Business Today

The world is your oyster

Pritam P. Hans        Print Edition: July 8, 2012

If you have a product to sell, why remain restricted by the boundaries of a single nation? You can sell your wares across the globe, thanks to the rise of the Internet and shrinking distances. Online sales are estimated to come close to $1 trillion in 2012.

Global research firm Forrester expects online sales in the US to grow from seven per cent of overall retail sales to almost to nine per cent by 2016. According to a report by the Federation of Indian Export Organisations (FIEO), exports through the e-commerce route have grown over 400 per cent to $1.4 billion in the past three years. "Traditional selling methods, especially to international markets, still remain expensive for small businesses. But with the rise of e-commerce, you can reduce costs on labour, international phone calls and travel," says Nayan Thakkar, Manager, Sales and Customer Support, Alibaba.com, a leading business-to-business (B2B) marketplace.

You need to first analyse the market and fi gure out how to reach your customer. "Businesses need to identify the right market and understand the export opportunity," says Nitin Bawankule, Industry Director, Google India.

A resident of Moradabad, Uttar Pradesh, Sandeep Mehrotra identifi ed a business opportunity in export of metal artefacts. He set up Progressive Enterprises with an investment of Rs 2.5 lakh in 1995. Mehrotra initially focused on offl ine deals. After years of advertising in global media and participating in international trade fairs, he fi nally found success only when he used an online B2B marketplace.

In contrast, Deven Patodia, an entrepreneur from Kolkata, started out with a plan for the online market. Having studied in the US, he was aware of the market potential for eco-friendly organic cotton bags and packaging material there. He started Star Silk Exports, with a small investment of Rs 30,000 on a few machines. Today both businesses have an annual turnover of Rs 2 crore to Rs 4 crore, mainly through online orders.

Once you have identifi ed a market, you must decide whether you want to tap the retail market or cater to wholesale buyers. Naveen Pamnani, who has a successful retail export business in spare parts of vintage bikes and scooters through his fi rm 24X7 Mercantile House, fi nds selling to end-consumers more lucrative. "Before starting my retail auto parts business, I was exporting handicraft items in bulk. I would be shipping containers worth Rs 20 lakh to Rs 50 lakh per month. The items would be sold by local retailers at several times the wholesale price. I was the loser," he says. Thus when he started selling spare parts, he decided to cut out middlemen and retail the parts at relatively lower prices by sourcing them from local traders. But selling wholesale has advantages too. "It is better to fi nd bulk buyers to get economies of scale," says Mehrotra.

Once you decide your products and your target customers, it is time to set up an online shop. An e-commerce site needs an initial investment of only Rs 5,000. Familiarise yourself with free e-commerce site platforms such as Magento, PrestaShop and osCommerce. Your investment will be the cost of domain registration and web hosting (Rs 500 and Rs 5,000 per year respectively).

Starting an independent website requires a lot more work in terms of reaching your customers. As most users start their online shopping from search engines such as Google and Yahoo!, your site must appear among top search results. This can be a challenge. You can also use online advertising services such as Google AdWords. However, keep track of the results to avoid losing money on wasteful ads. Though there are consultancy companies that manage websites and online stores, results are not guaranteed.

Mehrotra created a website in 2004 and hired a consultancy to promote it, but the move failed. He started getting a regular fl ow of enquiries and orders only after he joined Alibaba.com. IndiaMart.com and TradeIndia.com are other popular B2B marketplaces. eBay.com, which has several country-specifi c websites, is a popular retail store.

Like any business, an online one has a gestation period. It may take a few months to a year to have it running. "Being resilient is very important," says Patodia. There are also regulatory requirements.

"You have to establish a fi rm and get it registered with the Registrar of Companies," says M. Rafeeque Ahmed, president, FIEO. All exporters also need an Import Export Code issued by the Directorate General of Foreign Trade (see Follow the Code). Once a customer places an order, try to get paid before shipping it, to avoid payment fraud. Payment gateways such as PayPal.com allow you to get paid instantly and securely.

Before shipping products overseas, acquaint yourself thoroughly with the different country-specifi c regulations on product codes and specifi cations. Consult a chartered accountant for guidance.

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