Blog Article

The rise of online businesses and entrepreneurial ventures have been at an all-time high over the last few years in India. Ideas have been introduced in the online market, new jobs and roles have been created, and the online commerce industry has been booming. Anyone with a computer or phone and an internet connection can get virtually everything done in just a few clicks or more. With India’s welcoming resources to start a business and the government in full support, it is safe to say that starting an online business in India ought to be one of your better decisions in life. Here are a few things that one must know when considering starting and successfully running an online Business in India.

There are two ways to conduct business online:

• Selling Online directly to customers by setting up a website, payment gateway, etc. and operating your own website. This article is mainly concerned with the legal and operational aspects of this setup.
• Selling online through another existing e-commerce websites (such as Flipkart, Shopclues, Snapdeal, Amazon, etc.) in exchange for a commission or percent of the sales made. This requires a sellers or vendor agreement which will be provided by the online marketplace. It serves as the code for conducting business through that particular portal. Each company has a specific sellers/vendor agreement based on their desired goals and objectives.

How to Sell Online Directly?

Website

Think of a name for your business/website to begin with. The name you give your website should be unique in the sense it should not be similar or infringe on an existing name. Many sites have a list of names eligible for the company to choose from, provided based on the desired name the company wants and the names available online. Sites like Godaddy, Hostgator, Amazon Web Hosting, Bigrock, etc. provide a competitive range of prices for services such as registration of website name, website building, catalog services, product listing, payment services, online orders and query handling apart from website and domain registration. Most of these, if not all, will be required in getting your online business started.

VAT Registration

Value Added Tax registration is mandatory for a business, whether it is trying to sell online through its own website or through another online e-commerce website.

Any person that wants to sell a good or service in India requires a Vat registration either from the Sales Tax Department or online at Vat Karnataka website. The documents required for VAT registration are the certificate of Incorporation, the Articles Of Association, the Memorandum Of Association , Permanent Account Number, identification proof of directors and address proof of the registered company. The cost for a VAT certificate is INR 1000-2500 depending on the type of company and an additional INR 3000-10000 based on company turnover.

Bank Account

Once a company has been registered and incorporated, the company can open a bank account in its name. A sole proprietor needs to obtain a VAT certificate before he can open a bank account in the name of a company. A bank account is a must in order to obtain a payment gateway or to list products/services on an e-commerce marketplace website (Amazon, Flipkart). Directly receiving money into your personal bank account is illegal in India and will result in fraud. The banks in India offer a variety of services online that have made business accounts easier and more convenient to transact with.

Secured Payment Gateway

Payment gateways allow the company to accept online payments in the form of debit cards, credit cards, internet banking, etc. This makes it convenient for a customer to make a purchase and pay for it at the click of a mouse. The customer makes the payment to the payment gateway which in turn, deposits it in the business’s bank account within the following couple of days after deducting its service costs.

In India, one can avail of payment gateways either from :

• The company’s own bank provides its own payment gateway (eg. Company X has a bank account at ICICI, and hence can use ICICI payment gateway to directly accept or make payments.) Though the company will not have to bear additional expenses for this service, their customer range would be limited to only a select portion of the population will be able to avail of this facility (ICICI account holders).
• Third party services which tie up with other banks in order to provide payment services (eg. CCAvenue has partnered up with over 40 banks so that any payment for account holders with these banks are possible through CCAvenue.) Third party service providers employ variable rates and services. It is important to identify which method is best suited for your online business by comparison based on need. Instead of making bank accounts with each individual bank, third-party services offer the same service with already tied up banks.

This should be made secure with the help of electronic payment security to protect user information and data from hackers.

Terms And Conditions

When you click ‘I Agree’ on the terms and conditions page, the customer enters into a contract with the site/company undertaking that the customer would abide by the said terms and conditions.

Every company must clearly list its terms of service to the customer (shipping terms, return policy, payment policy, disclaimer, privacy policy, etc) to avoid discrepancies if any do arise during the customer’s use or dissatisfaction of the online store. The terms and conditions shouldn’t be ambiguous, but should be detailed and easy for any customer wishing to use the site to understand.

Export/Import License

A business needs to consider whether it needs an export license, import license or both based on its area of operation and procurement of raw materials. In today’s age, most companies cater to the customer on a global scale and thus require an export license to be able to ship those products to customers outside India. Import License might be required by companies to procure raw materials or finished goods in order to resell them. There are some restrictions on the imports that can be made and the quantity or value of those imports as the country moves towards a ‘Make In India’ policy.

Scalability/Servers

As an online business grows and expands, the number of people visiting the website will be sky-high. One will need to take account of the daily traffic a website receives and takes remedial measures so that the servers are not incapacitated. If a server crashes, it could mean downtime for a few hours to a few days which could prove to be very costly for an online business. Imagine closing shop for few days and still incurring operation costs, losing customers as well as loss in revenue would seriously hurt a business if not kill it. Always upgrade your servers when you feel it is necessary or in anticipation of severe public usage (during a promotion or sale).

Privacy Policy/Disclaimers

A company that wants to run its business online needs a privacy policy and a disclaimer on its website.

A privacy policy serves as an agreement between the user and the website that protects the interests of the company’s website. It discloses the way a website gathers information, stores and uses user data.

It is legally enforceable to the parties that have been contracted. A user has to agree to the ‘terms and conditions’ or disclaimer of a website before he is allowed to use the site. This ensures that a website will not be held liable for the information a user accesses on the website.