As we have achieved so many technical advancements this year, India has shown vast potential for starting various kinds of businesses in its different sectors. One such example of a company is the dealership business in India, which can generate a lot of profits for the dealer, alongside other benefits.
However, starting a dealership business in India may not be as easy as it might seem. Moreover, you might have to face various obstacles in your way, especially from financial instability and area inconvenience. Despite the challenges, if you can overcome all the difficulties, a lot of benefits are waiting for you.
In this blog, we will tell you how you can start a dealership business in India and what obstacles you might face in your journey.
Understanding The Dealership Business Model in India
Understanding the dealership business in India will require you to follow several steps and conduct research on the dealership market. For example, you need to know the working function of a dealership business alongside other factors such as challenges, benefits, stakeholders, and the income structure.
Although the dealership may seem very profitable at first sight, to excel in this field, you have to grasp a basic understanding of the concept.
Defining A Dealership Business Model in India
You can refer to the dealership as a kind of consensus among an organization and a manufacturer or with an individual. Furthermore, this procedure lets the dealer sell the organization’s assets and services in a specific region or area. Moreover, the dealership model operates asset distribution other than service production, like in franchises.
Step-by-Step Guide to Starting Your Dealership Business
Now that we have explained a few basics of dealership business and how the whole procedure operates, here is the step-by-step guide on how you can start your dealership business in India:
Step 1: Identify the Right Industry And Product
The initial step for a dealership business in India is for you to identify the right product and industry you want to work with. For example, if your expertise lies in a pharmaceutical dealership, you cannot start your business on automobiles. Not only because you do not have sufficient knowledge, but also insufficient experience in the field.
Personally, when you are enquiring about a product or industry, you need to assess a few points, like:
- Your estimated budget.
- Whether you prefer B2C or B2B.
- If you should deal with services or company assets.
- Your involvement in everyday operations.
Step 2: Conduct Through Market Research
When you have recognized or identified the right industry and products for your dealership business, the next thing you should do is conduct a thorough market research. You need to analyze many market shifts, product trends, and other important factors.
Moreover, when you are trying to conduct proper market research, here are some points you need to look for:
- Demand Trends.
- Criteria.
- Competition Level.
- Asset Shelf Life.
- Investment Necessities.
- ROI and Margins.
And while you are at it, here are some personal market goals that you should set for yourself, such as:
- Defining your objectives.
- Analyzing the local demand.
- Implementing several online tools for operation.
- Identifying potential customers.
Step 3: Develop A Comprehensive Business Plan
When you recognize the perfect industry for your dealership business and have identified the right products you want to sell, from this point, you want to develop a comprehensive business strategy on how you should execute your business output. Nonetheless, here are some steps that you need to follow:
- Executive Summary: You need to cover several factors such as the company name and type, preferred location and market, startup capital requirement, business objectives, and many more.
- Business Description: You need further clarification on your dealership business, like the business type, business model, vision and mission statements, and legitimate infrastructure.
- Market and Industry Analysis: Another crucial step for developing a comprehensive business strategy is to conduct an industry and market analysis, such as the industry overview, customer requirements, competitor analysis, market gaps, and preferred market profile.
Step 4: Secure Necessary Capital And Financing
Building a proper dealership business will require you to secure the necessary finance and capital. For instance, you need to properly budget for your business, especially when buying the products you want to sell. Nonetheless, some descriptive suggestions on this point are:
- Determining Capital Requirement: You need to assess several categories and the cost estimation for each type.
- Identifying Funding Sources: You can contribute to your dealership operation with an integration of several things, such as private savings, bank loans, government schemes, and many more.
- Preparing Your Commercial Documents: If you acquire financial loans from lenders or banks, they might ask for: a detailed business strategy, business and personal bank statements, dealership agreement letter, etc.
- Applying for Funding: Let’s say you have applied for funding, there are some banking processes you need to follow, such as choosing a lender, submitting documents, responding to problems and website inspections, and many more.
