New to online business?
For Indian sellers.
So finally you decided to start an e-commerce store or an online business, and for sure you must have decided what you are going to sell online. And if you are too new to this business let me tell you few basic things.
- For selling online in India, you need the VAT registration. (Do not get into any further research, you need VAT No. to sell online unless you are selling only in your state and your total turnover is less than 10 Lakh. If you are selling exempted goods like Books, you do not need VAT Regi. )
- To register VAT, you need an office – if you are too low on budget, your own house can be used or in case of rented house you need NOC from the owner.
- You can go to local CA to get this done, or visit www.vakilsearch.com or search in google for local TAX registration office
Now let’s talk about the actual online store. There are two ways you can sell online.
- Your own website
Marketplace (example Flipkart.com)
You can sell your stock on sites like Amazon.in, Flipkart.com, Snapdeal.com, PayTM.com and several other sites. These sites are called Online Marketplace, anyone can register and start selling. Further if you have a big stock, large volume-you can hand over the products to these sites, they will store it in their own warehouses and they will process the orders, you will virtually no do anything other than maintaining the accounts and counting your cash. And of course keep an eye on the progress.
Few sites like Myntra.com, Jabong.com work on contract basis, you can not register online and upload photographs.
How do you do business on Marketplace system.
Like you there are 100s and 1000s who are selling products on these sites, many are probably selling same product. There are 3 elements to survive and sustain here.
- Price competition (Discounts)
- Service Quality
- Variety/Range of products
Price is the most important factor in marketplace selling – you sell for less and you win, however the question is how to sell for less? plus handle the shipping cost, packaging cost, marketplace fees. The answer is complicated but in short, if you buy large volume from top source, like buying directly from factory or get it manufactured yourself might give you a huge margin and can afford to sell for less and still make profits. 2nd option is to import; may be from China or Hong Kong, Or the 3rd option is to sell something unique like hand made stuff, designer cloths, or something that available only with you. “If not Please understand this game is not for you”
– Let me make it more clearer – If I chose to sell Zodiac shirts – there are 100 other wholesalers of Zodiac, and further Zodiac themselves can start selling on the same site, now can you beat them in pricing? And therefore selling such products on a very small scale is not a right choice.
But on the other hand – If you are a designer and design printed t-shirts, with your own hand painted designs, there will not be any one who has those designs in entire world – and therefore there will not be a price competition for your designed t-shirt. If a buyer falls in lover with that t-shirt he can not get it anywhere else. However these are only examples. Or if you have manufacturing unit of a garden chair with your own patented design – you will be the only one on marketplace to sell it directly from the factory and will not have any competition.
Online business is confusing for the small sellers – you might not have expert team to take care of your orders like big sites have. Many a times people get the wrong products, damaged products, wrong invoices, late deliveries – these are all common things happen to everyone. Even for the medium size companies and even at Flipkart or Myntra or Amazon. However keeping a strict check on these errors is very important. The controlling system for online business is the customer feedback, a good feedback can take you to heights even if you sell ordinary products, and the bad feedback can seriously bring your business down. For good value products people do trust on feedbacks. Therefore you have to be a gentleman to your customers, no matter it is Rs. 100/- product or Rs.1 lakh business. 10 late deliveries can reduce your sell by 90%.
Variety – Range
Also when you sell online people need choices – have you ever purchased a shirt in a shop where you have only 10 options of design and style? therefore if you have a product range of few pieces then your chances of selling with profits are very low.
Two marketplace business models
Fulfillment by Seller (You)
- You have the inventory (products) with you
- You pack it and hand over to courier service personal
- You have to manage inventory, storage etc
- You can display one product on many sites.
Fulfillment by Site
- You hand over all the inventory (Products) to the site
- The site will pack it and deliver to your customers for some extra fees.
- Most of the times the site can deliver the product to customers on same day or next day which is not possible otherwise. This gets good feedback which will help you selling more.
- The packaging of the site is anytime superior than small sellers and the delivery process is more professional.
Once you have the product ready for sell, you need to do the following.
Photographing the product
The photography for the marketplace is little special than what you can do with your mobile phone camera. You have to go to professional studios who are specialists in e-commerce photography. Every website has a set of guidelines for the photography. If not followed they will reject your images. The Photography for apparel needs to be done on the models. To get the photography and image editing done you can contact the site itself, Sites like Myntra.com and Amazon.in or Flipkart.com has the photography department, I have worked with Myntra and Flipkart as the head of Photography department starting G16studios. Perhaps I played the key roll in building India’s biggest e-commerce Photo-studio and the team at Flipkart in 2012. These site have done lot of investment and developed the process and expertise to match to the international standards of e-commerce display. Even if you are a small seller on these sites, you still need to match to their high standards and therefore it is important to hire the experience photography services.
To save money many people request the local photostudio or the enthusiast DSLR owners to do the photography only to understand that it was waste of time and money.
The cost of photography appears to be expensive if you have a wrong business planning.
For example – Photography of a t-shirt will cost Rs.300/- to Rs.350/- and if you have only one piece of that design than it will add to the total cost of t-shirt. Meaning a t-shirt costing Rs.500/- will become 500 + 350 = 850/- which no one will buy from you.
But imagine you have 50 copies of each style. and now the photography expenses get divided Rs.350/- divided by 50 = Rs. 7/- only. If you have 100 pieces of same t-shirt or shoe or bag the cost will get divided into 100, meaning the photography will cost you Rs.3.50- per t-shirt or bag or shoe.
Listing the Product
Putting product online is call listing – every site will give you an online manager who will work on your training, they also send you the training material in form of videos and PPTs etc. For large listings the site will actually do everything for you. Or in the beginning the site will take charge of your listing.
There are online softwares and services that can automate the listing system and in one shot the product can be listed on multiple websites as well as it can manage the inventory – for the newbies – managing inventory means – when the product is sold on one particular site the quantity of that product should show -1, and when the quantity becomes zero the product should show OUT of STOCK label on all the sites.
And finally the question – do people make money with Market Place websites?
The answer is YES! – it is a regular bread an butter of 10,000s of people.
However please note that most of the sellers who are making profits are full time sellers with offline business as well. Most of the people operating from home or selling as part time business are struggling and can not sustain. For people who have patience and capacity to invest money, this is a great platform, but thinking it as a part time extra money can not take you anywhere.
Also the sites offer the promotional activity for extra cost – if you have big volumes or if you can procure stuff from manufactures for dirt cheap you can create a monopoly in some segment and the sell will be on top.
The key to start this business is that start it professionally – do not display 10-12 ordinary products and wait for orders, try the following
- Setup an office with good basic facilities, like computer with good broad band connection, printer, packaging helper and material etc
- Do research on your product category for pricing and good level of sourcing or the option to get it manufactured by some factory to save the cost on large volume.
- Do sell the volume
- Have a dedicated customer care handler to answer the e-mails or phone calls.
- Add the printed catalog of all your products while shipping.
- Invest in the promotional activities of your listings.
Besides Photography studios – there are many service providers who can list your products on multiple websites and manage your e-commerce business for you. However the cost of such services is only affordable if you have volume of products. I receive over a 100 calls a month – for the trial shoot or 10 or 20 products to sell online. You must understand there is nothing like litmus test for online selling with 10-20 products, ultimately it will be a loss. Many sellers try to be smart and say that “This is just a test shoot, we will be giving you 100s and 1000s of products next week on wards” this phrase was outdated even in East India company era in year 1835.
Remember your vendors are your partners they will genuinely help you to win the battle. Doing tricks within the business fraternity is suicide.