THT- Perspectives
February 7, 2016
Emergence of an industry
 
E- commerce companies gaining popularity but not making substantial profits industry insight
Abhilasha Rayamajhi
Kathmandu
T he global e- commerce market is gigantic. It is a trillion dollar industry that has shown significant growth of 20 per cent in 2015 and is estimated to grow by double digit in the coming years according to e marketer, a digital market research company. There are 12 to 24 million e- commerce stores worldwide as per global statics at Internet Retailer.
The growth of e- commerce industry around the globe and the advent of technology have influenced local entrepreneurs to start online business in Nepal. However, e- commerce is not yet recognised as a proper industry in Nepal and it faces several hurdles.
Capital centric market
The market size of the country is limited and Capital centric. According to a report by Kaymu, 53 per cent of e- commerce activity prevails in Kathmandu followed by Biratnagar, Pokhara and Bharatpur with 23 per cent, eight per cent and three per cent respectively. According Bharat Adhikari, Managing Director, Rojeko. com, this is the prime reason why e- commerce companies are not able to attract investors.
Lack of proper infrastructure “ Transportation, lack of proper roads, networks, communication infrastructure and internet connection availability is a hindrance to e- commerce industries,” says Nitish Sharma, Head of Sales, Kaymu. He adds, “ Even if our services were available in 15 cities it would be quite difficult for us to reach these places due to lack of proper infrastructure.” Dark hours and lack of fuel The ongoing fuel crisis and power cut has obviously had an impact on the e- commerce industry. “ Delivering goods out of the valley has been a huge challenge for us resulting in limited sales in other cities,” says Adhikari. Similarly, Kaymu has also been struggling with sales as there are limited products that are available in the market. Urban Girl ( UG) and other such online business ventures have resorted to using bicycles for delivering goods.
Touch and feel factors “ Majority of the population is yet to adapt to the trend of online shopping,” says Sharma. According to him, consumers’ still like to bargain and hesitate to make a purchase unless they physically check the colour, size and quality of the products.
Further, consumers’ are also not familiar with online payment systems. According to report by Kamyu, 85 per cent of e- commerce users prefer cash on delivery. The remaining transact through digital payment gateway ( e- sewa, iPAY et cetera ).
Only one percent use credit/ debit cards for direct payment.
Growth of sales on special occasions
 There is significant growth in sales during special ocassions such as New Year, Dasain , Tihar , Valentine’s Day and such. On the occasion of Valentine’s Day, e- commerce sites such as giftmandu, Muncha, Mero Shopping, Urban Girl and many others have placed special gift items such as couple t- shirts, flowers, soft toys, jewelleries and the like to boost sales.
E- commerce is here to stay
Despite the challenges, the new generation of entrepreneurs is inclined towards vibrant online businesses and the emergence of e- commerce business cannot go unnoticed.
“ Even though the marketplace for e- commerce is still in its nascent phase in Nepal, it holds a great potential.
Despite the ongoing crisis people have income to spend and they search for a marketplace where they can find the best deals,” says Sharma.
He says that a year ago when Kaymu entered the market there were only a few sales per day.
However, today despite the crisis, there are more than 300 sales per day.
Nikita Acharya, CEO of UG says, “ Youth these days do not have much time to visit stores, they spend most of their time online so they are more likely to shop off the internet.” The population from 16 to 40 are comparatively more tech savvy and prefer to shop online than the older generation, she claims. UG is in operation since 2012 and delivers accessories, gift items and customised cakes through online platforms and social media.
She says that in the previous three years she has observed a change in the buying behaviour of customers.
Initially she had to teach consumers’ the correct way of shopping online.
However, this is not the case today as consumers’ efficiently find their own way through.
Adhikari says, “ We are in the digital age and e- commerce is here to stay and grow despite the challenges.” Most of the businesses have integrated with online platforms to reach target consumers’ and businesses that have not yet used e- commerce could be left out, according to him.