The e-commerce industry in India is witnessing significant growth as smartphones and internet penetration increase. In this blog, we will discuss the concept and licenses required to start an e-commerce business registration in India. This is boosted by the rising number of internet service providers and the advent of 3G and 4G services.
E-Commerce Business Concept
E-commerce or electronic commerce refers to an electronic platform where transactions are conducted. Similarly to their physical counterparts, e-commerce websites provide goods and services for sale and facilitate the transfer of funds.
What are the benefits of running an e-commerce business?
There are several benefits to starting an E-commerce business in India.
- Reduces Inventory Cost
- Requires Less Manpower
- Minimizes Labour Cost
- Provides Doorstep Delivery
India’s E-Commerce Business Sector is Growing
The following factors contribute to the growth of the E-commerce Business Sector in India:
- Due to the growing use of smartphones and digital devices, there is a technological disruption taking place.
- India’s digital future
- The government takes initiatives to make India cashless.
- Broadband connectivity, 3G and 4G, are becoming more prevalent in the country.
- Individuals’ net earnings increase.
- An increase in the individual’s disposable income.
Considering the Leading Sectors of E-Commerce in 2019
In summary, the leading sectors in the e-commerce industry are experiencing the following trends in 2019:
1st Quarter: Non-essentials
2nd Quarter: Textbooks
3rd Quarter: Cosmetics and Personal Care
4th Quarter: Furniture and Home Furnishings
5th Quarter: Clothing
6th Quarter: Electrical
Statistical analysis of e-commerce growth
As of 2018, the Indian E-commerce Industry is expected to grow to $200 billion by 2026 from $38.5 billion, according to a report published by the India Brand Equity Foundation (IBEF) on 21.10.2020. By the end of 2021, the same is expected to reach US $84 billion.
Moreover, the e-commerce industry is predicted to generate $120 billion by the end of 2020 from $39 billion in 2017. It is also growing at a rate of 51%, which is the highest rate in the world.
Business Licenses Required for E-Commerce
E-commerce businesses in India require the following licenses:
In The first step for the proposed business owner is to register the business using one of the following options:
A sole proprietorship is a business structure where only one natural person owns and manages a business. That owner is solely responsible for all the liabilities of the business.
As a result of this format, two or more people are required for the startup of an e-commerce business in India. The partners of this format are jointly and severally responsible for the firm’s liabilities.
Private Limited Company
As defined by the Indian Companies Act, a private limited company is a company that is owned and operated by at least two and at most 200 members. However, the members of a private limited company are personally and jointly liable for the debts of the company.
One Person Company
In essence, One Person Companies or OPCs are very much like Private Limited Companies. However, the main difference between the two is that the former requires only one member for incorporation and the latter requires at least two members.
Limited Liability Partnership
This structure combines the advantages of a Private Limited Company and Partnership Firm. It offers both internal flexibility and limited liability to its partners.
Goods and Service Tax
If The annual turnover of an e-commerce business in India outside the North-Eastern States needs to exceed Rs 20 lakhs before the applicant needs GST Registration.
Shop and Establishment Act
If A Shop and Establishment License is required if the owner wishes to access the mode of Payment Gateway.
It is a must requirement for anyone who wants to start an e-commerce business in India to possess a trademark registration, which serves as a symbolic representation and aims to protect and guard the domain name, brand name, slogan, logo, etc.
As a result, everyone must get approval or permission from the Trademark Holder before using a name, slogan, logo, etc.
E-commerce Startup Documents
Developing an e-commerce website in India requires the following documents:
A By using a disclaimer format, the business is protected from liability arising from content posted by users or third parties.
Refund, Return and Cancellation Policy
Our Refund, Return, and Cancellation Policy covers all conditions related to the return of products, return of orders, and cancellation of orders.
Starting an e-commerce business requires additional contracts
E-commerce businesses in India require the following additional contracts:
“Vendor Agreement” refers to a contract signed between an e-commerce company and its suppliers, and it outlines the terms of supply, quality standards, and pricing.
Service Level Agreements
A Service Level Agreement is a document defining the terms and conditions of any business services that an e-commerce retail store benefits from, such as internet services and logistics.
Employees and staff are both covered by Employment Contracts, which lay down the terms and conditions of employment.
HR Documents include all the details regarding the following:
- Policies relating to human resources
- Conduct Code Procedures
- A promotion
In essence, e-commerce is the fastest, easiest, and most convenient way to grow a business in India. It is also a relaxed way to reach a global audience.
In addition, customers can get their products and services at their fingertips and doorsteps with this business platform that reduces inventory costs, needs less manpower, and minimizes labor costs.