People / Stories

eCommerce: Do you know the seller’s story?

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My name is Gurudatt. I have a business in Home appliances.

We are online sellers with Flipkart, Amazon, Snapdeal, Paytm, Shopclues and Ebay.

This is my experience as an online seller addressed to all the online buyers in India.

We sell Home appliance products of all major brands like Milton, Cello, Nayasa, Signoraware, Prestige, Tupperware, etc.

As you are aware, all the above mentioned companies have moved from “Inventory based” model to “Marketplace” model. “Marketplace” model means the eCommerce companies do not own any inventory, they enable sellers and buyers to connect with each other and transact.

We know that the eCommerce companies have changed the way we do commerce in India. They offer discounts, wide product selection across all categories, faster delivery, customer care support, user friendly return policies, cancellation options, product exchanges and thus made our lives easy. We can sit in our home or office and order anything we want and pay easily with credit cards, debit cards or cash on delivery.

So half a billion people are excited about eCommerce in India and this number is growing.

I will explain the other part of it – from a seller’s perspective. I will explain the hassles we face to keep you happy.

I was excited when I decided that I would sell home appliance products online through eCommerce portals. I made the list of products I wanted to sell and uploaded my catalog on the websites. On day 1, I got 11 orders. Who could stop me now? I was on a journey of infinite miles.

The initial days were good as I was just focusing on number of orders I got per day. I reached 10, 15, 30, 50 orders per day and I started dreaming of becoming a millionaire soon. Dreams are great but I was not keeping the accounts of the sales properly. One day, my charted accountant called to ask all sales and purchase details to file monthly returns, then I looked at all my bills, bank account statements, invoices, pending payments from eCommerce websites and could not find a logic or proper cashflow in my accounts. I started digging my invoices and got to know that I was losing more money on product cancellations, returns, logistics, and marketplace commissions than I expected.

On an average the marketplaces charge:

Marketplace commission – 15%
Domestic shipping per Kg – Rs 30
National shipping per Kg – Rs 45.
Fixed commission per order – Rs 10 ( for orders above Rs 250 )

Along with these, I incurred huge losses in

*Customers using products for a week and sending them back.
*Product damages (they tell us we can claim for damages, but they never do).
*Product returns (they come in a condition, where we cannot resend to other new orders. Most of the covers/corrugated boxes of brands are damaged.)
*Reverse logistics charges (When you cancel, the seller pays the return logistics charges)
*Marketplace commissions (When you cancel, we the sellers are still charged the commission).
*Product Cancellation (Paytm charges a commission of 15% + logistics fee of Rs 45, when you order and cancel in minutes. See the logic, the customer cancelled it by choice and order not yet shipped. But still seller has to pay commissions).

Please note that the average return rate for ecommerce in India is 30 %.

Our operational cost:

* Office Rent.
* Admin costs (I have 1 person for packing apart from me )
* Packing material costs (on avg Rs 15 per order package ).
* Transportation cost incurred for product purchases.

I do not have a retail shop, so my costs are minimum. But can you imagine the above expenses if I was paying Rs 1 lakh rent for my shop?

Logistics Issues:

* The pickup guys do not come regularly. If they skip pickups for 1 day, 30 % of our customers cancel the orders. And no company takes the responsibility. They tell you, “vehicle was not available”.
* We have to call the pickup guys every day and tell them the number of orders and whether they should send a van or bike. Amazon and Flipkart does a good job here by making the process automated. But Ecom, Bluedart, Delhivery teams are way behind in communications.

Payments:

* Shopclues take 30 days to settle the payments (so we quit selling there).
* Flipkart -15 days for settlements after the product reaches customer.
* Amazon – 10 days for settlements after the product reaches customer.
* Paytm – 8 days for settlements after the product reaches customer.

Sellers are made to compete for pricing. I have seen sellers playing the number game rather than serving the customer. Sellers are left with very little or nothing at the end. You will ask, why are sellers not complaining? I do not know. But most retailers who started selling online but gave up after 2 to 3 months, couldn’t communicate with anybody. They either get satisfied with offline sales or think it’s not for them.

Every day thousands of sellers are added with no knowledge of the rules of the game. The companies talk big numbers and sign them up. But the companies never call and ask you how you are doing or what problems are you facing with business or how they can help to grow our business…?

