You have an idea to start your online business, create your social channels, and start getting orders!
This sounds easy. Isn’t it?
But, that’s about getting a handful of orders and that too from your existing network of friends and family.
Count this idea as a boost to your business. However, this doesn’t sum up ecommerce. To scale your business, expand your network, and flourish sales, you will count on the platforms you can sell. You may like selling on marketplaces like Amazon, Flipkart, or launch an online store of yours.
While conducting online trade, your business needs to comply with the regulations & laws created by Government authorities. To conduct e-trade in India, you need to follow the Information Technology Act, 2000 (IT Act 2000), which ensures compliance with cyber laws.
The legal undertaking of your ecommerce business starts with company registration as per the Companies Act 2013. Further, you need to register for a GST number for your business to conduct sales through marketplaces and your ecommerce store. This adds the requirement of checking with the variety of taxes and laws created for the same. You need to count on the GST Act, Income Tax Act, Custom Duties if you conduct international business, and so on. At times, the legal requirement may raise the requirement to check with the Contract Law, Indian Penal Code, etc.
We know that’s a lot, but how you can successfully conduct e-trade. Do check with the financial laws and digital payment compliances created by Reserve Bank of India (RBI) and ISO for the quality of the products.
Now, we will be discussing some of the common legal conditions that you may face while running your ecommerce business:
- Brand infringement
Most of the businesses start their ecommerce journey from marketplaces like Amazon. The hybrid or the marketplace model has several registered sellers on the platform selling a similar type of product. For the ease of listing, & reducing the copying of product listings, ecommerce operators allow sellers to map the products and sell similar ones on their rates.
This takes the traffic of the seller & divert to the seller offering at the lowest rates. Unluckily businesses can’t do anything against such activity other than filling the brand infringement. But, you will be able to take the legal stand, if and only if your brand is registered under the Trade Marks Act for Intellectual Property of India.
Trademarks help you stand with your brand and allow you to get benefited from brand promotional strategies. It is referred to as the ownership of your business name under which you can sell different categories of products. While taking a Trademark for your brand, you need to tell about the product categories you will be selling. If you add more categories with time, you can get it updated.
- Quality certification
The manufacturing businesses have to check with the quality certification rules & standards set by the Central Government or Local Government bodies. If your products don’t comply with the quality measures, you may get out of the race. Depending on the manufacturing unit & type of products you are dealing with, you have to take different quality assurance certificates from standard organizations like ISO.
If your products are in the restricted categories, you may not be able to sell them online without certifications. We recommend you check with your product categories and if there is a need for quality certifications for your products.
- Violations of the Privacy Policy
As an ecommerce business, it is a must for you to create privacy policies for your store. But, do you remember when you last updated them? If not, you may face the decline in the traffic on your store, blocking issues on certain pages or suspending your product listings when selling on marketplaces.
Removing the bar of legalities may take a lot of time & will eat up the current opportunity. So, it will be far better if you keep track of all those policy update mails that you are getting from the third-party ecommerce automation services you are partnered with. When they update their terms of service, policy norms, you also have to update yours. If any cliche gets it cleared straight away, else you have to bear with the consequences.
- Data Theft
The most crucial, yet common legal situation that most ecommerce businesses fall into is Data theft. The novel GDPR compliance laws have it all revolutionized, though the change was initially for the traffic you are getting from European countries and states; now policies are applicable for Indian businesses as well. Under GDPR, it is mandatory to ask the end-user for permission to access the user’s data. If the permission is denied, the information will remain encrypted and will not be displayed to anyone.
Data theft may or may not take place directly from your website. It’s your responsibility to keep an eye on the checkout process and explore your site if it is redirecting to third party sites or so.
- Cybercrimes
When everything is going online, you have to be very cautious about the crash of your site, especially around festivals and end of the season sales. Businesses keep their entire site on cloud & keep their redundant counterparts on different servers for lesser load time. Virtualization is the need of time, but data encryption can only make it a successful attempt. Else, hackers can take advantage of the situation & gain access to your store.
Cybercrime can be anything like unauthorized access to your server, data theft, hacking & crashing it completely or even more dangerous like access to users’ personal information. You can not do anything to avoid the chances of such an unfortunate event anyway, but adding a security patch can minimize the risk & you must take note of the same.
You must hire a paralegal, business associate, legal advisor, or tax consultant to help you with the business decisions on the legal front. You may not need their advice for regular conduction of your business, but their assistance can keep you from a lot of future troubles.
In addition to all of these laws and acts, keep your ears open to the Government’s new decisions regarding offline and online business. Like recently, the Indian Government made ‘Location of product origin’ to be mentioned compulsorily; else, your listings will be suspended! Yes, that’s harsh! Indeed that’s a way to distinguish your local business from the crowd of different origins.
The amendments will keep coming, some of them will be a lot more in favor than others. Update your policies & start selling now!
