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How To Start Ecommerce Business in India – A Complete Guide

Starting an ecommerce business is a lucrative prospect, especially in a developing nation like India. India, being a thickly-populated country with diversity in cultural & traditions, there are plenty of opportunities for eCommerce entrepreneurs. But, what has been the real game-changer is that over the decades, more and more Indians have access to the Internet.

India has one of the fastest-growing eCommerce markets, and many experts anticipate the size of this industry will be 1200% by the year 2026. Government favourable FDI policies have brought tremendous foreign investment in the eCommerce sector of India.

Another solid reason for the rapid upward trend in the Indian eCommerce market is the increasing sales of 4G Internet-powered smartphones throughout the country. Today, Indians have high-speed Internet to buy their groceries, fashion, electronics, and other stuff, from the comfort of their couch or while commuting to their office.

In the hustles of life, the e-commerce Apps and websites have proved to be a life-saver for the Indians population. People love the convenience to shop anytime, above all, lured by amazing deals & discounts tactics.

So, it’s inevitable that India in the next few years or maybe a decade will be listed amongst the top eCommerce markets in the entire world.

If you are in the final phase of launching your e-commerce startup in India or planning to do so in the coming years, then this article is a must-read for you. As, here in this detailed article, we’ll answer some of the most queries related to e-commerce business in India in an easy-to-read form. What We’ll Cover:

What is an E-Commerce Business in India?

The eCommerce business in India is witnessing a massive growth that is backed by the increasing sales of smartphones and improvement in the speed of the Internet. Moreover, the growing affordability of the Internet in India has settled the growth of the eCommerce industry in the country.

Not just the big brands, even the small retailers are taking a plunge into the eCommerce market of India by launching their dedicated App or online store. Market statistics suggest the growth rate of the Indian eCommerce industry is 25%, and by 2022, the industry will be worth $100 billion. Wow that an impressive number, isn’t it?

How To Start Ecommerce Business in India

There Are a Myriad of Benefits of Starting Ecommerce Business in India, and a Handful of These as Follows:-

  • Your Shop is Open 24*7, Even You Sleep.
  • Reach a Wider Audience Base
  • Significantly Improve Sales
  • It is More Cost-Friendly to Build an Online Store Than a Physical Shop.
  • Attractive Business Opportunities.

The E-Commerce market in India can empower small retailers and manufacturers to take their products to a broader customer base, which in-turn can soar their sales numbers.

However, a successful eCommerce business in India isn’t just about hiring a developer to build your site and receiving orders like crazy. No, that’s true, the Indian eCommerce market is thickly-competitive, to make you mark, you need to do comprehensive research work, understand your target audience, your market rivals, and then formulate a well-crafted strategic plan.

When evaluating your competitors, you must carefully know their strengths, their weaknesses, their USP, and their marketing tactics. Always keep in mind, analyse your market rivals, but don’t copy their model of business, because what’s working for them may not work for you.

Now, coming to the compelling reasons why you should start an eCommerce business in India in 2020, here are a couple of highlights.

1. Ecommerce is the Future

Yes, in this fast-paced world, eCommerce seems to be the future, because people these days have next to no time to shop for everyday groceries, buy clothes, or even search for electronic appliances for their home. Till 2019, the eCommerce industry of India was soaring at a good rate, but the outbreak of COVID-19 has further fueled its growth. The coronavirus pandemic has changed the way Indians shop, in this age of social distancing, no local sales.

These changes have hampered the retail business in India, but some of the smart businesses have made a move from physical stores to online stores to survive through these tough times. With pandemic not coming to an end in the near future, market veterans believe that e-commerce is definitely the future.

2. Easy to Set Up & Run

Yes, you heard it right, building an eCommerce business is easier than a retail outlet. All you need is to hire a trustworthy web development company to create a dedicated online store where you can list all your products or services. In addition, you need a well-defined, tailored marketing strategy to stay competitive. You can outsource your project to a marketing agency, they’ll take care of everything, while you focus on the bigger picture of your business.

Once the eCommerce website is developed, meaning it is really easy, you can upload new products, offer great deals to attract buyers. Now, if you want to build a physical retail business, you’ll have to find commercial rental property. If you want to start your business at a premier location, then you’ll have to pay a heavy rent. Plus, there are numerous overhead costs that make the online retail business a preferred option.

