TRIBHUVAN UNIVERSITY

SCHOOL OF MANAGEMENT

PROJECT REPORT ON

E-BUSINESS INDUSTRY OF NEPAL

By

Diya Shrestha

Grishma Joshi

Khim Prasad Dhakal

Pujan Shakya

Sushmita Subedi

21 August, 2014

Table of ContentsAcknowledgement3Executive Summary11.History of the industry22.Introduction of the industry22.1 Nature of the industry32.2 Number of firms (players)42.3 Types of product and services42.4 Required raw materials52.5 Market for product/services53.Investment in the sector64.Trend of the industry:75.Employment Generation86.SWOT Analysis97. CSR of the industry108. Conclusion119. Recommendation1110. Bibliography13

List of figures:

Figure 1: Internet users in Nepal7

Figure 2: Facebook users in Nepal8

Figure 3: SWOT Analysis9

Acknowledgement

First of all, I would to thank prof. Bhojraj Aryal for giving us an opportunity to prepare this report. This report was successfully completed with the help and support of many people. We would like to thank everyone whos been there. Our college, for providing us the platform to broaden our horizon by getting us involved in such a project, for providing us the essential formats and procedures in implementing our work, for their always extended help and support and also for providing us an opportunity to prepare this report on the Ebusiness industry of Nepal which was really interesting rather challenging topic for us.

Group members, the work wouldnt have been completed without a team effort so we thank each other for overcoming any obstacle coming in our paths. To our friends and colleagues who helped us and supported us generously whenever we needed. Lastly, I would like to thank everyone who directly and indirectly for the completion of our report.

Executive Summary

E-business is the process of conducting a business through the use of internet. In Nepal e-business was developed only a decade ago. E-business was started in Nepal by various websites like muncha.com with the aim of sending gifts to Nepal targeting people living abroad. Eventually after the boom of various internet service providing industries, the Nepalese people came in touch with the internet. Internet is easily accessible in only the major cities like Kathmandu, Pokhara, Chitwan of Nepal. But there has been a rapid growth in internet users in Nepal since the past 5 years.

The establishment of companies like yomari, thamel.com, harilo.com, cloudfactory has been very productive for the development of e-business in Nepal. Internet has touched the lives of people, besides communicating and learning, is the way of doing business. One of the major requirements for the proper conduction of e-business is the payment gateways. During recent years, the payment gateways like e-sewa, hello paisa has been evolving in Nepal but conducting business through internet is still myth in Nepal. The increasing interest of people towards the social networking sites like facebook has also boomed the e business industry of Nepal. Sellers just create page and promote their products. In some cases they dont have stocks and a shop; they are the actual online stores, who deliver your products after you order with them.

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 e-business soon in Nepal.

1. History of the industry

E-business is about doing business online. Nowadays the thought of living without ecommerce seems complicated and an inconvenience to many. It wasnt until only a few decades ago that the idea of ecommerce had even appeared. In 1970s e- commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT), allowing businesses to send commercial documents like purchase orders or invoices electronically. In 1980s, the growth and acceptance of credit cards, Automated teller machines (ATM), Telephone banking, and airline reservation system affected the industry. In 1990s, the Internet commercialized and users flocked to participate in the form of dot-coms, or Internet start-ups. Innovative applications ranging from online direct sales to e-learning experiences started to emerge. In 2000s, many European and American business companies offered their services through the World Wide Web. Since then, People began to associate a word e-commerce.

The development of e-business in Nepal started just a decade ago. It was started with the aim of sending gifts and money online and other websites promoting Send Gifts to Nepal which had merely a concept of e-business. The target groups were Nepalese residing in USA, UK, Australia and Europe. There was no enough effect of that business to support the e-business concept in Nepal. Gradually the business was promoted by other companies who saw there was a marginal profit that can be earned from it. Along with the rise of IT, and business concept many online stores were launched but they didnt have the actual process of buying and selling online and also the payment method.

