ads on each others sites and newsletters, share discount coupons with each other, or even write about each other in your respective blogs, etc. For eg: A larger brand might want to partner with a smaller brand for originality or freshness, and a smaller brand might do it for the exposure and credibility. Building partnerships with other stores will definitely pay off in the long run, and create a win-win situation for all those involved.
- There are no upfront costs involved in giving out coupon codes to your partner stores. Plus you get free visibility.
- Since these visitors are coming from complementary stores, and are confirmed online shoppers, the chances of closing the sale is higher.
- Can increase your brand reputation if you partner with other reputed stores.
- Can be tricky to negotiate and come to an agreement which will benefit you both equally. Considering the products, price points, traffic etc will vary.
- Need to be careful, since any wrong-doing by the partner store has the potential to affect your store negatively as well.
There are millions of people across the country who are already in touch with your target audience. These are regular people like college students, housewives, bloggers, and even businesses like service providers, consultants, etc. And you already know that many of them are looking for a way to increase their income.
Your affiliate program could be the way to create a win-win situation. It’s about bringing them on board your company as salespeople for your products, and they would promote your store in exchange for a sales commission. The best part is you would not need to pay anything unless they actually bring in leads or sales. You can imagine how effective it would be if you could over time enroll a few hundred or even a thousand affiliates and support them with promoting your store!
- Your brand visibility can spread like wildfire if you enroll the right type of affiliates. Especially the ones who have high traffic websites or blogs which are related to your product category.
- You will understand the trends and demands of the market a lot better, since you will be in touch with your affiliates and will get constant feedback from them.
- False advertising by the affiliate can hurt your reputation. Also watch out for affiliates who might promote your site using spam.
- Your commission fees can be high since you will be competing with the affiliate programs of other ecommerce stores in your industry, in order to enroll more affiliates.
The best form of marketing has always been ‘word of mouth’, and having a referral program is one of the ways to enhance and encourage it. Your customers already know about you and your products, so the trust factor is already high. You just need to make it easy for them to share, and give them something in return for it.
It’s a very simple process, which can add some virality to your store. For example, you can give an incentive to your customer to recommend your store to others. And you can give another incentive to these recommended people to make a purchase.
It is a little similar to an affiliate program, but the main difference is instead of paying out commissions, you are giving away discounts, or any other special offer of your choice.
- Getting mentioned by a trusted source like a family member, friend, or colleague is probably the best recommendation you can receive.
- If your products are good, your customers would like to talk about you anyway. You just have to make it easier for them to do so.
- And rewarding them for doing so might even make them more loyal to your brand in the long term.
- Giving incentives to your customers to tell others about your store, might lessen the value of the recommendation in the eyes the one being referred.
Discount Coupons, Price Comparison, & Cash Back
Hunting for deals has always been a fun thing to do while shopping, and even more so in India, where bargaining and looking for discounts is almost the norm. So naturally, a lot of online ventures have started up here in India in the past few years, which focus on helping shoppers get the best price for most products available online. These kinds of websites come under three types, which are Discount Coupon Aggregators, Price Comparison Listings, and the most popular format - Cash Back sites.
What they basically do, is sign up for your Affiliate program and become authorised promoters of your products. They do this with many other ecommerce stores as well, and then promote all of these products together in their own website.
Coupon Aggregators list all the discount coupons which you have provided, and send visitors to your store.
Price Comparison sites allow their visitors to sort all the products from hundreds of ecommerce stores according to their price.
And finally Cash Back sites use both these previous methods, and then also offer their visitors a percentage of the sale as a 'cash back' when the visitor makes a purchase.
- Easy marketing with no upfront costs. All listings are free. And since its based on the Affiliate model, you will pay only per sale.
- These portals will promote your offers to their visitors so its a great way to get visibility.
- A large section of online consumers will always buy because of cheaper prices. So you can rest assured there will always be a lot of traffic on these sites.
- Works well with the loss-leader marketing strategy. Which means you make a loss on your initial sale, in order to attract the customer and make your profits on their future purchases.
- But you run the risk of attracting customers who will not buy unless you have low prices, which can bring down your lifetime customer value.
- Its quite easy to get lost among the the competition, unless your special offers and prices are truly competitive.
That's it. This is the end of our short guide. Hope you found it useful!
AND GIVE ANSWERS
Join the other readers of this guide to discuss all things ecommerce. Our community is brand new, and we need you to get it going!
ALL THE NEWS
ON A SINGLE PAGE
Read the latest ecommerce news from the top media sources, and popular startup blogs in India. Updated multiple times a day.