Step 5: Legal Requirements And Business Registrations
Starting a dealership business in India will require you to follow several legal requirements and business registrations. For instance, the government or the local administration might approve of any dealership in your local area or the particular product you are selling.
Moreover, you might need to adhere to some rules and policies to continue your business in the local group. Furthermore, here are some additional points you need to follow:
- Choosing a legal formation for your business.
- Registering your business name.
- Getting TAN and PAN for your business.
- Applying for GST registration.
- Getting relevant permits and licences.
Step 6: Securing A Suitable Location And Infrastructure
Alongside the regulations and funding concerns, if you want to make your dealership business prosperous, you must secure a suitable location and infrastructure for your business. It is mainly necessary to identify the potential customers for your business operations. And a few important factors that come with it are:
- Defining the perfect space necessities.
- Choosing the right location.
- Assessing infrastructure necessities.
- Making the right decision by renting, leasing, and buying.
- Setting up interior and layout designs.
- Ensuring approvals and compliance.
Step 7: Build A Strong Team
The dealership business is not a lone work where you can get most of the things done all by yourself. However, in dealership operations, you need to have a broad range of team members who you can assign multiple tasks and work with them on several important projects, and to create a strong team, you need to adhere to these points:
- Defining your manpower requirements.
- Defining roles and responsibilities.
- Recruiting the right people for business.
- Setting up onboarding and training.
- Establishing incentives and KPIs.
- Creating a positive working community.
- Managing compliance and HR.
Step 8: Establish Efficient Operations And Inventory Management
Doing a dealership business in India is not just about managing the finances of recruiting the right people for the job. Furthermore, you need to establish efficient operations and properly manage the inventory for business operations. However, to excel in this operation, you require these steps to follow:
- Designing basic operating procedures.
- Choosing the perfect inventory management function.
- Classifying and labelling inventory.
- Setting recorder levels and buffer stocks.
- Streamlining purchase and vendor management.
- Optimizing delivery and fulfillment.
- Observing and reviewing operations constantly.
Step 9: Develop A Robust Marketing And Sales Strategy
Your dealership operations are nothing if you cannot execute proper strategies to conclude them. Moreover, you can put more finances and team efforts you want, but without a proper strategy, you can’t generate good revenue from your business. Nonetheless, when you are enquiring about business strategies, here are a few points you can refer to:
- Understanding your preferred market.
- Positioning your dealership.
- Setting up local and digital branding.
- Building a local sales network.
- Using offers and promotions.
- Training your business members.
- Observing performance and adapting to different changes.
Step 10: Focus on Customer Service And After-Sales Support
After addressing all the required steps, there is one thing that many dealership businessmen neglect, and the thing is customer satisfaction. Moreover, you can refer to customer service and after-sales support. Here, you need to look after what satisfies your customers’ needs, and you can manage it by following these steps:
- Creating a customer service policy.
- Setting up a customer helpdesk or contact point.
- Maintaining a customer database.
- Offering value-added after-sales services.
- Training staff on customer handling.
- Implementing a feedback system.
- Handling complaints professionally.
- Offering loyalty and retention programs.
Types of Dealerships in India
As we have gone into several details on how you can secure a proper dealership business and what steps you need to follow to make a prosperous business in India, here are a few examples of dealership businesses that you can enquire about if you are trying to find the right option for you:
1. Automobile Dealership
When you talk about an automobile dealership, you might mainly refer to selling vehicles to customers. However, this dealership business is a licensed operation through which you can sell used or new vehicles alongside offering services, and managing spare parts for certain companies or customers.
An automobile dealership may seem one of the most capital-intensive options, but you can generate a lot of revenue in India.
The types of automobile dealerships you can do business with:
- Two-wheeler dealership.
- Four-wheeler dealership.
- Commercial vehicle dealership.
- EV (Electrical Vehicle) dealership.
- Used or old vehicle dealership.
Profit Margins
- Two-wheeler dealership: vehicle sales are around 2000 to 6000 per unit, with 10 to 30 percent up in accessories, alongside 1000 to 2000 finance commission per vehicle.
