In a master class to a group of startup founders and enthusiasts, Amit Kumar (CEO of OLX Autos) presents a step by step guide to build an e-commerce business.
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How to start an e commerce start-up (A step by step guide)
1. How to Start an
E-commerce Start-up?
A Step by Step Guide
2. Housekeeping: Questions bubbling in
your mind?
Please put your questions in Chat.
No question is a stupid question, Only an answer can be ☺
3. eCommerce & Amit, A
decade long journey!!!
B.Tech. IIT Bombay 2006; MBA ISB Hyderabad 2010
https://in.linkedin.com/in/execamit
Professional
•Experience in FMCG, Telecom, eCommerce and marketplaces
•Specialize in building businesses grounds up
•Understand product categories: Fashion, Electronics, Automobiles,
Foods & telecom
Personal
•Avid reader on Evolutionary psychology, Sociobiology
•Like to Swim, play tennis
•Husband, son & Father of 2
5. •E-commerce field has expanded quite astonishingly in the past few years.
•The Indian E-commerce industry has been on an upward growth trajectory.
•It is expected to surpass the U.S to become the second largest E-commerce
market in the world by 2034.
•By 2024, India e-commerce sector will reach US$ 99 billion from US$ 30
billion in 2019.
•It is an CAGR expansion of 27%.
•The credit goes to internet connectivity and mobile penetration.
•By the year 2022, Indian smartphone users are expected to reach 859
million.
•Along with that and the prevalent pandemic, we can expect huge chances for
B2B and B2C E-commerce start-ups in the coming years.
6. Some More Stats..
•As per data, online shoppers in India were around 120 million in 2018 and are expected to
reach 220 million by 2025.
•India’s E-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120
billion in 2020.
•That gives an annual growth rate of 51%, the highest in the world.
•As per data by a research firm named RedSeer, Ecommerce festive sales season in India from
October 15 to November 15, 2020, generated gross sales for brands and sellers worth US$
8.3 billion.
•It was 65% more compared to US$ 5 billion made in the last year.
•Technology enabled innovations like digital payments, hyper-local logistics, analytics driven
customer engagement and digital advertisements are the key drivers for the growth in the
sector.
8. The Step By Step Guide
Step – 1 E-commerce Idea to Launch
Step – 2 Research the Market Need and Combine with Your Idea
Step – 3 Business Model and Business plan
Step – 4 Understand Unit Economics Evolution for E-commerce
Step – 5 Understand and Identify Technologies to be Used
Step – 6 Logistics: Sourcing, Packaging, Shipping, Returns
Step – 7 Create Your Brand Through Customer Experience and Customer Service
Step – 8 A Checklist to Lunch the E-commerce Start-up
Step – 9 Grow and Convert Site Traffic
Bonus lesson: Economies of Scale
9. Step 0 – Are you ready to be an
entrepreneur!!!
eCommerce is serious business, its not for hobby!!!
It’s a new age business, its different from conventional businesses
Self discipline
Integrity
Persistence
Clear sense of direction
Decisive and action oriented
https://www.entrepreneur.com/article/282962
11. Step – 1 E-commerce Idea to Launch
•Make a list of Ideas for the products and
services you have in mind.
•Solve an existing issues or better the solutions
already available.
•It should add value to customers.
•Prioritize innovation, cost-effectiveness (for
you and of course, your customers), and ease
of using.
•Compare long-term compatibility with the
market.
12. E-commerce Idea to Launch
Ask the following questions to validate your
idea,
•Who are your customers?
•What is the potential market size or demand?
•Who are your competitors?
•What is the current market situation; growing, stagnant, etc.
•How durable is your product?
•Does your product serve a passion or solve an issue?
•Are there any government restrictions or regulations?
•What is the availability and quality of the product/services in the local market?
14. E-commerce Idea to Launch
“All it takes to create a successful ecommerce business is a
great vision.”
- Jack Ma
•Answering and analyzing these questions would help in choosing the
right idea.
•It increases the success probability of start-up.
15. Step – 2 Research the Need and
Combine It with Your Idea
•Market research is the process of determining the viability of a new service or
product through research conducted directly with potential customers.
•Market research provides relevant data to help solve marketing challenges that
a business will most likely face.
