India’s e-commerce market is growing at a very rapid pace. And, letting sellers sell their products online without the need of owning any physical store.
But do you know – What you require to start an e-commerce marketplace? Yes, you are right – Hosting, SSL, domain, inventory management, payment, and shipping required for starting an e-commerce marketplace. These are the common considerations before starting an e-commerce marketplace no matter in which geolocation you will start your online business.
Webkul is catering the clients around the globe. And, LabX is one such example. LabX Media Group is a leading Canada based marketplace for science media company delivering award-winning editorial, essential industry news, analysis, and insights for members of the scientific research and life science community.
You can go through more of our e-commerce marketplace success stories. And, get to know how our clients have benefitted using Webkul’s marketplace solution – https://marketplace.webkul.com/success-stories/
Before giving the actual picture to your e-commerce marketplace business, you need to consider certain other factors based on the country you will be starting your e-commerce marketplace.
Just like marketplace cost/investment varies from country to country. Similarly, there is a certain additional requirement and legal regulations you will be needed to consider if you are planning to start an e-commerce marketplace in India.
Important Considerations For E-commerce Marketplace In India –
There are some important core considerations which you must need to take care of while starting an e-commerce marketplace in India. Let’s discuss each one of them.
E-commerce marketplace is all about multiple vendors and transactions which is different from a typical e-commerce business model. This makes payment processing as one of the most complex and crucial section of the e-commerce marketplace which should be planned carefully.
You need to take care of how? and when? the funds will be transferred to the multiple sellers after every successful transaction by the customer. There are two ways of payments processing in the marketplace. One is Default payment flow and other is Split payment flow.
In Default Payment Flow the payment made by the customer for their purchases will come directly to the admin’s bank account. And then, the admin will pay the respective multiple sellers out of the e-commerce platform such as NEFT, cheque, bank transfer, etc.
But Split Payment Flow allow split payments among multiple vendors from the single transaction made by the customer. For this, there are several Indian third-party payment gateways available which support split payments like PayU, Citrus, EBS, etc.
In this, the payment will split between the sellers and the admin automatically. The sellers will receive the product payment in their linked bank account and the admin will get the commission and shipping amount in the admin’s bank account.
Taxation: The Goods and Service Tax (GST)
As the Indian government is quite on focussed on digital transformation. Therefore, the e-commerce sector will be gaining the maximum benefits under GST (The Goods and Service Tax).
For your e-commerce business, you need to register for GST and other taxes under the Government of India. GST norm has replaced all the direct and indirect Indian taxes existing earlier like VAT, excise duty, and service tax.
Note: For more details, you can visit the Indian Government GST Law page.
Indian Government Selling Norms For E-commerce Merchants
The Indian government has tightened the e-commerce norms for online marketplaces –
- E-commerce marketplace entity or its group companies are restricted from buying more than 25% of the inventory from a single merchant.
- E-commerce marketplace entity or its group companies having equity participation or control on the inventory of any third entity. Then, that third entity will no longer be permitted to sell its products on that e-commerce marketplaces.
- Online marketplace entity will not give direct or indirect discounts or manipulate the product prices.
- E-commerce marketplace entity or its group companies will not mandate any seller to sell exclusively on its platform only.
- E-commerce marketplace entity or its group companies have to submit a compliance report to the Reserve Bank of India (RBI) every year.
Providing convenient shipping service to your customer is equally important as providing payment options. Therefore, you need to choose logistic options which charge a reasonable price to ship the products depending on the size and weight of the product. Because the customers will not buy if they find the shipping charges too high.
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