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Discover how to start an e-commerce business with a detailed overview of key aspects such as market research, product selection, platform choice, marketing strategies, logistics, and legal considerations. Get step-by-step guidance to launch and grow your online retail venture successfully.
5 May 2024
Afinthrive Advisory
Starting and running a successful e-commerce business requires dedication, persistence, and continuous learning. Stay informed about industry best practices, adapt to market changes, and prioritize customer satisfaction to thrive in the competitive online marketplace.
Business registration is the first step towards your dream of setting up an online store. For registering your business, you need to decide which type of entity you should form. You have many choices such as starting solo with Sole Proprietorship firm or One Person Company. You may also opt for registering a Private Limited Company, if you have plans to infuse equity or bring in Foreign Direct Investment at a later stage. Usually, Private Limited Company is the best form of organization for an e-store. It has many advantages such as limited liabilities, quick approvals, easy compliances, legal protection, scalability etc.
How To Start An E-commerce Business?
When choosing a business firm for your e-commerce business, consider factors such as:
Different Types of E-com Business :
Sole Proprietorship:
Partnership:
Private Limited Company:
One Person Company (OPC):
Limited Liability Partnership (LLP):
Ultimately, the choice of business firm for your e-commerce business will depend on your specific circumstances, goals, and preferences. It’s advisable to consult with legal and financial advisors to make an informed decision based on your unique needs and objectives.
Once a business is registered, you need to apply for GST Registration, which is a mandatory requirement laid down by all e-commerce platforms. You may then proceed with opening a bank account in the name of business. More details on GST Registrations is available here.
Some e-commerce platforms also insist for their own Trademark i.e. a personalized logo and brand name. It also helps you create your own brand value and goodwill.
The business model of an e-commerce business refers to the strategy and approach used to generate revenue and sustain operations. There are several types of e-commerce business models, each with its own unique characteristics.
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This is the most traditional e-commerce model, where the business sells products directly to consumers through an online storefront. The business may source products from manufacturers or wholesalers and sell them at a markup. Examples include Amazon, Flipkart, and Walmart.com.
In a marketplace model, the e-commerce platform acts as an intermediary, connecting buyers and sellers. The platform provides a marketplace where third-party sellers can list their products, and the platform typically earns revenue through commissions or listing fees. Examples include eBay, Etsy, and Airbnb.
In a subscription model, customers pay a recurring fee to access products or services on a regular basis. This model is common in industries such as media streaming, software as a service (SaaS), and subscription boxes. Examples include Netflix, Spotify, and Dollar Shave Club.
Dropshipping is a business model where the e-commerce store does not keep inventory in stock. Instead, when a customer places an order, the store purchases the product from a third-party supplier, who then ships it directly to the customer. The store earns revenue by marking up the price of the products. Examples include Oberlo and AliExpress.
In a crowdfunding model, the e-commerce business raises funds from a large number of individuals to finance the development or production of a product. Customers typically pre-order the product or contribute to the campaign in exchange for rewards or early access. Examples include Kickstarter and Indiegogo.
E-commerce businesses can also sell digital products or services such as e-books, online courses, software downloads, and digital subscriptions. Since digital products have minimal production and distribution costs, they offer high-profit margins. Examples include Udemy, Adobe Creative Cloud, and Netflix.
This hybrid model combines traditional brick-and-mortar retail with online e-commerce. Brick-and-click retailers have physical stores where customers can shop, as well as an online presence where customers can browse and purchase products. Examples include Walmart, Target, and Best Buy.
DTC brands bypass traditional retail channels and sell directly to consumers through their own e-commerce websites. By eliminating intermediaries, DTC brands can offer lower prices, maintain control over the customer experience, and collect valuable data. Examples include Warby Parker, Casper, and Glossier.
Here is the check list of documents required.
Get Answers to your most asked questions.
E-commerce, short for electronic commerce, refers to buying and selling goods or services over the internet. It encompasses various online transactions, including online retail stores, online marketplaces, and digital downloads.
E-commerce works through online platforms or websites where businesses list their products or services, and customers browse, select, and purchase items using electronic payment methods. Orders are processed, and products are shipped or digitally delivered to customers.
E-commerce offers benefits such as convenience for customers, global reach, lower overhead costs compared to brick-and-mortar stores, easy scalability, targeted marketing opportunities, and access to valuable customer data for personalization.
Virtually any type of product can be sold through e-commerce, including physical goods like clothing, electronics, and groceries, as well as digital products like e-books, software, and online courses.
To start an e-commerce business, you’ll need to choose a niche, select products to sell, set up an online store using an e-commerce platform, register your business, set up payment gateways, market your products, and manage logistics and customer service.
B2B (business-to-business) e-commerce involves transactions between businesses, such as a manufacturer selling products to a retailer. B2C (business-to-consumer) e-commerce involves transactions between a business and individual consumers, such as an online retail store selling products to customers.
A payment gateway is a technology that securely processes online payments from customers. It encrypts sensitive payment information and facilitates transactions between the customer’s bank and the merchant’s bank.
You can drive traffic to your e-commerce website through various digital marketing channels such as search engine optimization (SEO), social media marketing, email marketing, content marketing, pay-per-click (PPC) advertising, influencer partnerships, and affiliate marketing.
Dropshipping is a business model where the e-commerce store does not keep inventory in stock. Instead, when a customer places an order, the store purchases the product from a third-party supplier, who then ships it directly to the customer.
You can ensure the security of your e-commerce website by implementing SSL encryption, using secure payment gateways, regularly updating software and plugins, implementing strong authentication measures, and educating employees about security best practices.
