An e-commerce industry is the fastest growing industry of this world it is very help for the starters to build an image using the online medium There are certain questions while starting a e-commerce business like who will be the producers, what is going to be the structure, what e-commerce exactly is.
Whether you want to start an e-commerce company or you are already running an e-commerce company and you are looking to explore more to renovate your business model. This article is going to guide you to get all the essential basics of e-commerce & will also give a brief regarding the step by step process to start an e-commerce company in India.
E-commerce stands for electronic commerce which basically refers to all the types of transactions related to goods and services conducted online for e.g. ordering a household item from Amazon or buying any kind of fashion accessories from Flipkart etc. Whenever any good or services are bought or sold by someone using the online medium , they are engaging in e-commerce.
Nowadays every business is trying to focus on bringing their product or service online in order to reach global audiences. Also, India is coming up with a lot of startup’s attracting the top global investors in the same way, few of them are confronting financing crunches and also discovering hard to sustain in this competitive industry. With growing demands and the affordability and accessibility of online shopping giving new hopes to the e-commerce industry.
Steps to be considered for starting an e-commerce business
Now let’s discuss the above steps in detail getting some highlights on each of them point wise:-
Step 1: Deciding the E-Commerce Business Model Your business;
The type of Business model depends on the business niche & the segment of the market you are targeting, basically there are four types of business model classified as the following:-
- B2B (Business to Business)
This model focuses on providing the products or services from one business to another business. Many of the industries are operating on this model, software companies are developing these type of applications for other companies, logistics companies are also providing the services to companies in transporting their goods.
- B2C (Business to Customers)
Business to consumer is the traditional retail model where the business sells their products or services directly to the individuals customers. When anyone orders any product from the marketplace or the e-commerce site and they have received the product directly to them & the transaction is based on the B2C model.
- Consumer to Consumer (C2C)
For example if someone is moving to another city, items of furniture and other electronic goods which cannot be carried on your own. You want to auction those items on the marketplace, and you found the buyer who is ready to purchase at your given price. This sort of exchange is based on the model of Consumer to Consumer (C2C) using a marketplace to trade, buy, and sell the items in return for a little commission paid to the site.
- Consumer to Business (C2B)
It is a model where the professionals or any skilled individuals monetize their skills to make money by way of providing their skills as a service to different companies. It is also called Freelancing which is one of the common examples of the C2B model. Where the professionals with a diverse skill set in a different domain and industries, auction their services on marketplaces such as freelancer, Fiverr, and UpWork.
Once you have decided the business segment and model here comes the main phase which is registration. Legal Window can help you with selecting the right business model.
There are two models in which in e-commerce business can work which either of the following:-
> Registering your business on an established platform such as Flipkart, Amazon, myntra, Paytm (For Products), as (Urban Clap, Just Dial, curefit) for services;
> Starting your e-commerce platform by creating your own e-commerce portal (website)
Step 2: Registering your E-Commerce business as a corporate legal entity
Business registration is the next step for proceeding towards your entrepreneurial journey a success and a reality and for the same you can start it by registering as a Private Limited Company which the most highly preferable route having the following advantages:-
1. Separate Legal Existence
Once an entity is registered it is born in the eyes of law which means it is separate from its owners, Directors, Managers, shareholders and employees etc. It can operate simply by its bank account and also provides the right to file cases against third parties in case of wrongful act.
2. Limited Liability
As the Company is a separate legal entity its Liability is limited to an extent of its Share Capital or the guarantee provided. The Company’s obligation does not create any right over the Owner’s personal assets.
3. Fund Raising
It is the most preferred entity by the investors also as it provides an opportunity to raise money through Banks, Foreign Investors, Venture Capitalists and the Angel Investors etc.
4. Perpetual Existence
A Company once registered lives forever until and unless it is not winded up the Promoters or the Government.
Procedure for registering of Private Limited Company for starting e-commerce business in India
1. Selecting the name of the Company:
You should select the name that will highlight your business model and should develop such kind of advertisements logo’s as well like Myntra, Amazon, Flipkart, Paytm, Google Pay, swiggy etc.
The name should be unique, different, eye catchy and should not match with the name of any other Company. Legal Window can help you select the desired and apt name for your e-commerce business.