•It involves gathering and Analyzing information.
•For an E-commerce start-up, allows to discover the target market and get
opinions and feedback from consumers about their interest in the product or
service.
•It answers basic questions like What to sell? Who to sell? – as per the market
need.
16. Importance of Market Research
•Making more informed decisions related to marketing strategy
•Identifying industry trends
•Determining pricing strategies
•Creating benchmarks for start-up
•Connecting to customers and spreading words about your start-up
•Finding a gap in the market
•Knowing the competitors better
18. Generic Methods of Market Research
•Google Trends: This lets you know what people are searching the most and what is in
the trend
•Google’s Keyword Planner Tool: This lets you search keywords related to your
product/service and displays the total number of searches for that product/service.
•Feedback Forms: You can send small and interesting questionaries though Google
Form, SurveyMonkey, etc. to your friends, family, colleagues and gather their
feedback.
•Meet in Person: Meeting customers in person has its own advantages.
•Hire a Research Agency: This option allows you to have more detailed information in a
very aligned manner.
•Free Resources: A lot of agencies give away free statistics and data, though this option
is a little bit more time consuming and effort seeking.
19. Combine Market Research with Your
Idea
•Now that you have information on demand, locality and preferences of audience using
the products, you can combine that with your product or service idea.
•Ask yourself the same question you asked in the first step for choosing the most viable
idea.
•Remember,
“The customer’s perception is your reality.”
- Kate Zabriskie
21. Step – 3 Business model and business plan
•A business plan is the roadmap that helps bring your ideas and executions together.
•It helps you prioritize and reach new customers.
•The purpose of a business plan is to help articulate a strategy for starting your
business.
•It also provides insight on steps to be taken, resources required for achieving your
business goals and a timeline of anticipated results.
•Business plan helps in choosing the right business model.
•It is the blueprint of your success.
22. Importance of a Business Plan
•To have a broader view of business
•To identifying cash and asset requirements
•To identifying resourcing to inject the finances
•To conduct SWOT analysis
•To secure funding
•To stay and track the progress
23. Types of Business Plan
•The Lean Business Plan: A lean plan deals with the formalities required when
displaying a plan for a loan or investment. It focuses on main business strategy,
objectives, tools and equipment, budget estimation, and forecasts.
•One-page Business Plan: A simple one-page format is an outline of business objective
and goals within a single page. This kind of business plan is great for startups that just
wish to summarize their concept in the best possible way.
•Formal/External Business Plan: Formal business plan documents are normally
intended for outsiders to provide comprehensive information about a business and its
aim. It explains where and how the funding would be used and what return is
expected from their investment.
28. Business Model and Business plan
“Without a plan, even the most brilliant business can get lost. You need to have goals,
create milestones and have a strategy in place to set yourself up for success.”
- Yogi Berra
29. Step – 4 Understand Unit Economics
Evolution for E-commerce
•In any business, medium or small; understanding and implementing unit economics is
very important.
•Unit in a business model depends and varies according to the type of business.
•For an E-commerce start-up, the unit is the customer.
•So, the unit economics of an E-commerce business is the cost to acquire a customer
with the customer's lifetime value.
•All businesses have to work around a unit economics model, and all the key resources
are utilized to keep track of the financial model, so that it helps in determining the
return of investment ROI in the business.
30. Step – 4 Understand Unit Economics
Evolution for E-commerce
https://uxdesign.cc/ecommerce-post-covid-not-as-rosy-as-people-expect-94e3b70c1bca
31. Importance of Unit Economics
•Financial analysis is the key for any business.
•Understanding the capital investment and the return of investment generated by
your customers, is what leads the start-up.
•the measurement of the initial setup cost and the revenue generated from a unit,
such as a customer determines the success of a start-up.
•Unit economics model exposes the problems you are having in your marketing
campaigns; what you are lacking, and what you need to do to stay ahead of
competition – and what you can do to minimize losses.
32. A Little Bit More..
•Two terms are important to understand Unit economics model.
•CPA (Cost Per Acquisition)- The cost company spends to acquire one user, or unit.
•LTV (customer lifetime value)- The revenue a company or business generates after
acquisition of that one user until the user keeps using the services of the company.
•Generally, LTV:CPA should be 3:1.
