Here is a guest post by Angel Investor – Mukund Mohan.
Say you are a stay-at-home-dad who wants to sell your own neat apparel designs online, or a creative mom who can make some excellent handicrafts at home. Now you are interested in setting up a storefront on the web so you can “get in on this eCommerce thing” or “make money on the side” or “make some extra revenue when you sleep”. Here’s what you need to get going.
Steps to get going
| Item | Who you need to set this up? | How much will it cost? |
| Company Incorporation
(MOA, AOA, PAN Card, Company legal entity, Bank Account) |
CA, Accountant or Company Secretary | Rs. 50,000 (Bangalore) |
| Payment Gateway (To accept credit card, net banking or debit card online) | EBS, CC Avenue, your bank (Axis, HDFC, etc.) | Rs. 25,000 (initiation fee)
2 – 4% transaction fee (negotiable) Rs. 500 – Rs. 1500 monthly fee (can get this waived) |
| eCommerce Software | Shopping cart software companies (Shopify, Big Commerce, MartJack, IQecommerce) + Do the catalog setup yourself | Rs.1000 to Rs. 10,000 per month starting |
| eCommerce team (Optional if you use off-the-shelf hosted software) | Build your own team of 2 people to custom build eCommerce storefront | Rs. 1.5 to Rs. 2.5 Lakhs per month |
| Computer, machines, servers for developers (if you are building a team) | Go Daddy, Big Rock, your local PC reseller | Rs. 50,000 + Rs 10,000 per month for hosting (basic plan) |
| Office Space (if you have a team that wants to work in an office) | Get a small, cheap shared space instead of a big swanking office | Rs. 5000 per month |
| Shipping | Blue Dart, Aramex or Fed Ex (AFL) | Rs. 20,000 (setup account, negotiable to zero) + Rs. 25 to Rs. 45 per shipment (up to 500 grams in weight) |
| Initial Marketing | Do it yourself (poster, flyers, send email to friends) | Typically zero, but budget Rs. 20,000 |
| Computer (Desktop or Laptop) + Internet + Phone | Assuming you don’t have one already | Rs. 30,000 + Rs. 2000 per month (for a good internet connection) |
| Total starting costs | Minimum: Rs. 1 Lakh plus Rs. 25,000 per month (using hosted shopping cart software)
Maximum: Rs. 4-5 Lakhs plus Rs. 2 Lakhs per month (building a team and hosting yourself) |
Milestones
1. Get eCommerce site up to take transactions
- Get website ready (either build from scratch or use a hosted shopping cart)
- Setup payment gateway
- Setup a shipping partner
- Upload and manage initial list of products
- Setup and manage initial supplier list for products to be drop shipped (or ship from own simple warehouse)
Team needed: Business (customer service, supply chain, operations, legal, etc) + Engineering (1-2 folks should suffice)
2. Get to 100 transactions / day & unit profitability (Typically 9 months to 1.5 years since start)
- Optimize website for SEO, put an affiliate marketing program, pay for SEM, social media
- Expand product list and supplier list
- Setup small warehouse (if customization is required) and manage inventory costs
Team added: Digital marketing, Procurement manager, Supply Chain and Logistics Managers and Customer Service, Increase engineering (User experience, Scalability experts, etc.)
3. Get to 500 transactions / day & scale (Typically 2-4 years from start)
- Include brand marketing efforts including TV, print and billboard advertising
- Expand into adjacent vertical products spaces, add new suppliers
- Keep refining website to include up sell, cross sell and analytics efforts
Team added: Head of brand marketing, Category manager (Merchandise Manager) for each category, Catalog manager (write product descriptions, take product photos, etc.)
4. Show gross profitability and scale beyond 1000 transactions
- Manage inventory and costs and ensure optimization of logistics and warehousing
- Recruit and manage team for growth
- Look for non-linear sources of traffic to the website, possibly add corporate sales
Team added: Finance & HR, Complete Marketing hires, Business Development
So after starting with a small team of do-it-all experts, you should at 1000 TX/day have about 200-300 people.
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