We will file an online application of the name to the Ministry of Corporate Affairs you have selected for your business securing it for a period of 20 days before filing the application for registering the company so that nobody else uses the same and in the meanwhile we will begin with the application process for registration. For the same you have to go to the second step as stated.
2. Submission of documents
For better understanding we will share a questionnaire asking the documents and analyzing the type of your work and guiding you towards the best results. Also, we will be requiring the following documents for registering your e-commerce company:
- PAN Card of the Members and Directors of the proposed Company, Passport in case of Foreign Nationals);
- Identity Proof of the Member and Directors (Aadhar Card/Voter ID/Driving License/Passport)
- Address Proof the Member and Directors (Utility Bill/Telephone Bill/Mobile Bill/Bank Statement not older than two months)
- Latest passport size photograph of Member and Directors;
- Business Address Proof
Owned Property : (Copy of Registry and Latest Govt. Electricity Bill or Water Bill) Rented/leased : Rent Agreement, NOC from the Owner, Latest Govt. Electricity Bill or Water Bill)
Note:- In case of NRI or Foreign National documents of Directors and Subscribers must be notarized or apostilled.
3. Drafting of documents:-
The main object of the e-commerce company should have the activities related to its business model as the prime area for work, We will draft your charter documents i.e. Memorandum of Association and Articles of Association keeping in mind the core work of the e-commerce company’s business model and the areas in which it might expand in future as the Company can only carry out such activities which are mentioned in its charter documents.
4. Submission of documents:-
We will submit your application for registration of Company in SPICE+, it will include the certification from the Company Secretary or the Chartered Accountant as a mandatory legal requirement. The Memorandum of Association and Articles of Association shall also be filed online along with SPICE+ in SPICE e-MoA, SPICE e-Articles of Association.
The Ministry of Corporate Affairs has also provided a special facility of mandating opening of Bank Account in your preferred bank, registration under ESIC, EPFO and has also provided an option to apply for the GST number in another e-form called as AGILE-PRO.
5. Getting your e-commerce Company registered:-
Once the field application gets approved by the Registrar it will share the Incorporation Certificate stating that your Company has been registered and you are ready to serve under the said name
Step 3: Creating your own website as an e-commerce platform or registering in any marketplace
There are two models in which in e-commerce business can work which either of the following:-
> Registering your business on an established platform such as Flipkart, Amazon, myntra, Paytm (For Products), as (Urban Clap, Just Dial, cure fit) for services;
> Starting your e-commerce platform by creating your own e-commerce portal (website)
Legal Window can help you in developing the e-commerce website by assisting you and providing you the guidance for the right website developer or you can get it created on your own.
Step 4: Setting up payment gateway
If you have your own website Payment Gateway is a must, all the major marketplaces have an existing payment gateway infrastructure.
Now wondering what is payment gateway here is the definition it is a merchant service provided by an e-commerce application service provider which authorizes the credit cards or direct payments for processing for e-businesses, online retailers also for getting a payment gateway there are some mandatory documents in addition to that your website must have the following
√ Website Terms of Use
√ Website Privacy Policy
√ Refund Policy
√ Bank account in the name of the business
√ PAN Card of the business
√ Certificate of Incorporation
√ Memorandum of Association
√ Articles of Association
√Identity Proof
√Address Proof
Once the above documents are lodged, a payment gateway will be provided to the ecommerce business to enable online payments.
There are certain payment gateway providers in India which are Instamojo, Razerpay, CC Avenue, PayU ,EBS.
Conclusion:
E-commerce has a way ahead in India as the Government is also aggressively promoting the digital India campaign, startups, skill India and many other such projects which will ultimately increase the market share .
So Awake Arise , here is a new and good opportunity to create a multi billion dollar companies and corporate, data and digital economy is the future and get the same with the help and assistance of Legal Window as minimal cost because we rise with India You may get in touch with our team on 072407-51000 or email admin@legalwindow.in
Author Bio
I am a OCI holder. I am planning to start a Ecommerce market place in India, I am also holding a IEC, PAN no. GST Registered, aswell as an AD Code,
Can I use my IEC licence to export goods for my vendors through Ship Rocket (an e-commerce logistic and shipping software). Is there any legal issues to do so as per the FDI policy for ecommerce