- Four-wheeler dealership: vehicle sales vary from 10000 to 35000 per unit, with up to 35 percent in accessories, and the insurance commission is 3000 to 6000 per policy.
- Commercial vehicle dealership: vehicle sales can range from 25000 to 100000 for each vehicle, and AMC/servicing up to 25 to 40 percent, alongside the finance commission is 5000 to 15000 for each CV.
- Electric Vehicles dealership: The vehicle sales carry up to 5000 to 15000 each vehicle, with a 35 percent profit margin for charging accessories.
Earning Potential
- Two-wheeler vehicles: Average profit for each unit is 3000-6000, with a monthly net profit of 2-5 lakh.
- Four-wheeler vehicles: Average profit per unit is 10000-50000 with a monthly net revenue of 5-15 lakh.
- Commercial vehicles: Average profit for every unit is 25000-100000, with a monthly profit net of 6-15 lakh.
- Electric Vehicles: Average profit for each unit is 5000-15000, and the monthly profit net worth of 2-7 lakh.
Also Read: Automotive Business Ideas
2. Fast-Moving Consumer Goods (FMCG) Dealership
Among all the good dealership businesses that you can do in India, a great example would be the fast-moving consumer goods (FMCG) dealership. Moreover, this dealership requires FMCG products that are mainly everyday consumable items, which you can instantly sell at a very low cost.
Moreover, you can refer to several examples like packaged foods, groceries, beverages, toiletries, cleaning products, and many more. These are dealership businesses that you can mostly find in your localities however, they can earn a lot of income if you consistently operate this business.
Types of FMCG Products
- Personal care.
- Household goods.
- Baby products.
- Health and Hygiene.
- Foods and Beverages.
Profit Margins by Product Category
- Packaged Snacks: 10 to 25 percent average margin range.
- Beverages: 8 to 15 percent average margin range.
- Personal care: 8 to 20 average margin range.
- Household Cleaning Products: 10 to 18 percent average margin range.
- Toiletries: 10 to 15 percent average margin.
- Baby Products: 8 to 12 percent average margin range.
- Low-cost items: 5 to 10 percent average margin range.
- New/local Brands: 20 to 35 percent average margin range.
Earning Potential
- Retailer Level: Probable monthly earnings 1 lakh per month.
- Distributor Level: Probable monthly income 2.3 lakhs per month.
- Super Stockist Level: Potential monthly salary 7.5 lakh per month.
3. Electronics And Appliances Dealership
Coming up next, we have the electronics and appliances dealership business in India. Moreover, this dealership business is one of the best dealership opportunities that you can get, with a lot of income possibilities. Also, this dealership is mainly famous because of its high appeal for technical and household products.
Nonetheless, the electronics and appliances dealership requires you to sell electronic and household products for everyday convenience. For example, a customer always tries to find modern gadgets, electronic devices, home appliances, and many more, while generating a handful of revenue for the retailer or the business dealer.
Moreover, the different types of consumer electronics, you can refer to are laptops and computers, smartphones and tablets, television and audio systems, and many more. And when it comes to home appliances, you get products like washing machines, refrigerators, Air conditioners, microwaves, water purifiers, etc.
Different products have different product margins, such as:
For consumer electronics
- Smartphones: 5 to 12 percent profit margin.
- Laptops/computers: 3 to 8 percent profit margin.
- Cameras and Accessories: 5 to 10 percent profit margin.
- TVs: 4 to 10 percent profit margin.
Home Appliances
- Refrigerator: 4 to 8 percent profit margin.
- Washing machine: 4 to 10 percent profit margin.
- Air conditioner: 5 to 7 percent profit margin.
- Microwave: 4 to 10 percent profit margin.
Earning Potential
- Retailer Level: 1,40,000 per month with profit.
- Distributor Level: 2,50,000 each month with profit.
- Super Stockist Level: 15,00,000 every month with profit.
