E - Commerce in Nepal
1
E-Commerce in Nepal
Prabin Bhandari
070BCT525
Pulchowk Campus, Lalitpur
1 INTRODUCTION
E-commerce or electronic commerce refers to the type of business or commercial
transaction that involves the transfer of information across the internet. Ecommerce can simply be said as the trading or the facilitation of trading of products
or services using computer network such as the Internet. E-commerce is not only
limited to online sales but also covers the various factors like : Preparation of
estimation online, consulting of users, provision of electronic catalog, access plan to
point of sale, real time management of product availability, online payment,
delivery tracking and after sales services. Aside from e-commerce, the terms mcommerce (mobile commerce) and t-commerce (television commerce) are also
being popular now a days. E-commerce uses one or more of the following ways for
the exchange of business information:
Electronics Data Exchange (EDI)
Electronic Mail (E-mail)
Electronic Bulletin Boards
Electronic Fund Transfer(EFT)
Other-network based technologies
E-commerce started in the early 1970s where the ARPANET (Advance Research
Project Agency Network : an early packet switching network which implemented
TCP/IP protocol and is said to be the foundation of modern internet) was used to
arrange a cannabis sale between students at the Stanford Artifcial Intelligence
Laboratory and the Massachusetts Institute of technology. The frst online shopping
system was demonstrated by Michael Aldrich in 1979. After these initial growth the
E-commerce industry has seen a lot in growth and currently E-commerce has
become a $220 billion industry, growing at almost 20% per year. According to
Americommerce, e-commerce is on track to outpace brick-and-mortar growth within
the next fve years. In couple of decades the brick-and-mortar shops might be
limited to a few numbers.
E-commerce are of three types: (i) B2B, (ii) B2C and (iii) C2C. B2B refers to the type
of business between two Companies. B2C refers to the type of business where
product or service is sold by a business company to individual costumers. C2C
2
refers to the type of business where the transaction occurs between two individual
consumers especially through a common website where individuals place the
product that they want to sell and another individual can buy the product from the
individual itself.
2 ADVANTAGES OF E-COMMERCE
The invention of the faster internet connectivity and powerful online tools has
resulted in this new era of commerce know as E-commerce. E-commerce
advantages can broadly be classifed into three major categories:
Advantages to Organizations
Advantages to Costumers
Advantages to Society
2.1 ADVANTAGES
TO ORGANIZATIONS
E-commerce has been of a great advantage to the organizations. Using Ecommerce, organization can expand their market to national and international
markets with minimum capital investment. E-commerce helps organizations to
reduce the cost to create process, distribute, retrieve and manage the paper based
information by digitizing the information. E-commerce helps organization to reduce
paper work, improve the brand image and provide better customer services.
2.2 ADVANTAGES
TO CUSTOMERS
E-commerce not only provides advantages to the organization but it has also made
the buying process of the customers easier and sophisticated. Customers have now
got a facility of 24*7 support system in many purchases all thanks to e-commerce.
E-commerce has provided users with more variety of selection of the products. Ecommerce increases competition among the organizations and as a result
organizations provides substantial discount to costumers.
2.3 ADVANTAGES
TO SOCIETY
E-commerce has had a great impact towards the betterment of the society.
Costumers need not to travel to shop individually rather a bulk delivery is done by
the organization that results in less trafc on road and a lower air pollution. Ecommerce has made the access of the services and products to the rural areas as
well.
3
3 TECHNICAL ASPECT OF E-COMMERCE
E-commerce is commerce based on internet, computers and technology revolving
around them so e-commerce must be backed up by a technology that is dependable
and can provide the result the users seek. An E-commerce business from a
technical point of view can be divided into six major steps:
A Front End
Shopping Cart
SSL Certifcation
Payment Gateway
Merchant Account
Bank Account
A Front
End
Shopping
Cart
SSL
Certifcati
on
Payment
Gateway
Merchant
Account
Bank
Account
Fig: The Technical Overview of E-commerce
3.1 A FRONT END
The Font End refers to an website or a mobile app or any other form of media
through which the consumers can view the products that they want to purchase. It
basically is an online catalog or an electronic catalog that list the product available
and users can select the product that they want to purchase and even get the all
information about the product.