•the customers bring 3 times more value/profitability to your business than the cost
you spent on acquiring them.
•initially, CAC (cost to acquire a customer) is high and is very time consuming.
•Therefore, with a model in place to calculate and determine and analyze the finances,
a company’s management and the financial team can keep track of expenses,
revenues and losses.
33. Unit Economics Evolution for E-
commerce
In addition to all these, for an E-commerce start-up, other complexity is also there due
to,
•The pressure to maintain Margin
•Coupons/discounts being provided
•Packaging & Shipping charges
•COD/Payment Gateway charges
•Return/exchange facilities
34. Unit Economics Evolution for E-commerce
•Your start-up is your investment and remember,
“It's important to know what you want to accomplish with your investments before you
actually invest.”
― Oscar Auliq-Ice
35. Step – 5 Understand and Identify
Technologies to be Used
•This step includes the main part of your business – creating a website.
•A website is the mirror of your business.
•If it is dull, you will lose your customer even before they reach the product page.
•You can create your own website or also can choose to sell on platforms like Shopify,
Amazon, eBay, etc.
•The point is to research what suits you and your customers.
36. Things to Consider
•For a website, you will also need to have a host and a server, which may cost you.
•But it comes included in a few website building sites along with your overall package.
•Compare ready website templates if you do not wish to make it from scratch.
•Make sure the website is trendy and eye-catchy.
•Make sure to upload attractive and genuine pictures of your product or services; if
needed, hire a professional photographer.
•Make sure that the product/service description is apt and inviting to customers.
•Update your website frequently.
•If you need assistance, hire a professional to oversee and run it.
38. Your Website is Your Brand Image
•Your website which represents your whole brand visually.
•Match your website colors, font and images with your brand.
•Remember,
“Websites promote you 24/7...No employee will do that.”
- Paul Cookson
39. Step – 6 Logistics: Sourcing, Packaging,
Shipping, Returns.
•This step is crucial to carrying out a successful ecommerce business it means that you now
have an effective and steady-fast way to keep track of the products being delivered- at every
step.
•It refers to the process of shipping an order to a customer or transporting an inventory to a
merchant.
•This process also keeps track of the shipped goods which are in transit, until they are
delivered to the customer in question.
•It involves the practice of locating and identifying distributor companies, to collaborate with,
packaging and shipping the goods or services, and look after the return responsibilities if any.
40. The Process
1. Order Placement:
•It starts when a customer places an order.
•Once you get the notification, you are supposed to ship the product/service.
2. Sourcing:
•You can have single vender sourcing or multiple vendor sourcing depending on the
nature of your start-up.
•In most cases, it is safe to have multipool vender; if one fails, you can have the
backup.
•If you are using a third-party vendor, they too will get the notification of the order
placed.
41. Continue..
3. Packaging and Shipping:
•This part includes packaging your products in a way that it secures the procyst from
breaking while in shipment. Also, the packaging should be neat if not fancy.
•For shipping your product or service, choose reliable transport mode and agency as
delays would spoil the reputation of your start-up.
4. Return/exchange:
•This part is option as it depends on the nature of products and services.
•If you are providing option of return or exchange, make sure you convey the terms
and conditions clearly on your website as this again includes transportation costs.
42. Create Your Brand Through Customer
Experience and Customer Service
•Your brand identity is as crucial as your start-up.
•Your brand identity consists of your brand name, logo, and design.
•Though merely these particulars do not create a brand.
•A brand name becomes a brand tag when customer validates it.
•It is the quality and experiences of services/products you provide to your customers.
43. Make Your Brand
Brand Name:
•The first step for making your brand a brand tag is to choose a name for it.
•It should be short, sweet and catchy. Though look after the trademark/copyright for
the already registered brand names to avoid issues.
Brand Logo:
•After this comes the brand logo. Your brand logo should reflect your business.
•It can be initials of your brand name of a symbol. But again look after
trademark/copyright requirements.
44. Customers Rule Your Brand Value
•There are infinite start-ups and businesses in the world, but not all are Apple,
Microsoft, Dell.
•It takes years of hard work, consistent quality service, polite customer interactions
and solution oriented attitude to create a brand value.
•So, along with how your brand should look, also look for how you can maximize your
customers’ shopping and after-purchasing experience.
