A

PROJECT REPORT

ON

[Ecommerce in Nepal]

By

Ankit Agarwal

Srijana Acharaya

Suraj Bogati

Bibhu Pokharal

Submitted to:

Mr. Mahesh Dahal

Department of Computer Science

Kantipur College of Management & Information Technology

In partial fulfillment of the requirements for the Course

Management Information System

Old Baneshwor, Kathmandu

Date:16 August 2018

 Acknowledgement
We would like to express my special thanks of gratitude to my teacher Mahesh dahal who
gave me the golden opportunity to do this wonderful project on the topic Ecommerce in
Nepal, which also helped me in doing a lot of Research and we came to know about so
many new things I am really thankful to them.

Secondly i would also like to thank my parents and friends who helped me a lot in
finalizing this project within the limited time frame.
 Content
Introduction 1
History and Development 2
History 2
Current Status 2
1. Kaymu (www.kaymu.com.np) 3
3. Threadpaints store (www.threadpaints.com) 3
4. Nepflights (www.nepflights.com) 4
5. Metrotarkari (www.metrotarkari.com) 4
6. Unoexplorer (www.unoexplorer.com) 4
7. Harilo (www.harilo.com) 5
8. Muncha (www.shop.muncha.com) 5
9. Foodmandu (www.foodmandu.com) 5
Payment system in Nepal 6
Advantages 7
1. Low Financial Cost 7
One benefits is that it has a lower startup cost. Physical retail 7
2. 24/7 Potential Income 7
3. Personalized Online Experience 7
4. Able to Process a High Number of Orders 7
5. Can Scale Business Quickly 7
Disadvantage 8
Challenges of Ecommerce in Nepal 9
1. Education: 9
2. Payment Gateway: 9
3. Reliability: 9
Payment method 10
1. Cards 10
2. Internet (online) 11
3. Mobile Payments 11
4. Remittance 11
5. Inter-bank 11
6. Postal/Money Order 11
Conclusion 12
 Introduction
With the influence and arrival of latest technology from neighboring countries, such as
India and China, Nepal is on its way to success through e-commerce. Online shopping is
taking the Nepalese market by storm and it is facilitated by fast speed inexpensive 3G and
4G internet technology. The convenient modes of payments and user friendly shopping
apps are further paving a pathway to unprecedented growth in the e-commerce sector. The
interest of students in the field of IT, the growth of IT companies has helped a lot in the
awareness and interest in young generation for internet and IT, has directly created more
opportunities for the growth of e-Commerce in Nepal.
According to a report compiled by Kaymu, a leading online marketplace in Nepal, the e-
commerce sector is growing at a rapid pace, people are showing more trust in these
marketplaces that offer a range of products from electronic items to home appliances to
apparels. People are more inclined towards purchasing mobile phones, used motor
vehicles, motorcycles, computer accessories and laptops through online platforms.
Before a decade ago, e-commerce was setup as sending gifts and money online and other
websites promoting Send Gifts to Nepal which did not had real meaning of e-commerce.
They were target to Nepalese residing in USA, UK, Australia and Europe. There was no
effect of that business to support the e-commerce in Nepal. Gradually the business was
promoted by other companies who saw there was a marginal profit. Along with the rise of
IT, and business concept many online stores were launched but they did not have the
actual process of buying and selling online.
The actual sales have not been able to start due to lack of knowledge, awareness and
online payment systems. Selling globally and inside the country is the same in years.
Payment Gateways are being developed but they have their limitation due to legal and
security issues. The lack of proper knowledge and awareness among the generation is the
major hurdle in ecommerce. In past recent years due to education and reach to Internet
among the many people in Nepal has brightened the future of ecommerce.
The interest of students in the field of IT, the growth of IT companies has helped a lot in
the awareness and interest in young generation for Internet and IT. This has directly
created more opportunities for the growth of ecommerce in Nepal.