4
3.2 SHOPPING CART
Shopping Cart is similar to the shopping cart that we use in departmental stores. In
a departmental store, we put all the product that we want to buy into the cart for
the ease as buying each products would be hectic and time consuming. After having
all the product we want to buy in the cart we can just go to the buying section and
pay the required price and purchase the products. The concept of shopping cart is
also similar in E-commerce. Shopping cart hold all the product and service that we
want to buy till the time when an actual purchases is made and the transaction has
been made. Shopping cart is used to make the buying of many products at once
possible.
3.3 SSL CERTIFICATION
SSL has been the de facto standard for e-commerce transaction security. SSL is all
about encryption. SSL encrypts data like credit card numbers and other information
which prevents the stealing of information. A SSL protected website begins with
“https”. The SSL Certifcate sits on a secure server and is used to encrypt the data
and identify the website. The SSL Certifcates can be obtained by two ways: we can
buy it from a certifcate vendor or we can “self-sign” our own certifcate. To sum
up, SSL Certifcation is a system that provides the e-commerce transaction security.
3.4 PAYMENT GATEWAY
Payment Gateway is an e-commerce application service provider that authorizes
the credit card payments for online payments.
3.5 MERCHANT ACCOUNT
Merchant Account is a type of bank account that allows business to accept
payments by payments cards (debit and credit cards). A merchant account is
established under an agreement between an acceptor and a merchant acquiring
bank for the settlement of payment card transaction.
3.6 BANK ACCOUNT
An organization will fnally require a Bank Account where all the money before and
after transactions is to be stored.
4 E-COMMERCE IN NEPAL
E-commerce in Nepal is a new feld yet to be reached to its full potential. Ecommerce started in Nepal in the early and mid-2000s when the e-commerce
business targeted for the Non Residential Nepali was started. Many E-commerce
site which target NRNs who could buy the product online and gift it to their relatives
or friends in Nepal. This type of business is still one of the most promising ecommerce in Nepal. Muncha.com was one of the business that ofered such facility
5
and is one of the most successful running online business in Nepal. Muncha.com
now even has 24*7 customer support service and people can even send money via
it.
With the increase of mobile user and the increased access of internet and smart
phones, in the last fve years, e-commerce has seen some positive changes in it.
The teens and youths are seen to be using the E-commerce business in Nepal. The
sales of products through e-commerce is nominal in Nepal but the sales of movie
tickets, Mobile recharge Cards and payment of electricity and phone bills is
increasing day by day.
5 HURDLES OF E-COMMERCE IN NEPAL
E-commerce though has been one of the biggest money making industry in the
world, it hasn’t has much efect in Nepal. E-commerce has been limited more to
movie tickets, phone and electricity bill payment. The main hurdles of e-commerce
in Nepal can broadly be categorized into two categories:
Technical Hurdles of E-commerce
Non-Technical Hurdles of E-commerce
5.1 TECHNICAL HURDLES
OF E-COMMERCE IN NEPAL
We have already discussed about the technical aspects of E-commerce. The
technical aspect includes the front-end, shopping cart, SSL certifcation, Payment
gateway, Merchant Account and Bank Account and the problems associated with
these are under this categories. Some of the problems can be listed as:
5.1.1 SSL Certifcation Issues
SSL certifcation is the transaction security system in e-commerce. SSL Certifcation
can be bought from a certifcate vendor or a self-sign key can be created. The
problem with self-sign key is they are not secure enough and the key bought from
the certifcate vendors are too much expensive for Nepali Investors. The certifcate
vendors are USA based or European based companies whose services are expensive
in Nepal.
5.1.2 Lack of Proper Payment Gateway
Nepal has not fourished as much as it should have in e-commerce and the main
reason behind this is the lack of proper payment gateway in Nepal. Payment
Gateway refers to the application that authorizes the credit card payment between
two online bodies. Nepal hasn’t got any short of payment gateway.
5.1.3 Nepali Payment Cards validity limited within the nation
The payment card’s (Debit and Credit cards) are valid in the nation only and some
are valid in India also but the main problem is that the card are not valid in USA,
Europe and China. These countries are the giant shareholder in the e-commerce
industry but the payments card issued in Nepal has no use in these countries.
6
5.2 NON-TECHNICAL HURDLES
OF E-COMMERCE IN NEPAL
The Non-technical hurdles refers to the other social, economic and geographical
hurdles that has afected the development of e-commerce in Nepal. Some of these
factors can be discussed as:
5.2.1 Customer Psyche
The Psyche of most costumers in Nepal follow the trend that they want to purchase
from the store nearby as they would have already built up some sort of closeness
or a neighborly relationship with them and it is a common trend an due to the social
life that Nepali People live. People tend to believe in people they already know and
they want to buy the item in the retailer that they know. If the product that they
want to buy is not available in their nearby store then only they go to other stores.
