E-Commerce in Nepal
Prabin Bhandari
070BCT525
Pulchowk Campus, Lalitpur
1 I
NTRODUCTION
E-commerce or electronic commerce refers to the type of business or commercial transaction that involves the transfer of information across the internet. E-commerce 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 m-commerce (mobile m-commerce) and t-m-commerce (television m-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.
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 A
DVANTAGES
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 A
DVANTAGES TOO
RGANIZATIONScommerce has been of a great advantage to the organizations. Using E-commerce, 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 A
DVANTAGES TOC
USTOMERSE-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. commerce has provided users with more variety of selection of the products. E-commerce increases competition among the organizations and as a result organizations provides substantial discount to costumers.
2.3 A
DVANTAGES TOS
OCIETY3 T
ECHNICAL
A
SPECT
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
Fig: The Technical Overview of E-commerce
3.1 A F
RONTE
NDThe 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.
A Front End
Shopping Cart
SSL Certifcati
on
Payment Gateway
Merchant Account
3.2 S
HOPPINGC
ARTShopping 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 C
ERTIFICATIONSSL 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 P
AYMENTG
ATEWAYPayment Gateway is an e-commerce application service provider that authorizes the credit card payments for online payments.
3.5 M
ERCHANTA
CCOUNTMerchant 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 B
ANKA
CCOUNTAn organization will fnally require a Bank Account where all the money before and after transactions is to be stored.
4 E-
COMMERCE
IN
N
EPAL
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 H
URDLES
OF
E-C
OMMERCE
IN
N
EPAL
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 T
ECHNICALH
URDLES OFE-
COMMERCE INN
EPALWe 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
5.2 N
ON-
TECHNICALH
URDLES OFE-
COMMERCE INN
EPALThe 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