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 History and Development
History
The practice of E-Commerce has been ongoing in Nepal for the past decade. It started as
sending money and gifts online and websites providing service such as “Send Gifts to
Nepal” which was primarily targeting NRN living in countries like USA, UK or
Australia. This had virtually no effect on the growth of E-Commerce in Nepal itself.
Along the way some online stores were launched but lacked the proper process of selling
and buying online. In all these years knowledge, awareness and system concerning online
payments about the E-Commerce is increasing day-by-day albeit at snail pace. Even
though the payment gateways for E-Commerce are being developed but are severely
limited due to security and legal issues. The major hindrance in E-Commerce has been the
required awareness and proper knowledge among the mass. But the future of E-
Commerce has quantitatively enhanced due to education and reach of internet among the
general public in Nepal in recent years. This has directly influenced the possibility of
growth of E-Commerce in Nepal.

Current Status
The current status of e-commerce in
Nepal seems to be promisingly good.
Many users are being attracted
towards online shopping and using
online services. With the introduction
of new technologies, digital stores
and interactive apps, there is a big
boost in sector of e-commerce. Many online portals and shopping portals are being
launched. Now we have dozens of virtual Nepali stores in the web. They are doing good
business along with providing the best services. They provide festival offers and various
discounts to lure customer from the physical stores. Due to dozens of increasing online
stores in Nepal, the competition is rapidly increasing day to day, which will ultimately
benefit the future of e-commerce in Nepal. There are various e-commerce companies in
Nepal, providing service (we use service provided by them like booking hotel room, air
tickets), product (we purchase goods from them) and both. People tend to use these
products as they are fast and reliable. An approach called Facebook store is also seen very
popular in Nepal, where products are sold through Facebook page, rather than a website.
Despite of e-commerce trending in Nepal, a large number of people in Nepal stills think
twice before purchasing online. Despite of the technological advancement, security is still
a concern in people’s mind. Various frauds and scams are hindering the growth of e-
commerce in Nepal. The e-commerce sector is still in its initial phase in Nepal.
Companies are trying their best to earn people’s trust and establish themselves. Some of
the services provided by e-commerce companies in Nepal are: buying and selling goods,
booking hotels, planes, buses, helicopters, planning a holiday tour, appointment for
doctors, buying and selling land, properties, comparing goods prices online and many
more.

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Some of the successful companies playing a very crucial role in the growth of this
industry are mentioned below:
1. Kaymu (www.kaymu.com.np)

2. Sastodeal (www.sastodeal.com)

3. Threadpaints store (www.threadpaints.com)

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4. Nepflights (www.nepflights.com)

5. Metrotarkari (www.metrotarkari.com)

6. Unoexplorer (www.unoexplorer.com)

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7. Harilo (www.harilo.com)

8. Muncha (www.shop.muncha.com)

9. Foodmandu (www.foodmandu.com)

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 Payment system in Nepal
Payment option plays a vital role in e-commerce. Since internet is the backbone of the
internet, online payment is preferred in e-commerce. Not only the payment option must
be safe, it must be favorable for both buyer and the seller. Some of the payment options
available for Nepalese users offered by Nepalese e-commerce sites are: Cash on Delivery
(COD), Bank Transfers, Prepaid Cards, Debits Cards, Master Cards, E-wallets (E-Sewa,
Hello Paisa, iPay, PayBill). How payment system works?

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 Advantages
1. Low Financial Cost
One benefits is that it has a lower startup cost. Physical retail stores have
to pay up to thousands for rent one of their store locations. Also, they have several upfront
costs such as store signs, store design, buying inventory, sales equipment, and more.
Physical retail stores also have to pay staff to work and run each location. They may also
need to hire security staff depending on the product value in the store. But ecommerce
don’t have to pay all this.

2. 24/7 Potential Income

One of the advantages of ecommerce is that online stores are always open for business.
With your Facebook ads, you can attract someone at 11 p.m. or 4 a.m... Most physical
location stores are open between 9 a.m. to 9 p.m. By being available at all hours, you can
attract people who would normally pick up a product in stores, if the store were open. You
can also attract those who may have odd work schedules or who don’t have time to shop
in-person. For a customer to order at night, you don’t need to have employees working
the night shift to ensure all orders get processed. You’ll never need to hire a security
guard.

