7 Critical Steps to setup your E-Commerce Startup in India

E-commerce laws and regulations in India are still evolving. This has created a sort of confusion and uncertainty among e-commerce entrepreneurs in India. While some have opened e-commerce outlets through websites others are exploring a more appropriate and legal way of running an e-commerce business in India.

The first and foremost doubt which arises is whether there is any list of licenses which needs to be granted in lieu of the e-commerce business?

No special licenses are required and nor does exist there any such list. However, a strict adherence to the laws of land is observed. As the procurement is done from vendors from different parts of the country, all the companies need to ensure that tax laws, which may change from state to state, are followed and things are well documented.

Three important documents have to be drafted when it comes to legal compliance which are:-

· Privacy Policy

· Website Disclaimer

· Website Terms and Conditions

Here are the 7 important steps when setting up an e-commerce startup ?

1. Structuring your business

As an E-Commerce business there are 5 options to register your firm which are as follows-

• Proprietorship firm registration — It is the simplest form of registration which requires tax registration like VAT or service tax
• Partnership firm registration- Minimum 2 persons with unlimited liability
• Private Limited Company- It is the most popular business form and has a lot of advantages like liability protection.
• LLP (Limited Liability Partnership) — It is a mixture of Pvt Ltd Company and Partnership firm and enjoys many benefits
• One person company- It is similar to PVT LTD Company and requires only one person

After deciding the Structure of business one like to choose for E-commerce business one needs to follow the following steps –

2. Registration of the Domain name

To attain the security for the domain name under the Intellectual Property Rights, one need to choose a unique name and preferably it has to be separately trademark protected from an appropriate national registry which gives the exclusive right to use that particular name.

3. Attain a Privacy Policy

Attaining a well drafted privacy policy is a must for every E-commerce portal to prevent itself from being sued under Section 43 A of the Information Technology Act, 2000 where penalty can reach up to 5 crores.

4. Draft the Website Terms and Conditions

For any website to work it is very essential to draft the terms and conditions agreement which would usually cover all the user covenants and company covenants in order to restrict the liability of E-commerce website in every way possible.

5. Make a Vendors Agreement

Making an agreement for vendor with well defined clauses and terms to deal with problems like default in product, late delivery, lack in quality etc and many other provisions which can be included keeping in mind the business model.

6. Get A Secured Payment Gateway

Payment Gateways are of two types in India –

• One, your own Bank itself which provides its own payment gateway;
• The other, the third-party services which tie up with many banks to provide a gateway.

Rates of these providers vary and hence, you need a do a proper market research on the provider that suits your requirements the best.

7. Keep A Feedback Channel Handy

After all, you are just ‘starting-up’ in the online space and need to learn every trick involved. No better way than to make channels of feedback so that you can improvise on the way. Have a Feedback Form, Grievance Addressing Corner in your online store so that you can nip in the bud any functional anomaly before it balloons to difficult sizes.

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