Growing online Markets in Nepal

Growing online Markets in Nepal

With the advancement in Information and Communication Technology (ICT), the change has not only been in the communication and access to information, but also the definition of the market has been extended. The market is defined as the place where two parties, i.e., buyer and seller, gather to exchange the goods and services. Before the advancement in ICT, the market was physical, but now the scenario is different. Today we can see the prevailing Virtual market where people from every nook and corner of the world can exchange whatever goods and services they have.

History of Online Market in Nepal

The year 1993 is watershed in the History of Information and Communication Technology (ICT). After a few years in 1995, the private company World link emerges to foster internet connectivity and its services. The increase in the number of internet subscribers and users is boosting the market potential of the internet. So in early 2000, eCommerce practice started with the commencement of Munchahouse.com (Lately known as Muncha.com). It is probably the pioneer in the eCommerce history in Nepal. Since then, the many other eCommerce sites followed the footsteps, like Sastodeal.com, Daraz.com, okdam.com, Thulo.com, Socheko.com.

As of July 2020, there are altogether 125 Internet Service Providers (ISPs) in Nepal, with about 200000+ internet subscribers and nearly 16.67 million internet users nationwide.

Current Overview

The number of internet users has tremendously surged over the last few years, increasing access to Smartphones. According to Nepal Telecom Authority, mobile phone penetration has reached 130 percent, meaning there are more mobile connections than the population itself, and 62 percent of the population is connected to the internet. According to the NTA, there was an addition of 2.25 million new Internet users in 2017 alone, turning into approximately 250 new internet users every hour.        

 

Mobile Penetration in Nepal
Mobile Penetration in Nepal

As of May 2017, there are more than 56,286 registered websites in Nepal, including 40,000 commercial websites. The growth of e-commerce in Nepal is hindered due to the lack of a supporting ecosystem, such as limited digital payment options. The scenario is changing with the emergence of fintech startups such as eSewa and Khalti, which are expected to disrupt the payments landscape. Despite the growing rate of access to the internet, we are still unable to extol the internet’s virtues in full potential. The online activities are constrained to Kathmandu and other few notable cities. Yet the rays of eCommerce have not reached to the rural part of Nepal.

Nepal’s online market is still not full-fledged due to the topographical challenges and lack of the street/home address. In the absence of this, home delivery does even not seem eminently available.

A large number of websites offer a variety of options to the consumer. Online retailers like Daraz, Sastodeal, thulo.com, okdam, choicemandu, to name a few, offers diverse assortment in categories ranging from household necessities, consumer electronics, health, and beauty products, groceries, etc.

Online food delivery sites like Foodmandu.com, bhojdeals.com, foodole.com, and foodmario.com connect people with their favorite restaurant’s food in their dining table of home or offices.

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The banking and financing activities have also been revolutionized as e-banking. The banks and financial institutions (BFIs) also offer e-banking services to their customers from which the payment and receival are made more convenient. Applications like e-Sewa, Khalti, IME pay, Connect IPS makes it easier to deal with the utility’s fees, online ticket bookings, and other various payments.

Hotel chains like Oyo, Tripadvisor, AirBnb,  Booking.com, Trivago have made traveling and staying more convenient. It has also helped to promote tourism due to its ease of nature to book hotels. Such online offerings have also let people leave all the hustle and bustle to find hotel rooms after they arrive at the destination.

Growth in online market sellers is expected to boost the Nepalese economy. Nepal’s e-commerce industry is the value of US$30 million and is expected to grow at more than 41%. The number of online sellers and platforms connecting to e-commerce is growing exponentially. The employment impact for the sector has been estimated to be 1:4, where four indirect jobs are created for each direct job. An increase in the online seller base also creates additional jobs in support services as delivery, customer service, warehousing, etc.

Cross border E-commerce

Regarding the Cross-border e-Commerce activity, it is not so exhilarating. Although Nepal shares the physical proximity with two giant economies, Nepalese consumers cannot still order quickly from eCommerce giants like Amazon.in, Flipkart.com, Alibaba.com. Although some websites offer to make cross border exchange, they don’t seem that promising. So, the market is still yet to foster from its infancy. Facilitating the access of Nepalese consumers to international sites will make the assortments of goods readily available and encourages cross border economic activity.