3. It’s Practical & Scalable

You don’t have to start big with your eCommerce business. First, build an aesthetically-attractive online store, but make sure it is user-friendly to use. Then, implement a proper marketing strategy, and as your business progresses, you can invest wisely. You can even expand your product range. Based on your business performance, you can think about expansion & acquisition.

4. India is a Digital Savvy Nation

Last but not least, what makes India an apt destination for your eCommerce venture is the young segment of society. India is a young nation, with the majority of its population having access to the Internet, and as the number of online shoppers is soaring, there is no better time than now to tap into the booming e-commerce market of India.

In the next segment of this article, we’ll be answering the billion-dollar question, is the eCommerce business in India profitable?

Is E-Commerce Profitable in India?

India is a value-sensitive market, therefore with respect to the global ecommerce industry, the profit margins are low. But, the sales are much higher. A smart business with heaps of practical experience can easily run a profitable ecommerce business in India.

Moreover, in comparison to offline selling, online retail business is much more profitable in India. Here, is a quick rundown of actionable tips to make your online store in India more profitable, let’s find out:-

1. Personalization

One of the most untapped territories of the ecommerce industry is personalization. We know, online & mobile shopping is scaling new highs with each passing fiscal year.

With more people switching from traditional time-consuming to convenient online-shopping, you can expect the competition in the ecommerce industry to get intense. To convert more leads, and increase the database of repeat customers, you need to create a memorable experience for your shoppers. That’s where personalization has an integral role to play.

So, what is it? It’s like when someone enters your physical store, you create a bespoke customer experience, which is tailored to their specific needs & budget, and then gently encourage them to make the all important purchase.

The personalization aspect in the terms of an ecommerce means:

  • The Site Must Be Navigational.
  • Content Should Be Personalized.
  • Real-Time Offers.
  • Dynamic Remarketing.
  • Subject Line Personalization.
  • Third-Party Data.
  • Database Segmentation.
  • Contextual Messaging.

To learn more about these elements, you must visit top ecommerce websites in India like Amazon.

2. Email Marketing

Email marketing even in India is surprisingly effective. Despite the popularity of Facebook, Twitter or Linkedin, email marketing is worth an investment. It is not a means to attract new customers to ecommerce stores, but also to encourage your previous customers to trust you again.

If the email communication you’re having with customers is for order confirmation and shipping tracking, but you are missing out on a huge opportunity to drive more sales and build loyalty. Steps to build a ROI-driven successful email marketing strategy:

1: You Got to Identify Your Goals.

2: You Have to Pick the Right Tools Email Marketing

3: Make it Easy for Your Potential Customers To Join Your List

4: Share Personalized Enticing Offers.

5: Analyse Your Performance, and Continually Tweak Your Strategy

Email marketing is not an overnight thing that will open floodgates of traffic to your online store, and drive sales. Instead, an effective, incremental approach can lay the robust foundation for your online retail business.

3. Make Videos

The Internet savvy people these days are more attracted to videos than reading the entire text of an article. If you want to convert more, then you’ll have to move the visuals of your site. Don’t focus on the content, as no one will go through a lengthy text, give them high-quality images and videos to attract them. This makes video marketing an essential tool for marketing of your brand and products.

The video or gif must be about educating the buyer about the product they’ve landed or planning to buy. The various types of videos you can include are : customer testimonials, unboxing videos, behind the scene presentation. Place these videos on the product page, social media channels, emails, and other marketing channels.

4. A Content Strategy

Yes, people don’t want lengthy content, instead, they are attracted by crisp text that delivers actionable results. The primary objective of content marketing is to boost brand awareness, spread a word about your products, and bring traffic to your product page.

5. Social Media Following

Social media channels like Facebook, Instagram and Twitter have experienced significant growth over the past over decade for brands. You’ll need to plan a proper social media strategy, after thoroughly understanding your objective, and marketing goals.

Don’t think social media marketing is only about posting promotional product posts, instead it’s more about connecting with your prospective audience by posting valuable knowledge. For instance, if you are selling vegetables online, then share facts about different fruits every day.

6. Drive More Testimonials & Reviews

One of the powerful means to drive more sales is to encourage more testimonials and reviews from your happy customers. It has been proven people tend to more likely purchase a product if they see a hoesnt online recommendations. There are many ways to drive more reviews:-

  • Send a Follow-Up Mail.
  • Ask for Honest Reviews and Ratings for Your Product on Your Social Media Page.
  • Offer Some Sort of Incentive For a Review.
  • Once you’ve a good amount of reviews, use them as your marketing material to promote your products.