2. Introduction of the industry

E-business is the application of Information and Communication Technologies (ICT) in support of all the activities ofbusiness. E-business (electronic business) is the conduct of business processes through the Internet. These electronic business processes include buying and selling of products, supplies and services; servicing customers; processing payments; managing production control, collaborating withbusiness partners; sharing information; running automated employee services; recruiting; and more. E-business can comprise a range of functions and services, ranging from the development ofintranets andextranetstoe-service, the provision of services and tasks over the Internet byapplication service providers. Today, as major corporations continuously rethink their businesses in terms of the Internet, specifically its availability, wide reach and ever-changing capabilities. They are conducting e-business to buy parts and supplies from other companies, collaborate on sales promotions, and conduct joint research.

Many companies have started the trend of e-business in Nepal decade ago, but the challenges are still the same. 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 as it have been in previous 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 e-business. In past recent years due to education and reach to internet among the many people in Nepal has brightened the future of e-business. 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-business in Nepal.

2.1 Nature of the industry

E-commerce is the buying and selling of products and services by businesses and consumers over the internet and through other electronic media. E-business is when a company e-enables its processes to do business in a more efficient way using Web technologies. This might include procuring goods and services, dealing with customers as well as selling products. The number of internet users is increasing day by day. This is the result of a competitiveInternet service provider(ISP) market and low Internet access prices. The growth in the number of internet users has also lead to the growth in E-business in Nepal. There are many organizations which are doing E-business currently. Ecommerce is still immature in Nepal. Even though the websites like Thamel.com, muncha.com etc is doing well, they still lack the publicexposure. Buying something from Internet is myth in Nepal. People are still afraid to do it. Majority of e-business website provides service to only big cities likeKathmanduand Pokhara.

2.2 Number of firms (players)

E-business industry is growing rapidly in Nepal. Some of the top e-business websites are muncha.com thamel.com harilo.com bhatbhatenionline.com, beskantipur.com, nepbay.com, rojeko.com, Foodmandu.com , metrotarkari.com, estornepal.com etc.

There are many software companies in Nepal. Some of the top E-business companies are Verisk information technology, Deerwalk services, Braindigit IT solution, sprout technology, websearch professional, yomari etc.

2.3 Types of product and services

1. E banking:

E-banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. Customers access e-banking services using an intelligent electronic device, such as a personal computer (PC), automated teller machine (ATM) and mobile phones.

2. Online Shopping:

Online shoppingore-shoppingis a form ofelectronic businesswhich allows consumers to directly buy goods orservicesfrom a seller over theInternetusing aweb browser. There are many online shopping stores in Nepal like muncha.com, hamrobazar.com, urban girl, foodmandu etc.

3. Outsourcing:

Outsourcingis thecontractingout of a business process to a third-party. Outsourcing sometimes involves transferring employees and assets from one firm to another, but not always. Outsourcing includes both foreign and domestic contracting, and sometimes includesoffshoringor relocating a business function to another country.For eg: cloudfactory, freelancer.

4. E-ticketing:

Anelectronic ticketis a digital ticket. An e-ticket allows your entire travel experience to be easy and safe because all of your booking and ticket details are held electronically. Electronic ticketingis the time-saving, ticketless way to travel.

5. Online payment:

Anonline payment systemfacilitates the acceptance ofelectronic paymentforonline transactions. Also known as a sample ofElectronic Data Interchange(EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.For eg: e-sewa.

2.4 Required raw materials

1. Internet service providers like broadlink, Ncell, Ntc:

2. Computer software and hardware

3. Servers

4. Information and data

5. Human resources

2.5 Market for product/services

The vast changes in computer technology and the mass production of very versatile micro-computers have made the use of computers very widespread. The development of e-business has thus become a very promising and profitable. E-business and current indications are that this trend will continue in the future. Nepal has well educated and trained manpower who could undertake the development of e-business to meet the special needs of individual clients. Nepal is also in a strong position to undertake data entry operations for foreign clients at very competitive prices. Personnel required for data entry operations are available at a relatively low cost. The establishment of colleges like softwarica, maya animation center has increased the number of skilled manpower which contributes in developing the E-business sector.

