Last Updated on April 9, 2026
E-commerce is the modern way of conducting business, enabling trading through websites and mobile apps accessible worldwide, 24/7. While many in India still prefer traditional methods, there has been a clear shift in mindset. Today, even home-based entrepreneurs are leveraging the internet to run businesses from anywhere. Working from home sounds simple and convenient—but before starting your own online business, here are important things to consider.
About E-Commerce Business
With rapid growth in internet usage, e-commerce market trends are reaching new heights. The market is expected to grow three times its current size by the end of 2030 – i.e., to approximately 504 billion rupees if the current trend continues. Anyone who does offline business is bound to do so online if they want to survive in this competitive world. Let me tell you a story: my friend was a home baker for nearly 15 years. One fine day, she came to me and asked me for legal advice- she wanted to start a baking business and sell cakes and confectionery online. I suggested that she understand the compliance requirements before doing it, and she followed my advice exactly. She runs one of the most profitable online bakery shops. Do you want advice on what I gave her? Read more to find out more:
Types of E-Commerce Business
| BUSINESS MODEL | DESCRIPTION | INDUSTRY LEADERS |
| Inventory | inventory of goods and services is owned by an e-commerce entity and is sold to consumers directly through an online platform | e.g. are WS Retail, Cloudtail, JioMart, Adidas, Reliance Digital |
| Marketplace | intermediaries providing an information technology platform for sellers and buyers to interact and buy and sell products | Flipkart, Amazon, eBay, Quikr, GoMMT, Paytm Mall |
| SERVICE | Intermediaries that connect professional service providers, either in-house or external, to provide services to customers from the comfort of their homes | Uber, an urban company, Ola, Byju’s |
Types of E-Commerce Business Structure
1. Business-to-Consumer (B2C)
In the B2C e-commerce model, companies/business owners sell products/services directly to end customers through intermediaries such as wholesalers and retailers, or directly to customers.
2. Business-to-Business (B2B)
This is a business-to-business (B2B) model in which business owners sell products or services to other businesses. There is no direct customer involvement in this model.
3. Business-to-Government (B2G)
In the B2G (Business-to-Government) model, businesses provide goods or services to government agencies or entities, often through government contracting or tender processes.
4. Consumer-to-Consumer (C2C)
The C2C (Consumer-to-Consumer) model involves individuals selling goods or services to other individuals, typically through their own websites or online platforms designed to facilitate such transactions.
Pros of Starting an E-Commerce Business in India
Types of E-Commerce Revenue Models
How to Start an E-commerce Business in India – Step-by-Step Guide
To successfully run an e-commerce business in India, here is what you need to do:
1. Choose your business model
You can choose from the following options: B2B, B2C, C2C, etc.
2. Choose your business structure
| Business Structure | Registration & Compliance | Documents Required |
|---|---|---|
| Sole Proprietorship | • No separate incorporation required • GST Registration (if applicable) • Shop & Establishment License • Income Tax Filing |
• PAN Card of Proprietor • Aadhaar Card / Identity Proof • Address Proof of Business Place • Rental Agreement or Property Tax Receipt • Bank Account Details |
| Partnership Firm | • Partnership Deed Registration • PAN for Partnership Firm • GST Registration (if applicable) • Income Tax Filing |
• Partnership Deed • PAN Cards of Partners • Address Proof of Business • Identity Proof of Partners |
| Limited Liability Partnership (LLP) | • Certificate of Incorporation • LLP Agreement Filing • PAN & TAN Application • GST Registration (if applicable) • Annual Return (Form 11) • Statement of Accounts (Form 8) |
• Incorporation Certificate • LLP Agreement • PAN & TAN • Identity & Address Proof of Partners • Registered Office Address Proof |
| Private Limited Company | • Certificate of Incorporation • PAN & TAN Application • Opening Current Bank Account • GST Registration (if applicable) • Annual Returns Filing • Financial Statement Filing (AOC-4) • Director KYC Compliance |
• Certificate of Incorporation • Memorandum of Association (MOA) • Articles of Association (AOA) • PAN & TAN • Director Identity & Address Proof • Registered Office Address Proof |
| One Person Company (OPC) | • Certificate of Incorporation • Appointment of Auditor • Commencement of Business Declaration • Annual Return Filing • Financial Statement Filing (AOC-4) • Director KYC Compliance |
• Incorporation Certificate • MOA & AOA • PAN & TAN • Identity & Address Proof of Director • Registered Office Address Proof |
It is advisable to consider registering as a private limited company to attract investors and funding. Our team can help you understand the advantages and disadvantages of each business structure.
3. Registration of Domain Name
For ease of business, it is important to choose a correct domain name. Here is what a good domain name would look like:
- Easy to remember
- Easy to pronounce
- Name in alignment with your business identity
- Name that defines your business and objectives
- Name that is easy to promote.
4. Build a good website/ application for your business
Starting an exclusive e-commerce business requires a web development team, an online marketing team, and a payment portal to accept payments. Your website/application will be the face of your business, and this is what your website should have to attract customers:
- It should define your business mission and vision.
- It should have a brief description of your business.
- It should outline your business history.
- It has a product or service catalogue and a description of each product/service.