4. Pharmaceutical Dealership
There is no doubt that medical issues are one of the most important priorities in every society. And with that in mind, the pharmaceutical dealership is among the top dealership businesses that you can pursue in India, as it promises a lot of profits with various conveniences.
Moreover, the pharmaceutical dealership will consist of selling drugs, medicines, and healthcare to required facilities alongside providing medical services such as ambulances, physical checkups, and many more.
Profit Margins
- Stockists or super stockists have an 8 to 12 percent profit margin.
- Distributors have a 6 to 10 percent profit margin.
- Wholesalers have a 5 to 8 percent profit margin.
- Retailers have 16 to 22 percent profit margins for branded drugs and 20 to 80 percent for generics.
Earning Potential
- Retail Pharmacy has a monthly 50000 to 2 lakh income profit.
- Wholesale dealers have 50000 to 4 lakh monthly income profit.
- Distributors have around 2 lakh to 7 lakh monthly income profit.
- Super Stockists have around 6 lakh to 25 lakh monthly profit.
5. Building Materials Dealership
We have another great example of a profitable dealership in India, which is in building materials. If you are unfamiliar, let us tell you that building materials are used to make several important materials for infrastructure and construction. For instance, you can refer to the materials from which you can build houses or bridges.
As India is progressively going towards housing, real estate, and infrastructure projects, the building material dealership opens several paths for these kinds of business owners and helps them earn a huge portion of revenue. And when it comes to materials, some examples suggest cement, bricks and blocks, paints, steel, and TMT bars, etc.
Building Dealership Profit Margin
The profit margin varies for several product types, such as
- Cement: 4 to 8 percent average profit margin.
- Steel and TMT bars: 2 to 8 percent average profit margin.
- Bricks and blocks: 8 to 15 percent average profit margin.
- Paints: 10 to 18 percent average profit margin.
- Tiles and flooring: 12 to 20 average profit margin.
Earning Potential
- Small dealers earn a monthly profit of 50000 to 1.5 lakh per month.
- Medium dealers earn a monthly profit of 1.5 to 5 lakh every month.
- Large dealers earn a monthly profit of 4 to 12 lakh each month.
6. Furniture And Home Decor Dealership
At our next option, we have a furniture and home decor dealership for you, which does not require any kind of technical or medical proficiency. Furthermore, the furniture and home decor dealership requires selling several kinds of home and office furnishing products.
Moreover, the furniture and home decor dealership can open numerous business opportunities alongside good revenue. Also, dealers mainly operate businesses with both commercial and corporate clients, like B2B and retail sellers.
Furniture and Home Decor Dealership Profit Margin
The profit margin on various types of dealerships indicates:
- Franchise or branded outlet dealerships gain over 20 to 30 percent profit margin.
- Multi-brand retailers gain around a 25 to 40 percent profit margin.
- Customer furniture dealers have around a 35 to 60 percent profit margin.
- Online sellers gain around 10 to 25 percent profit margin.
Earning Potential
- Small retailers earn a monthly revenue of 3 to 8 lakh with a profit.
- Franchises like Durian and Nilkamal earn a monthly potential earning between 2 to 10 lakh with profit.
- Independent stores earn around 1.5 to 8 lakh monthly with profit.
- Online and offline hybrid sellers generate around 1 to 5 lakh monthly profit.
7. Agriculture Equipment Dealers
Among all the dealership types, agriculture equipment dealerships are one of the most crucial dealers in our society because our whole country’s agriculture relies on their services. Moreover, the agricultural equipment dealerships include selling, servicing, and even sometimes renting agricultural equipment.
Nonetheless, this dealership deals with providing tools to agri-businesses, farmers, government sectors, and cooperatives. With this kind of dealership in India, you can earn a lot of revenue from doing such services.
Agriculture Equipment Dealership Profit Margin
Agricultural equipment dealership profit margins vary depending on the equipment, such as:
- Tractors have a 5 to 8 percent average dealer margin.