3. Personalized Online Experience

Website personalization, one of the online business advantages, can enhance the online
shopping experience. Or segment email lists based on purchases made, location or even
how much money a customer spent. You can also retarget a customer who visited your
store showing them an ad for a product they added to their cart and forgot about. If your
online business has a login feature, you can have a welcome message appear such as
‘Welcome back (name).’ Product bundles can help the customer buy more for a better
price increasing average order value. You can also personalize upsells based on what the
customer has looked at or what you think they might like based on their purchase
behavior.

4. Able to Process a High Number of Orders

If you choose to dropship, you can process a high number of orders with ease. As your
business continues to grow, you might choose to hire employees to help with order
processing. In retail stores, long line ups can deter people from shopping. With
ecommerce, there’s no waiting time. A customer can place orders on his or her own
schedule with no delays allowing you to accept a high number of orders.

5. Can Scale Business Quickly

One of the benefits of ecommerce is that it’s easy to scale the business quickly. You can
increase your ad budget when ads are performing well without having to worry too much
about keeping up with the demand, especially if you dropship. With brick and mortar
stores, if your store needs to grow in space to accommodate new products or add more
cashiers. You’ll need to find a bigger space, renovate and wait for your lease to end. This
delays your ability to scale. If you create informational products, you run into a challenge
again as it takes time to write ebooks, courses, and more.

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 Disadvantage
1 .You Need to Ship Your Products
Customers consider shipping times to be one of the worst ecommerce disadvantages.
When a customer shops in person she can take the product home right away. But, with
online shopping, most customers receive their products in a week or more. While Amazon
offers same day shipping, it wasn’t a profitable model until they created Amazon Prime. It
only became profitable because they have tens of millions of Prime members. The
solution is to be transparent with your customer. Let them know when they can expect
packages when they place an order.
2. Any one, good or bad, can easily start a business. And there are many bad sites which
eat up customers’ money.
3. There is no guarantee of product quality.
4. Mechanical failures can cause unpredictable effects on the total processes.
5. As there is minimum chance of direct customer to company interactions, customer
loyalty is always on a check.
6 .There are many hackers who look for opportunities, and thus an ecommerce site,
service, payment gateways, all are always prone to attack.

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 Challenges of Ecommerce in Nepal
Talking about the challenges of ecommerce in Nepal is majorly education. Let me discuss
a few here:

1. Education:
I believe, major challenge is education, since ecommerce is a computer plus
internet business. Education awareness to this is most. Anyone who can use computer and
internet well can be involved in. But as we know the major of the population are
uneducated in this term.

2. Payment Gateway:
We today cannot use our bank/ card for paying online. There are rarely limited system
that we can pay online. We cannot dream of paying to international shopping site and
service. Don’t know how long but we need to wait a long for this.

3. Reliability:
Not only about shopping, paying or buying any service over the internet is not reliable.
We still think it’s a fake business. Even the providers are not able to make the users
understand that it’s reliable.

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 Payment method
While the use of cash is still prevalent, the increased use of ATM cards and credit cards in
the past 10 years has demonstrated the trend toward more use of technology. Nepalese
Citizens have responded positively to the aggressive marketing of banks for credit and
debit card. On the other hand, despite the introduction of the Electronic Payment over the
Internet has not started at all, but the volume of POS based electronic payments has
increased significantly. Using the Internet can reduce costs. According to UNCTAD, a
traditional bank-to branch transaction costs no less than US$ 1; ATM reduces the cost to
US$ 0.20; and an online transaction brings it down to US$ 0.01. Digital e-payment
therefore appears ideal not only for large deals but also for small transactions. More and
more, financial products are becoming available in electronic format, even in developing
countries, faster than we could expect. A silent revolution started well before the Internet,
and is moving beyond electronic payments. Changing the way financial services are used
in international trade, electronic finance is forcing standardization, adding speed and
reducing costs. These changes can help developing countries improve their international
trade competitiveness. The Internet is characterized by openness and information sharing
but the financial services are characterized by confidentiality. E-payment, which is an
important part in the e-trade cycle, represents the ultimate goal of the transaction. The
transaction remains at risk until money is received. E-payment and other financial
services applications require state-of-the-art security and encryption, which is totally in
opposition with the concept of free information sharing. Highly sophisticated encryption
programs now provide the required security, at a nominal cost, for users in both
developed and developing countries. This sets the stage for e-payments to offer rapid,
cost-effective and secure settlement of transactions.
Nepal is moving towards the electronic payment system and most prevailing payment
media are presented in the following paragraphs.