- Cost of product/service
- Website agreements- terms of use, disclaimers, IP rules, FAQs, refund and shipping terms, etc
- A good colour scheme that can define your business and attract the target audience.
It is also important to copyright your website to protect the business from infringers.
5. Choose a good brand name and register it
Your brand name is your identity. A unique and well-defined brand name differentiates your business. For guidance on selecting a good brand name, refer to our dedicated article (link to guide on selecting a good trademark). Protection is just as important as selection, so register your brand name.
6. Obtain all necessary licenses, insurances and permits
Business requires licenses and permits to be obtained in order to run smoothly and without any interference. Here is a complete list of licenses you will require for your e-commerce business:
| BUSINESS MODEL | Licenses | Insurance |
| Inventory | Shops & Establishment Act Registration
Fire NOC GST Registration FSSAI Registration for e-commerce TDS Registration & Certificate Import of goods – IEC Number ESI Registration EPF Registration Signage License DGCA Digital Sky Registration OSP Registration Secretarial/ ROC Compliance Legal Metrology |
Product Liability Insurance
Transit Insurance Cyber Security Insurance |
| Marketplace | Shops & Establishment Act Registration
GST Registration FSSAI Registration for food freight logistics or warehouses TDS Registration & Certificate Import of goods – IEC Number ESI Registration EPF Registration Signage License DGCA Digital Sky Registration |
Product Liability Insurance
Transit Insurance Cyber Security Insurance |
| SERVICE | Shops & Establishment Registration
Signage License Fire Safety License MSME Registration for your Business |
— |
7. Taxation compliances
The most crucial and complex compliance is taxation compliance, which cannot be ignored. All e-commerce platforms require you to adhere to your tax compliance so that you can run your business smoothly. Here is what you need to do
- Obtain GST registration: It is one of the mandatory registrations required to list your products on an e-commerce platform. Obtain your GST registration today and file GST returns on time.
- File IT returns
- File TDS returns
8. Keep all your documentation handy
There are certain set of documentations to be required to be done to avoid last miunte hassle and legal troubles. Given below is a tentative list of documents that can be handy in the due course of business
| Category | Documents required |
| Business agreements | · Cofounder’s Agreement
· Supply-Purchase Agreement · 3rd Party Logistics Agreement · Memorandum of Understanding · Service Agreements · Merchandise license agreements |
| Investment-related documents | · Term Sheet
· Shareholding and Share Purchase Agreements |
| Payment and transactions | Agreement with Payment System Aggregators – Drafting/Review and compliance with Payment and Settlement Systems Act |
9. Payment gateways and data privacy terms
It is important to have a well-encrypted and secure payment gateway to process all payments. It should be glitch-free and easy to handle. If there is any glitch, it is important to manage the refund concerns. It is better to have a tie-up with good banks to facilitate payments.
10. Employment/Labour compliance
When you start an e-commerce business, you will definitely hire employees, so you will have to follow employment compliance.
| S.no | Labour laws | Compliances |
| 1 | Wages and salaries | · Defining minimum wages
· Overtime payment rules · Equal pay for equal work · Allowances · Payments of bonus · Payment of gratuity |
| 2 | Working hours, overtime, and holidays | · Duration of work
· Overtime work · Minimum number of holidays · Maternity leave · Paternity leave · Sick leave |
| 3 | Employment documentation | · Employment contracts
· NDA agreement · Relieving letter · POSH policy · ESOP policy · HR Policy · Etc |
| 4 | Social welfare and financial security | · Provident fund
· Pension · ESI |
| 5 | Workplace welfare and safety | · Safety of employees
· Regulation of working hours · Sanitation · Welfare facilities · Protection against injury |
| 6 | Sexual harassment policies | · Constitute Internal Committee
· Conduct annual POSH training · File annual POSH report · Maintain complaint records confidentially |
| 8 | Maintenance of digital records | Maintain electronic registers
File returns online Retain payroll and attendance data Digital access during inspection |
How can we help
Here is a basic question you have to ask yourself. If you find it difficult, contact our expert advisory team:
- What is your mode of business?
- What is your business model?
- What is your investment slab?
- What is your source of investment?
- What platforms do you want to reach?
- What is your delivery mode?
- Will you hire employees? If yes, how many?
These are a few things you will have to answer before you start your e-commerce business, and we at Kanakkupillai are happy to assist you. Let us help you transform your business into a well-established and managed digital business today.
FAQs
1. What is the minimum budget needed?
Your investment might start around ₹20,000–₹50,000, while a more extensive setup typically requires ₹85,000 to ₹1 Lakh+for inventory, website development, and marketing.
2. Do I need a GST number for an e-commerce business?
Yes, GST registration is mandatory to sell on e-commerce marketplaces in India.
3. What are the best business models?
- Inventory Model: You store and ship products directly.
- Dropshipping: A third-party supplier handles inventory and shipping; you act as the marketing/sales channel.
4. Which is the best payment method?
- Marketplaces:Platforms like Amazon or Flipkart handle payments and charge commission.
- Own Website:Integrate payment gateways like Razorpay, Cashfree, or Instamojo.
5. What are the compliance requirements?
You must comply with the Consumer Protection (eCommerce) Rules, 2020, which include displaying clear seller details, return policies, and grievance redressal mechanisms.