The trust for electronic media and a vendor which the customer can’t see is big
issue.
5.2.2 Geographical Barriers
The delivery of product all around the nation is not feasible. The lack of proper
transportation system throughout the nation is another barrier to e-commerce.
5.2.3 Lack of Proper House Numbering
The House Numbering system in our nation doesn’t follow any standard algorithm
or procedure which makes it difcult to identify the exact house even though the
customer provides all the information about him including the house number. This is
another huge problem faced by e-commerce in our nation.
5.2.4 Clothing Standard and Size
Nepalese clothing market is highly dominated by the products from china. The
clothing size vary from the manufacturing country. Many of the customers here do
not have adequate knowledge regarding it which leads not only to return of the
goods in delivery but also efects the goodwill of the organizations.
5.2.5 Lack of Option and Stock
The Ecommerce prospects are the teenagers who prefers to purchase the products’
from the outlets having big brands. The options provided by the ecommerce sites in
Nepal are limited not only in brands but also in the stocks which leads to decrease
the no of prospects itself.
5.2.6 Digital Illiteracy
At present, digital illiteracy is one of the formidable problems e-commerce is facing.
Internet user though in Nepal have increased tremendously in recent years.
According to NTA (2015) the internet users have reached to 38.09%. Though the
data seems to opportunistic for ecommerce. But to be precise the users are mainly
using it for social media like Facebook, twitter and youtubes only.
5.2.7 Lack of Market
Due to the various factors the market of e-commerce is limited to few teenagers
and young people within the city area only. This lack of market has discouraged the
investors to invest in this industry too.
7
6 FUTURE OF E-COMMERCE IN NEPAL
E-commerce in Nepal has got many problems but it has got bright future if we can
tackle these problems. In the next few years E-commerce will be the biggest
industry in the world and Nepal must also be part of it sooner or later. The current
problems faced by e-commerce can be dealt with by all the concerned party
including the government to solve these problems and make a future where ecommerce is one of the largest industry of the nation.
E-Commerce in Nepal
Prabin Bhandari
070BCT525
Pulchowk Campus, Lalitpur
1 INTRODUCTION
E-commerce or electronic commerce refers to the type of business or commercial
transaction that involves the transfer of information across the internet. Ecommerce can simply be said as the trading or the facilitation of trading of products
or services using computer network such as the Internet. E-commerce is not only
limited to online sales but also covers the various factors like : Preparation of
estimation online, consulting of users, provision of electronic catalog, access plan to
point of sale, real time management of product availability, online payment,
delivery tracking and after sales services. Aside from e-commerce, the terms mcommerce (mobile commerce) and t-commerce (television commerce) are also
being popular now a days. E-commerce uses one or more of the following ways for
the exchange of business information:
Electronics Data Exchange (EDI)
Electronic Mail (E-mail)
Electronic Bulletin Boards
Electronic Fund Transfer(EFT)
Other-network based technologies
E-commerce started in the early 1970s where the ARPANET (Advance Research
Project Agency Network : an early packet switching network which implemented
TCP/IP protocol and is said to be the foundation of modern internet) was used to
arrange a cannabis sale between students at the Stanford Artifcial Intelligence
Laboratory and the Massachusetts Institute of technology. The frst online shopping
system was demonstrated by Michael Aldrich in 1979. After these initial growth the
E-commerce industry has seen a lot in growth and currently E-commerce has
become a $220 billion industry, growing at almost 20% per year. According to
Americommerce, e-commerce is on track to outpace brick-and-mortar growth within
the next fve years. In couple of decades the brick-and-mortar shops might be
limited to a few numbers.
E-commerce are of three types: (i) B2B, (ii) B2C and (iii) C2C. B2B refers to the type
of business between two Companies. B2C refers to the type of business where
product or service is sold by a business company to individual costumers. C2C
2
refers to the type of business where the transaction occurs between two individual
consumers especially through a common website where individuals place the
product that they want to sell and another individual can buy the product from the
individual itself.