Plans and Policies

Nepal has adopted the Digital Nepal Framework in 2018. This framework encompasses one nation, eight sectors, and eighty digital initiatives. The Digital Nepal Framework is a blueprint that provides a roadmap to how digital initiatives can Contribute to economic growth. It finds innovative ways to solve significant challenges facing society in a shorter period with fewer resources and identify opportunities for Nepal to participate in the global economy.

GDP Growth Forecast, Nepal
GDP Growth Forecast, Nepal

 The regulatory framework governs the ICT framework, which provides the necessary foundation to the Digital Nepal framework, such as National ICT Policy, 2015, National Broadband Policy, 2015, and Electronic Transaction Act,2067. 

Many stones yet to be turned

Although the government has been adopting the eCommerce strategy. Yet there are many stones left to be turned to unleash the full potential from this sector. With the development of the requisite infrastructure, internet data has to be made more affordable to reach every individual across the nation. The physical address system is lagging, so the government should also prioritize the use of postal code, the proper number of houses streets which are critical for the cultivation of eCommerce. The digital payment system is another requirement for running e-commerce effectively. It is estimated that over 85 percent of the payments for e-commerce transactions are done using the cash on delivery method. Nepal Rastra Bank and the Ministry of Information and Communication Technology has to build customer-friendly payment gateways. The availability of a secure and convenient e-payment system in export can also help promote the export sector. The eCommerce transaction requires strong legal support. Provisions of quality control, respect of customer’s rights, data privacy, return and refund systems, and payment solutions must be regulated by law. Robust legal protection and regulation would also help in attraction the FDI and more domestic investments

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Silver lining amidst Pandemic

“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity.”   

― John F. Kennedy

Like every cloud with a silver lining amidst the COVID-19 crisis, there has come an excellent opportunity for the government and startup tech companies to transform the conventional way of doing the business. People start to adopt the online transaction and approach to doing business. They started to learn how to order online, pay online, and transfer money online amongst their peers and relatives. The government of Nepal has also played a crucial role by initiating the deliveries of essentials goods through state-owned companies like Food and Trading Company, Salt Trading Corporation, and Giant retailers like Bhatbhateni, Bigmarket are in the frontline to fulfill the demand of the public. In short, we can say the digital economy is the future of Nepal. To extend support to emerging technologies, the Ministry of Industry, Commerce, and Supplies had called meetings with tech-driven companies and supermarkets, encouraging them to provide door-to-door delivery services. The government is trying to incorporate new technologies into the national governance system. The central bank of Nepal has also urged people to use online services for payments. Internet companies have been instructed to give a 20 percent discount on their services during the crisis, and the intra-banking payment charges have been waived for the time being. Anyone can use any ATM without any fee. Yes, these are tragic times. But they also provide an excellent opportunity for Nepal to change the traditional society into an e-society by supporting the innovative tech companies through public-private partnership business model.

References:

Data retrieved from:

  1. Montgomery, L. (2006, June 23). NGO and Internet in Nepal. Online Library.
  2. Abroad, U. E. (2019, January 8). Nepal – eCommerce. Export.Gov.
  3. Marasini, M. K. (2019, July 15). Digital development and eCommerce in Nepal. Kathmandu Post.
  4. KC, S. (2020, April 3). Covid-19: An opportunity to kick-start Nepal’s digital economy. The Annapurna Express.

Badal Shrestha is pursuing an undergraduate degree in Business Administration (BBA) at Mahendra Multiple Campus, Dharan. His research includes Management and cultural diversity in Gorakha Department Store, Itahari. Database Management System in Gorakha Bakery.

Badal ShresthaBadal Shrestha

About Post Author

Badal Shrestha

Hello! I am Badal Shrestha, Currently pursuing an undergraduate degree (BBA) from Mahendra Multiple Campus, Dharan. I like to read stuff related to Business, Economics, Marketing, History, Mythology. and I do have a mild interest in photography.
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