How to Establish an E- Commerce Website

E- Commerce is estimated to be 13 billion $ Sector, with Projections of it touching more that 45 billion $ by 2020. Biggest problem in starting a e commerce business is family hurdles.

If you are a entrepreneur and if you plan to build a successful E – Commerce Company you need to take care of legal permissions, finding the right business model, efficient delivery and payment mechanisms.

To Start a E – Commerce venture you need at least 1 lakh to 2 lakh Rupees as investment. The cost varies depending on the scale and categories of the product you want to sell and the kind of business model you adopt.

A leading E – Commerce Company secretary says most E- Commerce companies use marketplace model and they also use border terms such as information and technology services when they make the company registration. “It’s important how you define your objective in the memorandum; it affects the kind of permission and the whole nature of business that you will do and, more importantly, the foreign direct investment you can take

Up to 100 per cent foreign direct investment is permitted in companies defining themselves as ‘information and technology’ companies.

Things to keep in mind while establishing E Commerce Company

Investment required is Minimum 1 lakh to 2 lakhs.

A memorandum with the objective, liability of member, capital clause of the company and article defines powers of the management

A clear objective of the company is crucial. A marketplace company defined as IT services, marketing, etc. A marketplace company needs to register with the service tax department for providing services.

Marketplace Company needs to pay service tax of 12.36% and 30% tax on profit.

An inventory company defined as retail, wholesale, cash & carry or retail trade. An inventory-led model needs Trade Identification Number or TIN from the state sales tax department

If company working from leased or self-owned premises and has at least two persons, it needs to register under the Shops and Establishments Act, 1954, of the state

If there are at least 20 workers, registration with the employee state insurance necessary

If Labourers on Contract and are more than 20 number , then registration with the contract labour department and compliance with labour rules needed

To launch the platform, registration for domain address, Microsoft and other software licenses needed

If you are doing business in Mumbai then you need to register with special professional tax & local body tax and compliance with the labour department. No such taxes need to be paid in Delhi and Haryana.

If customer care services aren’t outsourced, other service provider (OSP) registration needed for bandwidth & phone.

Twin-company structures used to avoid foreign direct investment (FDI) rules. In inventory-led model, where FDI is not allowed, one company is wholesale/cash & carry which have no FDI cap. Enforcement directorate looking out for such companies

Identify the sellers through advertisements in local trade magazines, database of merchants, cold calls and word of mouth.

The key to the success of your market-place website will be finding good sellers who offer great products at low prices

It’s the promise of faster delivery that will become the main success point in e-commerce after the price war.

Choosing best courier service is most important thing to reach your target customers, because only few courier services can reach majority of towns and cities.

By Hari Babu Digital Marketing Trainer

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