In the next section of this article, we’ll discuss the various types of ecommerce business. So, let’s find out:-

What Are the 3 Types of E-Commerce Websites?

Let’s talk about the three top types of eCommerce websites:-

How To Start Ecommerce Business in India

1. Transactional Site

Internet-savvy people who do online shopping frequently are more familiar with the transactional sites. A transactional site is simply an online presence of a physical store, such as an electronic store or grocery mart. It’s like a showroom for a manufacturer; one example can be the official website of Hewlett-Packard.

A transactional site allows users to browse all the products available in the store, pay for the product online, and finally get the delivery. A transactional eCommerce site is integrated with tools such as CRM, web analytics, logistics, order management, inventory, marketing, and other key elements of an eCommerce store.

2. Static Content Site

Unlike a transactional site, a static content eCommerce website is created with the objective of improving brand awareness, rather than making online transactions. Such a website is similar to a brochure; it provides available information about the products/services before your customers can make up their mind to purchase.

Since the content of this type of site is static, there are less overhead costs associated with online transactions. It is much more cost-friendly to build & run a static content site than a transactional website. A modified version of such a website can be the feature to book the product online.

3. Marketplace

Last, but the most popular eCommerce model is online marketplaces. It is a kind of website that bridges buyers and sellers, or in other words, an online platform that sells products of various brands.

One most popular example is Amazon, it doesn’t sell its own products, but allows manufacturers and sellers to register on their marketplace to sell, and they take a commission on every purchase. Online marketplaces are making bigger profits than the other two types of eCommerce websites.

Next up is an important discussion on the best type of e-commerce business to start in India.

What is the Best Ecommerce Business to Start in India?

Online marketplaces are booming in India, and each passing year, they are scaling new peaks of revenue numbers. There are mainly four types of eCommerce marketplaces:-

Best Ecommerce Business to Start in India

1. Vertical E-commerce

These are the marketplaces that sell products of a similar category from different brands & vendors.

2. Horizontal E-commerce

A marketplace that sells products that have similar characteristics.

3. Global E-commerce

A global marketplace is one that has no limitation when it comes to the products they are selling.

4. Hybrid E-commerce

A type of marketplace that sells products from other brands, as well as their own products.

Marketplaces are responsible for more than half the online sale transactions.

Below Are Some Key Perks of Starting an Online Marketplace in India:-

1. High-Revenue

Since the revenue is commission-based, you’ll always be in profit. Strategically prepare your commission model in a manner that you are getting good revenue for each product sold on your platform, and also attract sellers to list their products on their marketplace. Apart from the direct commission on the product sale, you can monetize your online marketplace through listing fees, subscriptions, advertising, and many other additional services.

2. Automation

Another benefit associated with running an online eCommerce marketplace is the high degree of business process automation. Since you are only getting a commission for each product sold, there is virtually no requirement for manual processing, especially in terms of paperwork, as everything is automatically within the online marketplace.

3. A Scalable Business

An online marketplace is less financially riskier than an online store because you don’t need to invest in inventory. Marketplaces can be expanded quickly, as the sales soar, you can quickly add more vendors to meet the demands. The only challenge someone running an eCommerce marketplace has to maintain a fine balance between the demand and the supply. High-quality brands or vendors attract more customers, but more customers attract more sellers.

4. Customer Interest

Whether you are selling just an online category of products or like Amazon offering all kinds of products, you are presenting your potential buyer with a wealth of options from multiple manufacturers/vendors. People will prefer to browse your online selection of products, rather than to limit their choice to a single brand.

So, from the above, we can deduce setting up an online marketplace is the most preferred type of e-commerce business model. But, if you are a brand offering B2B or B2C products, then creating a transaction site is the right option.

Running an online marketplace requires a big marketing budget compared to the other types of e-commerce models. In a nutshell, you gotta weigh-in your options, carefully understand the advantages & disadvantages of each type to zero down on the best option.

What’s next? How much does it cost to build an eCommerce business?

How Much Does It Cost to Start an Ecommerce Business in India?