Nowadays, there is huge market potential for online shopping. Due to the busy schedule, people dont have time to frequently visit shops to buy the things they like. Hence, entrepreneurs have started many online shopping sites for different products of different brands that cater to the needs of the various individuals. Not only online shopping there is also much potential for others sectors regarding e-business as almost all banks have started providing e banking services, IT companies have started producing different software and applications customized to the consumers need, sites like nepse and sharebazar provide information about our share market for the investors. Real estates has also started promoting their products through various online sites like gharjagga.com, 1ropani.com etc.

3. Investment in the sector

The growth in internet users in Nepal is also triggering the growth of e-business. As such more and more young entrepreneurs, educated in the IT sector are engaged in e-business sector. Because e-business requires less capital, young entrepreneurs are attracted to start and continue the e-business. As such, the growth of e-business is a slow but progressive process. Many of the established e-businesses are foreign based so it shows that foreign investors are interested in the potential of this sector in Nepal. Nowadays the private sector is the one who are leading with the establishment of many different sites to make peoples life convenient in this sector but government is also implementing many new schemes for the enhancement of the E-business sector.

The road to launching a new e-business web site, all companies budget for obvious costs

1. Planning

2. Designing

3. Registering

4. Hosting the site

5. Infrastructures (if you are working in a company including internet, laptops)

6. Research

7. Marketing tools

8. Staffs

Data entry

Social media for client

Graphic designers

Content writers

Programmer

Researcher

Review team

4. Trend of the industry:

Figure 1: Internet users in Nepal

The number of internet users is increasing day by day. Internet has touched the lives of people, besides communicating and learning, it is the way of doing business not only nationally but also internationally. This has largely affected the global marketplace with peoples growing interest in buying and selling online. At a time when online shopping has taken the world by storm, Nepal is still struggling to come out of the box. The increase in various e-business portals like ramailomela, yeskantipur, metrotarkari, muncha, bhatbhateni, etc are enough to justify the encouraging presence of e-commerce in Nepal.

Moreover, the advent of several payment gateways like eSewa, payWay, payBill, etc in Nepali e-business market has further complemented to this growth. With this growing dependency on e-business, the cyber world has witnessed the birth of various automated tools required to develop an e-commerce site. Nevertheless, a problem with such tools has always been their limitation to provide easy and secure platform.

Figure 2: Facebook users in Nepal

The growth of social networking sites like facebook has helped and revolutionized the e-business industry. Sellers just create page and promote their products through the advertisement posted in the various social networking sites. In some cases people dont have permanent shops; they are the actual online store, who delivers your products after you order them. If you are interested you can order online and pay them at the time ofdelivery. Here you dont have the actual experience of buying over the internet, but you can use social media to get your goods home.

5. Employment Generation

E-business is one of such employment generation fields which demands knowledge and skill more than qualification. Knowledge and skilled manpower can help in uplifting the level of e-business. In Nepal, E-business has been developing day by day but increasing number of e-business companies has not been successful in generating employment. Job seekers who would have secured administrative jobs in traditional businesses are not getting jobs in e-business sector; only jobseekers with expertise knowledge in a particular field like IT and marketing are able to secure jobs. However some of the big companies like Yomari, Cloudfactory, Deerwalk etc have been able to generate employment opportunities to many people. They employ various unskilled people and provide training to them as well. But some of the smaller companies are only employing fewer staff as e-business can be started by a single staff. E-business has the power to create employment opportunities for people in various fields for different people if we can understand and utilize the resources, data and information available in the market through and intensive research and development of the e-business sector.