Taxation:

I bet 99.999% of charted accountants do not know how eCommerce taxation works. Not to blame them, but every company generates invoices in different formats and and when we sit for filing our returns, its headache.

Marketplace?

The eCommerce companies have total control on our inventory. They can block us anytime, make our listings inactive anytime, can damage our orders in transit, delay our payments, cut huge commissions, cut buyer claimed refunds without giving any notification.

Dear Online Buyers,

Who is paying for your offers or discounts? Please note, that to change your online purchasing behaviour, habits or addictions, eCommerce companies are just racing to capture the marketshare to get more online buyers, increase their buying trends, capture all your shopping data to raise the next billion dollars from venture funds.

There is nothing wrong in eCommerce companies modelling their business and pricing the sellers with such policies. But in the long run, this is a biased business model, where sellers are screwed to make customers happy. The discounts and offers do not go a long way and the customer expectations are increasing day by day. To meet those expectations sellers are giving up their margins and closing businesses.

I am still optimistic about my business and not quitting my journey. It’s a start. I am here to build not to fall.

Hope your support stays with all online sellers to serve you.

Thanks

Gurudatt

Founder & CEO

Smarthomez

Twitter handle: g_datt

http://therodinhoods.com/forum/topics/ecommerce-do-you-know-the-seller-s-story

Networking

4 Ways To Stay In Touch With Senior Executives

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Have you been to a networking event, saw a super star executive, ran up to him to chat with him, and later go home to add he/she to LinkedIn? For me, this story is way to familiar.

Unfortunately, time after time I let the potential relationship go cold and unfortunately this is a story I have to go through over and over again, and I hate it!

We show up at networking events, meet great people, follow up poorly, and later kick ourselves when we realize we should have worked harder to create a relationship. It’s a painful situation, and here are three tips to avoid this happening to you in the future. After doing this over and over again, here are 4 ways that I stay in touch with executives

  1. Schedule Time For Follow-up

The networking event ends at 10PM but the ‘networking’ continues. If you want to effectively connect with future partners and customers, your responsibilities extend beyond the drive home.

If you’re like most people, you don’t have a set routine for post-event follow-up. Reaching out on LinkedIn, sending an email, and entering information into your CRM are all vital to growing your business and your network, but it’s all to easy to just ‘do it when I have a free minute’.

If you want to get the most out of your business networking events, build ‘post-event follow-up’ into your calendar either that same night after an event or the next morning.

For example, I go to the Cambridge Center of Innovation every Thursday night, and collect at least 20 or so business cards. Lately, I have made it a religious practice to come home and enter in all those individuals in my LinkedIn. Especially if it’s LinkedIn, I’ll make it a point to include a short message:

 Hi Jack,

Great meeting you at the CIC last night. I can’t believe you also had a Labrador retriever growing up – they are great dogs. Let me know if I can ever be of help.

Thanks

Chirag

Co-founder, Insightfully

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Finance, Motivations

Crowdfunding Advice From the Kickstarter Consultant with an Amazing 100-Percent Success Rate

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Dubbed the “Crowdsourceress,” Daly has a unique knack for running successful Kickstarter campaigns. It’s likely that you’ve even helped fund a few of them. Through her company Vann Alexandra, Daly has helped launch and run campaigns such as the Joan Didion Documentary, TLC’s final album, the Standards Manual (co-created by her boyfriend and collaborator, Hamish Smyth) and Eric Reis’s latest book, The Leader’s Guide (which we wrote about here). The company has a 100-percent success rate so far, and has several new campaigns in the works, including NYCTV, an initiative to help independent video creators and filmmakers.
Daly has proven extremely adept at organizing others’ funding campaigns, but she had never attempted one of her own until yesterday, when she and Smyth Kickstarted a limited-edition poster with all 468 New York City subway stations painstakingly hand-drawn and arranged in alphabetical order. Perhaps not surprisingly, the project exceeded its $29,800 funding goal on the first day. As that project was about to launch, we caught up with the Crowdsourceress to tease out some of the secrets of her success.

Click Here for an interesting interview

Finance

Sidbi’s electronic platform to make it easier for start-ups to access institutional funds

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The high-end technology platform will enable investors to manage and monitor investments in small enterprises, while giving start-ups a one-stop shop for meeting their funding needs

Raising institutional finance – both equity and debt – is likely to become easier for early-stage start-ups. Small Industries Development Bank of India (Sidbi), which targets micro, small and medium enterprises (MSMEs), is setting up an electronic platform for institutional investors, angel and venture capital funds, start-up accelerators and incubators ventures to meet the financing needs of early-stage start-ups.