•Remember,
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about
that, you'll do things differently.”
– Warren Buffett
45. Step – 8 A Checklist to Lunch the E-
commerce Start-up
•This is the most crucial parts of starting your E-commerce start-up.
•The time to launch your E-commerce start-up.
•Creating a website is not enough to launch a business.
•There are legalities and regulations involved that you have to follow.
46. The Checklist to be Follow
•Director’s Identification Number (DIN)- Can be downloaded using the DIN application
(DIN 3 form) from the official website of Ministry of Corporate Affairs or you can also
apply DIN online by submitting the necessary documents.
•Permanent Account Number
•Digital Signature
•Apply to the Registrar of Companies- It can be done after you get DIN.
•Commencing Business- Within 6 months of getting conformation from Registrar of
Companies, you can start selling your products or services.
47. Continue..
•Apply for the Goods and Service Tax (GST) certification
•Apply for Shops and Establishment License – It is reuired in cases of Payment Gateway
Integration
•Apply for Professional Tax (PT)
•Apply for a separate bank account having your business name
•Register for Payment Gateways for ease of payments – Some popular options are
PayPal, PayU and RazorPay.
48. Payment Gateway Essentials
•Bank account in the name of the business
•PAN card of the business
•Certificate of Incorporation
•Memorandum of Association
•Articles of Association
•Identity proof
•Address proof
•Website terms of use
•Website privacy policy
(Note: It depends on the type of business and the gateway policies.)
49. Step – 9 Grow and Convert Site Traffic
•This is the post launch step for your E-commerce start-up.
•Just like the product/service quality is important, getting customers to see them is
more important.
•The best way to do so is to growing and converting the site traffic.
•Afterall,
“You can’t just open a website and expect people to flood in. If you really want to
succeed you have to create traffic.”
- Joel Anderson, the former CEO of Walmart
50. How to do It?
With so much options available for marketing, you can chose what suits you the best.
1. SEO Marketing:
•Search engine optimisation helps put you on the search engine map.
2. Keywords:
•Different kinds of keywords that you need to use to make your online business show
up in the search engines.
•Keywords between 0-26 characters, are called ‘head terms’. Whereas keywords
between 26-40 characters help you be more specific.
51. Continue..
3. Advertisements:
•You can opt for the ‘paid ad’ option on platforms like Facebook, Instagram, etc.
•When users click on the ad and are directed to your website, you have the option to convert
them into potential customers.
4. Promotions and Retargeting:
•For promoting your product/service, you can posts pictures, audios, videos, etc. on social
media or traditional media.
•Retargeting is a process where a cookie is placed on the computers of those who have visited
your site once but have exited without purchasing anything.
Once this is done, when these online users visit another website that shows advertisements
of your product. Expensive but useful!
52. Continue..
5. Word of Mouth
•This is the cheapest way to bring traffic to your website.
•All you have to do is sell quality, and the quantity will come.
•You can also ask your customers to recommend your brand to their friends and
families.
•Apart from that, you can collaborate with social media influencers to promote your
start-up.
55. Bonus Lesson: Economies of Scale
•While, this is more of a technical subject, Economies of scale means the advantage
reaped when production becomes efficient.
•Start-ups can achieve economies of scale by increasing production and lowering
costs.
•This happens because costs are spread over a larger number of goods.
•In simple terms, economies of scale is important to reduce the long term costs to run
a start-up.
56. Continue..
•It includes the following costs and the process of reducing them over time.
•Sourcing the goods/services (higher the quantity, the better it is).
•Managing the business (the efficiency at managerial level).
•Financing (better and low cost funding).
•Marketing costs.
•Technological Investments (it shortens in the long run).
57. The Bottom Line
•The current time is perfect to start an ecommerce business in India
considering that the market for it is blooming.
•It may have its ups and downs, but once you learn your customers, your
products, its viability, building an online store, and marketing and selling to
new customers, you would be at ease.
•Remember that 90% of the start-ups fail, and only 1% of the start-ups in the
world become unicorns.
•So, brace yourself, be consistent, be strategic, and see your e-commerce
start-up getting wings!
58. Lets keep in touch
(Code word:
ExecAmit)
Happy to help!!!
ExecAmit@gmail.com
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