6. SWOT Analysis

(Situation Analysis) SWOT Analysis

(External Analysis) (Internal Analysis)

(Opportunity) (Strength) (Weakness) (Threats)

STRENGTH:

1. Facilitates consumers with easy and instant buying

2. Easy to correlate between marketing and sales level with cheap marketing expenses

3. New market and increasing trend provides the wider opportunity for the market

4. Easy and instant adaptability to market changes on a global level

5. Creativity and skills of the employee and team are the biggest strength

6. Easy interaction with customers as it is more customers focused

WEAKNESS:

1. Negative customer feedback can spread easily damaging the good name of the product

2. Competition increases because online marketing helps consumers to easily compare between different products

3. Requires constant attention as it needs to be updated regularly

4. Requires broad knowledge of web and its applications

5. Security and privacy issues

6. Maintenance cost due to constantly evolving environment

OPPORTUNITIES:

1. First to engage in e commerce can capture the market swiftly

2. Constant costumer feedback can be used to identify and exploit new markets

3. Automatic systems can help consumers to stay well informed

4. Globalization

5. Home based opportunities

THREATS:

1. Lack of knowledge of web technologies can lead to problems

2. Will be very difficult to compete with established firms

3. Imitation can be difficult to stop

4. Improper databases results lack of evidence to validate its value

5. Technological changes versus manpower

7. CSR of the industry

Corporate social responsibility is the responsibility that a company should fulfill as being a part of the society. CSR is not a compulsion in any manner but instead it represents the companys ethic. Some of the e-business companies also conduct CSR activities. Software development companies like Deerwalk have felt an obligation to make the community and society a better place. Activities like book donations to colleges and libraries, cash donations to charitable organizations, establishment of NYAYA Wealth, cleaning the neighborhoods, social campaigns, providing scholarships to students etc have been conducted by different organizations. A well known outsourcing company of Nepal i.e. cloudfactory also conducts community service in every six weeks. They have provided scholarship to the financially deprived students, they have conducted cleaning program in various historical places. They also have organized New Year parties in an orphanage.

8. Conclusion

E-business is a growing industry so it wouldnt be surprising to see that there are companies that exist only inside computer networks. It is E-business that is changing the way products and services are conceived, manufactured, promoted, priced, distributed and sold. The reason being that it is much cheaper; it allows vast coverage and helps in serving the customer better.

At present, in the context of Nepal, it is still an infant industry. Most of the potential customers of this industry are not yet aware about this industry. Even the urban dwellers dont yet fully know about the workings of the e-business sector. As such a lot needs to be done for the promotion of this sector so that many companies can invest significantly in E-business strategies. The existing online e-business are networking their way into sales opportunities by redesigning their websites as lead capture machines and leveraging analytics technologies to improve sales efficiencies and earn profit through them.

Nepal has been investing in E-business sector for a short period of time so there are still many more types of products and services that we have not been able to focus on such as in tourism, online hotel and ticket booking, online payment so we still have much to work on. Lastly there is much we can do for the development of E-business but we cannot ignore the progress we have made until now.

9. Recommendation

The establishment of association, related to E-business should be done for the proper accumulation of data.

With the growing generation, every business will have to adapt and think about their online existence in future depending on the nature of business. So the organizations of Nepal should also focus on its online existence.

A common understanding should be struck between different organizations in this sector to run their businesses smoothly because formulation of industry-specific rules and regulation is very difficult.

People should be made more aware about the advantages of using E-business as one can buy products and services easily with one click.

The government law working for cyber crime should revolutionary come into action to wash away the cyber crimes.

Approach for credit card should be made since the value of Nepalese currency is very low as compared to international currencies.

Investigation and analysis of risky products should be done to avoid unexpected consequences.

10. Bibliography

http://www.nepsolweb.com/ecommerce-in-nepal-1/

http://ils.indiana.edu/faculty/hrosenba/www/S643/classes/intro/intro.pdf

http://en.wikipedia.org/wiki/List_of_e-commerce_services_in_Nepal

http://meroconcept.blogspot.com/2013/08/top-10-e-commerce-website-in.html#.U_YY5sWSwpo

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