The collaborative electronic platform under the National Innovation Finance Programme (NIFP) is currently in the development phase in the Centre for Innovation and Incubation and Entrepreneurship (CIIE) of Indian Institute of Management (IIM), Ahmedabad. The high-end technology platform, backed with analytics tools, will enable investors to manage and monitor investments in small enterprises, while giving start-ups a one-stop shop for meeting their funding needs.

At the pilot stage, the electronic platform would offer assistance to 10-15 start-ups, before ramping it up to the need of 500-odd companies.

According to K I Mani, general manager, Sidbi, SME Development Centre, the development bank is playing the role of a “market maker” in this exercise, while collaborating with different stakeholders, including the IIM Centre and the German sustainable development agency, GIZ GmbH. “We want to bridge the gaps in the MSME system, rather than become the biggest lender to the sector,” says Mani.

Click Here for more

http://sidbi.in/?q=loan-facilitation-syndication-services-entrepreneurs

Motivations, News, People / Stories

How Ratan Tata is working in intersection between entrepreneurship, tech-led innovation and philanthropy

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Recently, when four students from Massachusetts Institute of Technology (MIT) approached Ratan Tata, expressing their desire to work in India and help solve a grassroot-level problem here, Tata did not connect them to the Tata Trusts which together invest Rs 340 crore every year to solve social problems. Instead, he plugged them to Paytm, an e-commerce company in which Ratan Tata made a personal investment this March.

Similarly, R Venkataramanan, the one man who has screened, consulted and led every one of Ratan Tata’s 10 personal investments in startups including six in e-commerce over the past 12-15 months, is not a hot shot investment banker, but a trustee on many of the charitable trusts set up by the Tata Group. Half-a-dozen entrepreneurs who Tata has invested in told ET that Venkatramanan was with Tata in every one of their meetings.

 

Business Ideas, Innovation, Social Entrepreneurship

Jamshedpur’s Plastic Roads

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Disposal of waste plastic is no longer a problem in the steel city with Jamshedpur Utility and Services Company (JUSCO) using bitumen technology on waste plastic, ranging from polybags to biscuit packets, for constructing roads.
Tata nagar roads jamshedpur
JUSCO, a 100 per cent subsidiary company of Tata Steel which maintains and provides municipal services in Tata command area of the city, has constructed 12-15 kms road in the steel city as well as Tata Steel Works besides widening 22 roads using the environment-friendly technology of utilising waste plastic.
Tata nagar roads jamshedpur -jusco
“As far as we know, Jamshedpur is the only city in eastern India where bitumen technology (Dry Process) patented by Thiagarajar College of Engineering (TCE), Tirupparanku ram, Madurai, has been implemented on accumulated waste plastic for the first time”, Gaurav Anand, Senior Manager (Quality Assurance) of JUSCO, said today.
Claiming that there is no maintenance cost involved for the first five years, Anand, who is an environment engineer, said that for every stretch of such one km long and four metre wide road, one tonne of bitumen costing Rs 50,000 is saved.
The use of bitumen has been reduced by 7 per cent ever since JUSCO began using waste plastic in road construction work, he said, adding that the quality and longevity of roads made of waste plastic-aggregate-bitumen was two times better than bitumen road.
roads made from plastic by JUSCO
Describing plastic tar road as a “new pathway”, Pratyush Dandpat, Deputy Manager (Quality Assurance) of JUSCO, said that the technology turned out to be successful.
Besides being water resistant, it has better binding property, higher softening point, can withstand high temperature and higher load, has lower penetration value, costs less as compared to bitumen road and has no toxic gas emission, Dandpat said.
Though there is great demand for the technology, including from Chattisgarh, Himachal Pradesh, Uttarakhand and Jharkhand governments, but “we do not have any plan to commercialise it but to serve society. We have even received a request from Nigeria, which wants to replicate it in their country”, Anand said.
Courtesy : Havovi Homavazir

o the JUSCO initiative, the city will now have strong, durable, eco-friendly roads which will also relieve the residents from the ugly & frightening sight of heaps of plastic waste!!
Finance

