How to Start an E-Commerce Business

How to Start an E-Commerce Business

  • 21 October 2021
  • By Our Subject Matter Experts
E-Commerce Business

In E-commerce (electronic commerce) companies sell or purchase goods/items online. It helped businesses to establish a wider market presence by providing cheaper and more efficient distribution channels for their products or services 24 hours a day, seven days a week. This involves the transaction of goods and services, the transfer of funds and the exchange of data. Many stores offer a wider array of products online. Even more, than they have in their brick-and-mortar. Plus many stores that solely exist online may offer consumers exclusive inventory that is unavailable elsewhere.

There are 5 types of e-commerce models:

  1. Business to Business (B2B): Where companies directly deal with the company. The final consumer is not involved. This includes manufacturers, wholesalers and retailers. 

  2. Business to Consumer (B2C): Here companies directly sell their products to the consumer no mediator is involved. Like Myntra, Amazon etc.

  3. Consumer to Consumer (C2C): The consumers are in direct contact with each other. No company is involved. It helps people sell their personal goods and assets directly. Eg: Olx.

  4. Consumer to Business (C2B): It is the reverse of B2C. Here consumers provide the services to the company. Like an IT freelancer shares his ideas or software to the company.

  5. Consumer-to-administration (C2A): An online transaction between individual consumers and public administration or government bodies. Frequently bought services from the government are Education, Health, Taxes and Social Security.

Steps to start an e-commerce business:

  1. Decide on the perfect business plan and model:

    It has 2 vendors under this plan: Single Vendor and Multi-Vendor.
    • Single Vendor: A single seller who is selling his or her product to multiple customers. To this end, it is not only easier to keep track of the transactions between the two parties, administrative costs are lower when you have to pay just one supplier, and you also have more control over the inventory at hand.
    • Multi-Vendor: This kind of model calls for multiple vendors to sell their products to multiple customers, with the vendors all being required to be registered with your site.

    Advantages of both: In the first situation, you could earn high margins. In the second, you will earn a commission, every time one of the sellers registered with your brand and makes a successful sale.

  2. Brand your brand: To come up with the perfect brand name that matches the product and the company logo. Once branding and logo are completed, the next step will be forming the company. Online businesses of this model require an Employer Identification Number (EIN) to open a business bank account so that business taxes can be filed in the next financial year. EIN is a unique number that identifies your business. If you have, however, opted for the sole proprietor model, then you need not have a tax ID number. You can use your allotted Social Security number instead.


  3. Registration of business:  Most crucial part. Sharing the steps of business:
    • Apply for the Director’s Identification Number (DIN), which can be downloaded using the DIN application (DIN 3 form) from the official website of the Ministry of Corporate Affairs. You can also apply for DIN online, by just attaching and uploading the necessary documents.
    • Make sure you have your Permanent Account Number (PAN) and Digital Signature Certificate.
    • Once you have received the DIN, you can apply to the Registrar of Companies (ROC), to check for the availability of the name you have chosen for your company. This can also be done by checking for it on the official website of the Ministry of Corporate Affairs.
    • After receiving a confirmation on the name, you can incorporate the proposed company within six months. You also have the option of renewing the name of the company, by paying a certain fee.
    • Apply for the Goods and Service Tax (GST) certification, Shops and Establishment License – necessary in cases of Payment Gateway Integration – and Professional Tax (PT).
    • Apply to open a Provident Fund (PF) with the respective Provident Fund Organization; register with the Employees’ State Insurance Corporation for medical insurance of the employees and finally apply for the Certification of Company’s Incorporation, where your company will be officially registered under the Company’s Act, 2013.
  4.  Opening a bank account: Need to obtain GST registration, which will then allow you to open up a bank account in the name of your online business. In this case, once the bank account is ready, you can list the products you will sell on your e-commerce website, to obtain and then operate a payment gateway.
  5. Build e-commerce website: There are two types of website pre-built platforms and building from scratch. In the pre-built platform, the ready-made template will be available for various niches and you just need to make slight changes as per the requirement. In a scenario where you’ll have to make the website from scratch, you will be getting a meticulously constructed website that can be customized according to the clients’ needs, and their specific business requirements.


Not only does it require low investment, it actually is a type of business that does not require a full-time commitment, especially if you are selling a limited number of products.

You just make an online presence and promote the business on other platforms using both free and paid methods. However, as each business, it has its positive and negative sides. If you want to achieve success, you will have to create an organized strategy that is based on realistic goals and a comprehensive analysis of the market.

Written by Muskan Negi