A Write-Up on

E-Commerce in Nepal

Submitted to:
Dr. Arun Kumar Timalsina
Department of Electronics and Computer Engineering
IOE, Pulchowk Campus
Lalitpur

Submitted by:
Samip Subedi
070BCT536

16 May 2016
E-Commerce in Nepal

Background
Internet is what todays world relies on. From a Tempo driver in the valley, chatting with his wife
about a noisy passenger to a mother in Rukum district, speaking with her son at Rihad are all
facinated by it. Internet today is not just about connecting people all around the globe. Its more
about making the life easier. Hence internet now has become the hub for entertainment, news, being
social and yes! Commerce.

Commerce refers to the activity of buying and selling of goods as well as services on a large scale.
The Electronic Commerce now popularly known as ecommerce is a term given for any type of
business or commercial transaction that involves the transfer of information across the internet.
Selling physical goods, purchasing movie tickets, reserving hotel room over the internet are some of
the examples of common ecommerce ativities popular these days.

Introduction
As of Novemember 2015, the internet penetration rate in Nepal has reached 44.11 percent. With the
rise in internet penetration, the middle class of Nepal is getting more tech-savvy. The advancement
of internet in the lives of Nepalis has given them an opportunity to explore this platform as a new
shopping arena. The ecommerce industry is currently in its initial phase where growth is expected
with the increase of online shopping trend in Nepal. There is a wide range ofonline stores already
established consisting of both local and international e-tailers which are offering high quality and
branded products of different categories from clothing, shoes, and electronics to books and jewlery
at market rates and somewhere discounted prices. The rise in the development of these online shops
is the sign that a large number of target consumer exist as a potential online shopper.

The younger lot is much more addicted to internet with Smartphones and tablets being their
necessity. They make the most potential customers for online shopping. According to the research
done by Kaymu technophiles lead the shopping list with 8% of the total e-commerce activity in the
country, followed by movie lovers at 7%, TV lovers at 6%, shutterbugs at 5%, News Junkies &
Avid Readers at 4.5%, World Music Fans at 4%, Entertainment & Celebrity News Junkies with
3.5%, Mobile Enthusiasts at 3%, Travel Buffs at 2.5% and Music Lovers with 2% share of the total
e-commerce activity across Nepal.

Fig: - E-commerce trends in Nepal

The exceptional concept of free classifieds has given Nepali shoppers a new online shopping
experience. Kaymu is one such website working on this model where buyers meet sellers for both
new and used products and services. It provides a common platform and lets local sellers to
promote their products online and also make sales. This concept is also popular in second hand
market where buyers prefer to buy used products at low prices.

The other place is social media where buyers search for their favorite brands or products or just go
to their pages. The sellers display their products and promote on social media however, the sale is
made only when the buyer agrees to buy and payment is usually made as cash on delivery. Social
media is currently booming with its exquisite user friendly features and is also catering mass
market. Thus, it is very much influencing the shopping trend of Nepal.

There are certain web portals playing the role of a mediator, between international sellers and local
buyers. The buyer selects the product, register the goods with website, gives order, pays the website
and they get the product from international market and deliver to the costumers. This concept has
given buyers more options to get quality products from international market instead of relying on
local retailers and limit their options.

Problems Faced:

1. Low level of e-readiness

Electronic readiness or E-readiness is the measure of the degree to which a country, nation
or economy may be ready, willing or prepated to obtion benefits which arise from
information and communication technologies. Nepal is way behind other countries in the
context of e-readiness due digital divide. People here still are in dilema whether to accept
the change brought by the ICT secture or not. This has severely affected the e-commerce
sector.

2. International Payment gateway

A payment gateway is an e-commerce application service provider service that authorizes
credit card payments for e-businesses, online retailers. A payment gateway facilitates the
transfer of information between a payment portal (such as a website, mobile phone or
interactive voice response service) and the Front End Processor or acquiring bank. Nepal’s
international payment gateway is in dire straits. Due to lack of proper policies and security
issues, online transaction from and to Nepal is extremely difficult. Some Payment system
like eSewa, iPay, Hello Paisa are providing this services but within the country only. Due to
such international gateway service, ecommerce is not being able to flourish in Nepal.

3. Lack of reliable third party delivery system

Delivery system plays an important role in the advancement and popularity of e-commerce.
As speaking of Nepal’s delivery system, there is lack of trust. This issue of trust is infact the
result of unreliable delivery system. People complain about the delivery time, condition of
delivered product and customer care services.
4. Low rate of internet accessibility
Though the internet penetration rate is high in Nepal but the easy access is still a challenge.
Internet infrastructures are costly and not available easily in all regions. Shortage of power
has also adversly affected the easy accessibility of internet. This has created a situation
where e-commerce is facing a difficult time to prosper.

5. Age scenario
As per the research carried out by Kaymu, it can be observed that younger population –
between 18-34 years, is most actively involved in e-commerce transactions, as compared to
the rest of population. One of the reasons for this conclusion is the fact that people above the
age of 35 are less inclined towards technology and its usage, whereas youth between 18-34
years are at the forefront of the technological revolution and are more open towards online
shopping. With involvement of only the youth in ecommerce, the growth is rate hindered.

Fig: - Age scenario of ecommerce

6. Language localization
Language is one of the main factor in ecommerce. If the service is available in local
language then it is ovbious that more customer will get engaged. Most of the ecommerce
sites in Nepal only offer english language. So one with out the sound english skill is not able
to use those sites for purchasing or selling goods.

7. Business centralization
Kathmandu, being the capital city and the largest municipality of Nepal, prevails the list of
yearly e-commerce activity in the country with 53%, closely followed by sub-metropolitan
municipality and third largest city of Nepal i.e. Biratnagar with 23%. Pokhara, the sub-
metropolitan municipality and the second largest city of Nepal stands at third place with 8%
of the country’s total e-commerce activity each year. The city of Bharatpur, located in
Chitwan Valley with 4% of the country's total e-commerce activity, remains the fourth city
of Nepal with highest inclination towards e-commerce. Still a majority of Nepal’s teritory
hasn’t accepted the ecommerce.
 Fig: - Geological e-commerce trend in Nepal

Conclusion:
Online shopping in Nepal is still in its early stages as there is lack of connectivity and trust among
people for online shopping. However, the trend is on a growing path as more businesses are getting
online and prompting people to buy their products online through various marketing strategies like
discounted price, deals etc. Thus the e-commerce industry is playing major role in influencing the
shopping behavior of Nepalis.