- Power tillers have an 8 to 12 percent average profit margin.
- Harvesters gain around a 5 to 7 percent average profit margin.
- Implements like ploughs have a 10 to 20 percent average profit margin.
- Seeders and planters have around 10 to 25 percent average profit margin.
Earning Potential
- Small rural dealerships earn around 5 to 10 lakh monthly with profits.
- Medium-sized showroom dealerships generate 15 to 40 lakh monthly profits.
- Large dealerships gain around 50 lakh to 1 crore monthly profits.
8. Apparel And Textile Dealership
There are several dealership businesses in India, but only a few of them are reliable and can help you earn many profit. Nonetheless, one such reliable and profitable dealership is the Apparel and Textile dealership, which involves buying fabric or clothing products from wholesalers and manufacturers and selling them to retailers and customers.
Moreover, this dealership is among the most dynamic and appealing dealerships which has been trending in India for a long time.
Apparel And Textile Dealership Profit Margin
The profit margin of textile and apparel dealerships depends on the type of category, such as:
- Branded Men’s Wear has an average profit margin of 25 to 35 percent.
- Branded Women’s wear carries an average profit margin of 30 to 40 percent.
- Ethical wears like Sarees and kurtas have an average profit margin of 35 to 60 percent.
- Kids’ wear generates an average profit margin of 30 to 50 percent.
Earning Potential
- Small local retailers generate a monthly income of 60000 to 2.8 lakh.
- Medium-sized retailers have a monthly gain of 2.5 to 12.5 lakh.
- Branded franchises generate a monthly income of 6 to 20 lakh.
- Wholesale distributors earn a monthly income of 2.5 to 18.75 lakh.
- Online stores have a monthly income of 1 to 11.25 lakh.
9. Healthcare And Beauty Products Dealership
You can find a lot of heavy dealerships that require lofty investments and tools. However, there are also a few dealerships which you can do without much issues, and the dealership we are going to suggest is a Healthcare and beauty products dealership. Furthermore, this dealership involves collaborating with manufacturers and distributors to sell beauty and healthcare products.
Moreover, the healthcare and beauty products dealership is gaining a lot of popularity in India as people are becoming more aware of personal care, health, and wellness.
Healthcare And Beauty Products Dealership Profit Margin
The profit margin of Healthcare and Beauty Products Dealership depends on several categories, like:
- Healthcare products have a 10 to 30 percent profit margin.
- Beauty products have around a 20 to 50 percent profit margin.
- Ayurvedic and Herbal products have a profit margin of around 30 to 60 percent.
- Fitness and wellness products carry a profit margin of 25 to 45 percent.
Earning Potential
- Offline retail shops have a monthly profit of 1 to 8 lakh.
- Franchise models earn a monthly income of 1.5 to 15 lakh.
- Online stores and distributors gain a monthly profit of 1.25 to 25 lakh.
- Wholesale distributors have a monthly revenue of 2 to 20 lakh.
- Private lab products have a monthly profit of 3 to 30 lakh.
10. Organic Food Dealership
Foods are among the essential products in our society, and you can gain a profitable dealership with an organic food business. And the name of this dealership is Organic Food dealership, which mainly involves selling food products like vegetables, grains, pulses, dairy products, spices, and snacks.
Nonetheless, organic food dealerships are increasingly enhancing their reach and mainly rely on their awareness of wellness, health, and environmental sustainability.
Organic Food Dealership Profit Margin
The profit margin of organic food dealerships relies on their business types, such as
- Retail organic stores have a profit margin of 25 to 50 percent.
- Wholesale distributions have a profit margin of 10 to 25 percent.
- E-commerce or online sales generate a profit margin of 20 to 40 percent.
- Franchise stores gain a profit margin of 15 to 35 percent.
- Direct farm-to-consumer sales have a profit margin of 30 to 60 percent.
Earning Potential
- Retail organic food stores generate a monthly revenue of 3 to 15 lakh.
- Wholesale distributors have a monthly profit of 5 to 30 lakh.
