Is becoming a seller on Flipkart, Snapdeal, etc a profitable business? Why?

Find out if its viable to sell online.

Shipping Cost – Visit your nearest courier or shipping company and find out how much it would cost to ship your product in various parts of India. Make a list of states and shipping fee. Normally this cost hovers between 5% to 15% of the product cost depending on the size and weight of the product.

Packaging Cost – Depending on the type of product you are planning to sell, you will need to consider the packaging cost. Check the different packing material and calculate how much you will need for one product. Calculate the total cost per product accordingly. Normally its between 0.5% to 2% of the product cost.

Payment Gateway Cost – If you planning to setup your own store, you will need a payment gateway. These sites normally charge between 1.5% to 5% of the total transaction. There could be one time setup fee and recurring annual maintenance fees. Last time when I checked, most payment gateway providers had waived off these fees. You can negotiate the transaction fee if you have higher volume.

Storage Cost – Depending on the product, you might need to rent warehouse or some storage space for your products. Find out this cost as well. Some online marketplaces like Amazon let you use their warehouses at a small fee.

Marketing Cost – Like any other business, you will have to tell the world that you have arrived. Surely, there are free ways to promote your business but at some point of time you will have invest in paid marketing channels. Google’s AdWords is a good platform to start with online ads and it also offers tools to calculate the costs.

Profit Margin= Selling price – (Sourcing Cost + Packing & Shipping + Transaction Fees + Marketing Cost + Variable Costs)

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 )

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.