Sebi picks Narayana Murthy to head panel on startup funding platform

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India’s capital markets regulator has named Infosys founder N.R. Narayana Murthy to head a panel that will devise rules for a new funding platform for homegrown start-ups, the regulator said on its website.
In March, the Securities and Exchange Board of India (SEBI) announced an alternative investment platform targeted at the country’s booming internet start-ups, relaxing some key requirements to encourage them to list at home.
Murthy’s Alternative Investment Policy Advisory Committee (AIPAC) will devise policy and rules for the new platform, and is modeled after other regulatory panels that advise markets regulator Sebi on capital market policies.
The regulator released the details on its website as part of the panel’s terms of reference.
Tough rules have made start-up listings difficult in India, where rules restrict, for example, early exits of original shareholders.
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Motivations

India learns to ‘fail fast’ as tech start-up culture takes root

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After ping pong tables, motivational posters and casual dress codes, India’s tech start-ups are following Silicon Valley’s lead and embracing the “fail fast” culture credited with fuelling creativity and success in the United States.

Taking failure as a norm is a major cultural shift in India, where high-achieving children are typically expected to take steady jobs at recognised firms. A failed venture hurts family status and even marriage prospects.

But that nascent acceptance, fuelled by returning engineers and billions of dollars in venture fund investment, is for many observers a sign that India’s $150 billion tech industry is coming of age, moving from a back office powerhouse to a creative force.

“There is obviously increased acceptance,” said Raghunandan G, co-founder of TaxiForSure, which was sold to rival Ola this year. He is now investing in others’ early stage ventures.

“My co-founder Aprameya (Radhakrishna) used to have lines of prospective brides to meet … the moment we started our own company, all those prospective alliances disappeared. No one wanted their daughters to marry a start-up guy.”

Srikanth Chunduri returned to India after studying at Duke University in the United States, and is now working on his second venture. “I think what’s encouraging is that acceptance of failure is increasing despite the very deep-rooted Asian culture where failure is a big no,” he said.

“It’s ok to fail”

The shift has come about, executives say, as engineers began returning from Silicon Valley to cash in on India’s own boom, as hundreds of millions of Indians go online.

“Investors too want to find the next Flipkart, and most of them come from Silicon Valley backgrounds, so they bring that culture,” said Stewart Noakes, co-founder of TechHub, a global community and workspace for tech entrepreneurs. “That’s changing the Indian norms. It’s becoming ok to fail and try again.”

Big names like Flipkart can also mean the prospect of a lucrative exit for investors, covering a multitude of failures.

To be sure, the pace of change is slow in altering a culture that has produced top software engineers for decades, but – as yet – no Google, Apple or Twitter.

Cheap engineering talent keeps start-ups afloat far longer than in Silicon Valley, where companies last less than two years on average. And the freedom to fail remains restricted to a small portion of India’s corporate fabric, booming tech cities like Bengaluru or Gurgaon outside New Delhi.

There is also still no revolving door with big corporates, whom one senior Bengaluru headhunter described as beating down salaries of executives who dared to risk – but then came back.

Role models

But big homegrown successes like e-tailers Flipkart and Snapdeal or mobile advertising firm InMobi, as well as the multi-billion dollar firms set up by former executives from the likes of Amazon.com, Microsoft and Google, have created role models, encouraging graduates to take risks.

“With success stories, people accept it as a legitimate exercise,” said Ryan Valles, former CEO of coupon site DealsandYou and a former executive at Accel Partners, now working on a new project.

Meanwhile, billions in investor funding have fed the sector.

External cash – as opposed to more traditional bank loans tied to individuals, or family savings – makes a difference. Failing there can involve walking away Silicon Valley-style, not years of court proceedings in a country with no formal bankruptcy law.

There has also been, to date, no major collapse.

“What’s happening is healthy: people recognising that some things will fail, that it’s largely a failure-based industry, in the same way that movies, music or pharmaceuticals are,” said Shikhar Ghosh, senior lecturer at Harvard Business School.

An estimated 70-90 percent of start-ups fail.

But the biggest test may be the first bust after the boom.

“That will be the test: whether people come back into the market and how they treat the people who lost their money,” said Ghosh.