An idea is not enough to start an eCommerce business in India; you need the monetary resources to set up your business. Here are the bare necessities to launch your basic eCommerce store in India:-

1. Domain Name

The domain name is the name of your eCommerce site. You have to pick a domain name that is easy to remember, yet people can quickly relate to the products available. Generally, the cost of a domain name is between $0.99-$15/year.

Domains are not expensive; you can surf different domain names, and check their availability on GoDaddy. A pro tip is to go with domain extensions like .com; however, extensions such as .clothes, .cheap are becoming quite popular these days.

2. Hosting

Hosting is the fee you pay to host your eCommerce site on a server. The typical cost is $3.50-$250/Month. Without hosting, people won’t be able to visit your website. There are two broad types of hosting, one is the shared hosting, and other being the private hosting.

Shared hosting is the most affordable type of hosting model because you’ll be sharing the resources with other sites. This model is apt for an upcoming eCommerce store, with not more than 100,000 visitors per month.

Private hosting, on the other hand, means you’ll be paying for your own private server. However, it is slightly costly, way more reliable, especially when you have a lot of monthly users.

3. Inventory

You cannot launch your online store without having something to sell. Having that said, you’ve to invest in inventory for managing your products in and outflow. If you don’t want to invest in inventory, then whenever you receive an order request, you can forward it to your supplier, and they can ship directly to your customers.

4. Payment Processing

Finally, let’s talk about payment processing. All the payment processors charge you roughly 2 to 3% in addition to a transaction cost. All these costs are pivotal when it comes to selling your products and setting their pricing.

Apart from these, you need to hire a professional web developer to build a tailored eCommerce based on your objective and marketing goals. You may need qualified graphic designers who have extensive knowledge to create extremely creative, high-quality images that attract your visitors.

You also make the graphic design to build a dedicated logo for your eCommerce store. To stand your authority in your target market, you probably require to rope in a professional digital marketer to promote your eCommerce store and improve your lead conversion rate.

Now, let’s move to the final segment of our article, which is How Can I Start Ecommerce Business?

How Can I Start Ecommerce Business in India?

Here is a quick rundown of the steps for starting your eCommerce business from scratch.

The eCommerce in India is exploding, and brick and mortar are moving to the online store.

Step 1: Research Ecommerce Business Models

Research is the first crucial step in starting your eCommerce business in India. As the different business models have been explained earlier, you need to analyze them, and then make the final decision.

Step 2: Start Ecommerce Niche Research

Choosing your niche is important when planning your eCommerce business in India. Thoroughly research work to identify all the successful companies in the space. Don’t always go with an overly crowded niche, stay clear of the domains which have been dominated by big brands.

Step 3: Validate Target Market and Product Ideas

Now, you’ve identified a business model and niche. Suppose you won’t be able to make any sale if you don’t know your target markets. Who are your ideal customers? Once you are well-aware of your target audience and what image you want to present, next is coming up worthy product ideas.

Step 4: Register Your Ecommerce Business & Brand Name

Before you set up your online store, there are certain things to take into account:-

  • Pick a Store Name
  • Register Your Business
  • Get Your Business Licenses
  • Get Your Employer Identification Number
  • Find the Right Vendors

Step 5: Finalize Your Ecommerce Business Plan

So, by now, you probably have a good idea of how your eCommerce business will be. You know your business model, target audience, products, and brand name. Now is the right time to put your plan over a piece of paper, determine your startup costs & monthly expenses. Your business plan involves details such as logistics, staff, product sourcing and marketing budget.

Step 6: Create Your Online Store

Once you own a legally registered business, next is building your online store. It starts with buying a domain name, hosting, and hiring a coder to list your products. Make sure the design of your eCommerce store is attractive, yet user-friendly to browse.

Step 7: Attract Customers To Your Ecommerce Website

Last but not least, you have to draw people to your eCommerce site; for that, you have to invest in SEO, PPC, and SEM. Target all the relevant keywords and queries Internet users try to search for products sold by your website. See the top eCommerce stores are investing heavily in online marketing.

Conclusion

So, we’ve reached the end of the article, and by now you probably are demotivated about starting your eCommerce store, since there is so much to think about. But, if you can have patience, and plan things well in advance, nothing will stop you from launching a successful eCommerce website.

About Nandini

Nandini Yogi is Co-creator and Senior Editor at Online Business in India . She is Writer by Heart and Business Developer by Profession. You can connect with her on LinkedIn and Instagram.