2 ADVANTAGES OF E-COMMERCE
The invention of the faster internet connectivity and powerful online tools has
resulted in this new era of commerce know as E-commerce. E-commerce
advantages can broadly be classifed into three major categories:
Advantages to Organizations
Advantages to Costumers
Advantages to Society
2.1 ADVANTAGES
TO ORGANIZATIONS
E-commerce has been of a great advantage to the organizations. Using Ecommerce, organization can expand their market to national and international
markets with minimum capital investment. E-commerce helps organizations to
reduce the cost to create process, distribute, retrieve and manage the paper based
information by digitizing the information. E-commerce helps organization to reduce
paper work, improve the brand image and provide better customer services.
2.2 ADVANTAGES
TO CUSTOMERS
E-commerce not only provides advantages to the organization but it has also made
the buying process of the customers easier and sophisticated. Customers have now
got a facility of 24*7 support system in many purchases all thanks to e-commerce.
E-commerce has provided users with more variety of selection of the products. Ecommerce increases competition among the organizations and as a result
organizations provides substantial discount to costumers.
2.3 ADVANTAGES
TO SOCIETY
E-commerce has had a great impact towards the betterment of the society.
Costumers need not to travel to shop individually rather a bulk delivery is done by
the organization that results in less trafc on road and a lower air pollution. Ecommerce has made the access of the services and products to the rural areas as
well.
3
3 TECHNICAL ASPECT OF E-COMMERCE
E-commerce is commerce based on internet, computers and technology revolving
around them so e-commerce must be backed up by a technology that is dependable
and can provide the result the users seek. An E-commerce business from a
technical point of view can be divided into six major steps:
A Front End
Shopping Cart
SSL Certifcation
Payment Gateway
Merchant Account
Bank Account
A Front
End
Shopping
Cart
SSL
Certifcati
on
Payment
Gateway
Merchant
Account
Bank
Account
Fig: The Technical Overview of E-commerce
3.1 A FRONT END
The Font End refers to an website or a mobile app or any other form of media
through which the consumers can view the products that they want to purchase. It
basically is an online catalog or an electronic catalog that list the product available
and users can select the product that they want to purchase and even get the all
information about the product.
4
3.2 SHOPPING CART
Shopping Cart is similar to the shopping cart that we use in departmental stores. In
a departmental store, we put all the product that we want to buy into the cart for
the ease as buying each products would be hectic and time consuming. After having
all the product we want to buy in the cart we can just go to the buying section and
pay the required price and purchase the products. The concept of shopping cart is
also similar in E-commerce. Shopping cart hold all the product and service that we
want to buy till the time when an actual purchases is made and the transaction has
been made. Shopping cart is used to make the buying of many products at once
possible.
3.3 SSL CERTIFICATION
SSL has been the de facto standard for e-commerce transaction security. SSL is all
about encryption. SSL encrypts data like credit card numbers and other information
which prevents the stealing of information. A SSL protected website begins with
“https”. The SSL Certifcate sits on a secure server and is used to encrypt the data
and identify the website. The SSL Certifcates can be obtained by two ways: we can
buy it from a certifcate vendor or we can “self-sign” our own certifcate. To sum
up, SSL Certifcation is a system that provides the e-commerce transaction security.
3.4 PAYMENT GATEWAY
Payment Gateway is an e-commerce application service provider that authorizes
the credit card payments for online payments.
3.5 MERCHANT ACCOUNT
Merchant Account is a type of bank account that allows business to accept
payments by payments cards (debit and credit cards). A merchant account is
established under an agreement between an acceptor and a merchant acquiring
bank for the settlement of payment card transaction.
3.6 BANK ACCOUNT
An organization will fnally require a Bank Account where all the money before and
after transactions is to be stored.
4 E-COMMERCE IN NEPAL
E-commerce in Nepal is a new feld yet to be reached to its full potential. Ecommerce started in Nepal in the early and mid-2000s when the e-commerce
business targeted for the Non Residential Nepali was started. Many E-commerce
site which target NRNs who could buy the product online and gift it to their relatives
or friends in Nepal. This type of business is still one of the most promising ecommerce in Nepal. Muncha.com was one of the business that ofered such facility
5
and is one of the most successful running online business in Nepal. Muncha.com
now even has 24*7 customer support service and people can even send money via
it.
With the increase of mobile user and the increased access of internet and smart
phones, in the last fve years, e-commerce has seen some positive changes in it.
The teens and youths are seen to be using the E-commerce business in Nepal. The
sales of products through e-commerce is nominal in Nepal but the sales of movie
tickets, Mobile recharge Cards and payment of electricity and phone bills is
increasing day by day.