- E-commerce organic stores earn a monthly income of 2 to 20 lakh.
- Franchise outlets gain a monthly profit of 4 to 10 lakh.
- Direct farm-to-consumer sales gain a monthly profit of 1 to 8 lakh.
11. Computer Hardware And Accessories Dealership
If you are proficient in the technical field, then maybe you would want to look at the computer hardware and accessories dealership in India. Moreover, this dealership requires selling and procuring physical parts and accessories that are related to computing, for example, wholesale, retail, or B2B.
As we can see rising trends in laptops, desktops, peripherals, alongside networking equipment. If you can continue this dealership properly, you can earn a lot of revenue.
Computer Hardware And Accessories Dealership Profit Margin
A Computer Hardware and accessories dealership has profit margins following its products, for example:
- Laptops and Desktops have a normal profit margin of 4 to 10 percent.
- Custom PCs and assembled systems have a typical profit margin of 10 to 20 percent.
- Internal components like RAM and SSD have a profit margin of 8 to 18 percent.
- Monitors have a profit margin of 6 to 12 percent.
- Keyboards, Mice, and headphones have a profit margin of 10 to 25 percent.
Earning Potential
- Retail stores like B2C have a monthly revenue of 3 to 15 lakh.
- Wholesale distributors have a monthly profit of 5 to 50 lakh.
- Franchise stores like HP World gain a monthly income of 5 to 20 lakh.
- Online resellers have a monthly income of 2 to 25 lakh.
12. Jewellery Dealership
After naming all the dealerships in India from which you can generate an immense revenue. Nonetheless, jewellery dealerships include selling jewellery or becoming an authorised retailer for certain brands or a kind of jewellery.
Moreover, there are a lot of jewellery products that you can sell, for example, you can refer to silver, gold, diamonds, and other materials that are appealing to customers.
Jewellery Dealership Profit Margin
Jewellery dealerships have their profit margins relying on different products, like:
- Gold jewellery has an average gross profit of 8 to 15 percent.
- Diamond jewellery has an average gross profit of 20 to 40 percent.
- Silver jewellery carries an average gross profit margin of 15 to 25 percent.
- Platinum jewellery has an average profit margin of 10 to 20 percent.
- Gemstones have an average profit margin of 25 to 45 percent.
Earning Potential
- Branded franchises like Tanishq earn around 30 lakh to 2 crore monthly profits.
- Independent gold jewellery stores have a monthly profit of 10 lakh to 1 crore.
- Diamond boutique generates around 10 to 50 lakh monthly.
- Silver and conventional jewellery stores gain around 5 lakh to 20 lakh.
- Online jewellery businesses earn around 1 to 25 lakh monthly.
Factors for Success in The Dealership Business in India
If you want to succeed in your dealership business in India, there are several suggested tips you might follow, and these insights are:
- Choosing the right product and industry sections.
- Conducting a thorough market research.
- Having a strategic location for business.
- Following legal compliance and proper registration.
- Having robust business models and plans.
- Having strong financing backing.
- Maintaining inventory and supply chain efficiency.
- Leveraging both effective marketing and local branding.
In Conclusion
Now we have listed several dealership business options in India, you can select one of those options that suits your category. Moreover, we have also listed a few ways to choose the right way for you and as well as how you can start your dealership business.
Moreover, alongside the points we have mentioned in this blog, you also need commitment, communal support, and consistency in your business operations to earn a huge amount of profits and revenue.
FAQs
What is the most profitable dealership in India?
There are many profitable dealerships in India, such as automobiles, jewellery, organic food, pharmaceutical dealerships, and many more.
How do you define a dealership model for business?
The whole procedure indicates a retailer who is selling authorized assets by a dealer or manufacturer.
What is the most beneficial distributorship in India?
There is no definitive description of the most profitable distributorship, however, there are several examples, like FMCG products, Beauty products, etc.
What industry has the highest profit margin in India?
Central banks mainly have the highest profit margin in India.