Startups

6 Common tax mistakes that most startups make

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01-05-2015

by : CA Pratik Anand

These days there is a flurry of new businesses or start-ups being launched. As a start-up, you won’t want to get into a legal tangle especially with a very aggressive tax regime and a long incorporation process. To make sure your new business is handling its regulatory, tax obligations properly, run through these common mistakes that most start-ups make:

 

  1. Choosing the Wrong Legal Entity

Your startup’s legal structure affects your legal reporting requirements and your tax filings and how much you pay as tax, so it’s important to choose the right entity.

There are a number of entity structures that you could choose such as a Registered Company (Public/Private Limited), LLP, proprietorship, partnership etc.

While the proprietorship mode of business could lower your tax pay out to an extent but a registered company is more formal and widely accepted way for doing business especially with foreign clients which generally want to do business with registered companies. Also venture backed startups generally require registered companies for funding.

Also if you do not want personal liability for the losses/liabilities of your startup than you could opt for either a Limited liability partnership or Limited Company, but if you don’t mind your personal assets being used for settling the business losses/liabilities then you could opt for proprietorship or partnership.

Remember that not choosing the right form of a legal entity can get you into a legal tangle and can also result in a higher tax outgo. A discussion with a tax advisor or CA can help you figure out which structure is right for your situation.

  1. Not Keeping Track of All Your Expenses

From the moment you launch a business, you’re able to deduct all “ordinary and necessary” business expenses (e.g. office supplies, event fees, kilometers driven to meet with partners).

The biggest mistake start-ups make is not keeping track of these expenses throughout the year and trying to gather every receipt when it’s time to file the tax returns. Always remember, you can’t deduct what you can’t document, and failing to record expenses as you go most likely means you’re leaving money on the table.

Find a method for documenting expenses that works for you. There are accounting softwares, such as QuickBooks, Tally, Busy, FreshBooks etc which let you record and manage expenses. You can hire services of an accountant to record all your expenses. You can also get all your accounting outsourced from a professional such as a CA.

 

  1. Mixing Capital Expense with Revenue expense

First-time business filers get tripped up as to which expenses are considered assets /capital expenditure and which are revenue expenses deductible in the P&L A/c. Capital Expenditure/ Assets/ Equipment are typically higher-value items that will last significantly longer than one year. For example, a new computer, server, office chairs. The expenses on their purchases are not deductible as revenue expenses in the P&L A/c but only the depreciation/amortization on them is deductible over a period of time.

Revenue expenditure includes things that you use/consume during the year (e.g. printing paper, pens, toner cartridges etc.).

If you mistakenly deduct your equipment or capital items as revenue expense, the tax department can determine that you improperly characterized the expense and that you’re not entitled to the deduction.

 

  1. Mixing Personal and Business expenses

New startup founders and small business owners often invest so much of their time and money in the company that their personal and business expenses become indistinguishable. This practice can lead to major confusion come tax filing time, and in some cases, can lead to deductions being disallowed on an ad-hoc basis by the revenue and higher tax outgo as a result. Avoid trouble by establishing a company financial account from the start and maintaining separate records for the business.

  1. Not Paying Your Taxes Regularly

Businesses, including self-employed sole proprietors, are required to pay taxes on a advance basis i.e they have to determine their taxes for the year in advance and pay as prescribed instalments in Advance. Not paying the taxes deducted from payments of suppliers/ service providers can land you in big trouble. Take a stock of your profit/loss statement at each quarter and pay your advance taxes accordingly. A CA/Tax Consultant can help you estimate these payments if you need some help.

 

  1. Not asking for professional tax help

Once you get established and incorporate, find a tax advisor to make sure you are following all the regulations. Your job is to get your company up and running, to focus your energy on creating your product, forming strategic relationships, and other big-picture ideas. The last thing you want to think about is taxes. It’s essential to hire a tax advisor to accept liability, and make sure you follow all regulations.

Above all, any startup or small business owner must think of taxes as a year-long obligation, not just something to revisit once a year.

(The author is a Chartered Accountant in practice and has wide experience of working startups/new businesses right from incorporation to compliance related filings. He is also founder at taxraasta.com which deals in setting up businesses for startups in India.)

– See more at: http://taxguru.in/income-tax/6-common-tax-mistakes-startups.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+articlenoticejudiciarynews+%28TaxGuru.in+%3A+Legal+%26+Tax+Updates%29#sthash.FbAbQfxK.dpuf