5 HURDLES OF E-COMMERCE IN NEPAL
E-commerce though has been one of the biggest money making industry in the
world, it hasn’t has much efect in Nepal. E-commerce has been limited more to
movie tickets, phone and electricity bill payment. The main hurdles of e-commerce
in Nepal can broadly be categorized into two categories:
Technical Hurdles of E-commerce
Non-Technical Hurdles of E-commerce
5.1 TECHNICAL HURDLES
OF E-COMMERCE IN NEPAL
We have already discussed about the technical aspects of E-commerce. The
technical aspect includes the front-end, shopping cart, SSL certifcation, Payment
gateway, Merchant Account and Bank Account and the problems associated with
these are under this categories. Some of the problems can be listed as:
5.1.1 SSL Certifcation Issues
SSL certifcation is the transaction security system in e-commerce. SSL Certifcation
can be bought from a certifcate vendor or a self-sign key can be created. The
problem with self-sign key is they are not secure enough and the key bought from
the certifcate vendors are too much expensive for Nepali Investors. The certifcate
vendors are USA based or European based companies whose services are expensive
in Nepal.
5.1.2 Lack of Proper Payment Gateway
Nepal has not fourished as much as it should have in e-commerce and the main
reason behind this is the lack of proper payment gateway in Nepal. Payment
Gateway refers to the application that authorizes the credit card payment between
two online bodies. Nepal hasn’t got any short of payment gateway.
5.1.3 Nepali Payment Cards validity limited within the nation
The payment card’s (Debit and Credit cards) are valid in the nation only and some
are valid in India also but the main problem is that the card are not valid in USA,
Europe and China. These countries are the giant shareholder in the e-commerce
industry but the payments card issued in Nepal has no use in these countries.
6
5.2 NON-TECHNICAL HURDLES
OF E-COMMERCE IN NEPAL
The Non-technical hurdles refers to the other social, economic and geographical
hurdles that has afected the development of e-commerce in Nepal. Some of these
factors can be discussed as:
5.2.1 Customer Psyche
The Psyche of most costumers in Nepal follow the trend that they want to purchase
from the store nearby as they would have already built up some sort of closeness
or a neighborly relationship with them and it is a common trend an due to the social
life that Nepali People live. People tend to believe in people they already know and
they want to buy the item in the retailer that they know. If the product that they
want to buy is not available in their nearby store then only they go to other stores.
The trust for electronic media and a vendor which the customer can’t see is big
issue.
5.2.2 Geographical Barriers
The delivery of product all around the nation is not feasible. The lack of proper
transportation system throughout the nation is another barrier to e-commerce.
5.2.3 Lack of Proper House Numbering
The House Numbering system in our nation doesn’t follow any standard algorithm
or procedure which makes it difcult to identify the exact house even though the
customer provides all the information about him including the house number. This is
another huge problem faced by e-commerce in our nation.
5.2.4 Clothing Standard and Size
Nepalese clothing market is highly dominated by the products from china. The
clothing size vary from the manufacturing country. Many of the customers here do
not have adequate knowledge regarding it which leads not only to return of the
goods in delivery but also efects the goodwill of the organizations.
5.2.5 Lack of Option and Stock
The Ecommerce prospects are the teenagers who prefers to purchase the products’
from the outlets having big brands. The options provided by the ecommerce sites in
Nepal are limited not only in brands but also in the stocks which leads to decrease
the no of prospects itself.
5.2.6 Digital Illiteracy
At present, digital illiteracy is one of the formidable problems e-commerce is facing.
Internet user though in Nepal have increased tremendously in recent years.
According to NTA (2015) the internet users have reached to 38.09%. Though the
data seems to opportunistic for ecommerce. But to be precise the users are mainly
using it for social media like Facebook, twitter and youtubes only.
5.2.7 Lack of Market
Due to the various factors the market of e-commerce is limited to few teenagers
and young people within the city area only. This lack of market has discouraged the
investors to invest in this industry too.
7
6 FUTURE OF E-COMMERCE IN NEPAL
E-commerce in Nepal has got many problems but it has got bright future if we can
tackle these problems. In the next few years E-commerce will be the biggest
industry in the world and Nepal must also be part of it sooner or later. The current
problems faced by e-commerce can be dealt with by all the concerned party
including the government to solve these problems and make a future where ecommerce is one of the largest industry of the nation.