1. Cards
Credit cards, debit cards and prepaid cards currently represent the most common form of
electronic payments. For all 3 types of cards the consumer or the business most often uses
a plastic card, commonly with a magnetic stripe. Debit/Credit/Prepaid cards are the
emerging payment media with risk-free feature. Most of the traveling people and peoples
of urban areas prefer to use these instruments. Current estimates are that over 80% of
payments for online purchases are made using a credit card or debit card. At present, most
online transactions involve payment with a credit card. While other forms of payment
such as direct debits to accounts or pre-paid accounts and cards are increasing, they
currently represent a less developed transaction methodology.
Korea and Japan are among the most advanced countries in Asia for smart card
payments, with Malaysia catching up fast due to government mandates for banks to issue
smart cards. Most credit and debit cards are expected to be issued or reissued as smart
cards by 2008 or earlier.

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2. Internet (online)
Online payments involve the customer transferring money or making a utilities invoice
payment online via the internet. Consumers and businesses can transfer money from their
respective accounts to third parties within the same bank network. People are generally
used for hotel reservation, buying air ticket, paying fees like SEVI, TOEFL, GRE etc and
other similar types of small payments.

3. Mobile Payments
Mobile phones are currently used for making petty payment in limited numbers.
However, the percentage seems likely to increase as mobile phone users are adopting
electronic commerce. Consumers can use their mobile phone to pay for transactions in
several ways. Consumers may send an SMS message, transmit a PIN number, and use
WAP to make online payments, or perform other segments of their transaction with the
phone. Additionally, merchants can obtain an authorization for a credit or debit card
transaction by attaching a device to their mobile phone.

4. Remittance
There are many electronic means that the banks in Nepal follow to cater for the need of
remittance transactions. While SWIFT is being used for various remittance purposes,
there are also other means and agencies dedicated for remittance businesses. Apart from
SWIFT that the banks in Nepal use for remittances, there are other web based applications
developed by banks as well as remittance agencies like WUMT. The web-based
remittance software is used more by the people working in Gulf countries.

5. Inter-bank
There is no automation to cater to the need of inter-bank transactions in the country. The
only option available at present is either through clearing or special clearing directly
between banks requiring funds transfers.

6. Postal/Money Order
It is the product of post office. It is generally used by people in rural regions for domestic
transfer. Having wider area network within the country Post Offices started "Money
Order Service" to handover money to the recipient. Under this service money is
physically transferred putting into envelope and delivered to the addressee. Later, when
these offices started "Hulak Bachat Bank", the concept of Postal Order came into effect,
which is as much as similar to T.T.

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 Conclusion
Being a small market, small buyer group and the generation has been a major factor both
as a challenge and opportunity of ecommerce business in Nepal. The future of e-
commerce business lies in the hands of players who are currently in the market. It’s time
to go online, sell online, Payments should be easy. Every individual’s trust must be built by
business owners. Time has come to take your business online, start your online shop today.
E-Commerce is a practice which no one can escape and avoid. It will be either today or
tomorrow we must adapt to it. Both the development of payment system, legalizing and
securing the payments, creating reliability from the portals is a major issue. With the
growing generation every business will have to adapt and think about their online existence
in future depending on the nature of business. It will not be too long; there will be a boom in
the trend of ecommerce business soon in Nepal.

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