E-commerce gets a much-needed boost
The pandemic has forced us to think out of the box, and catch up with the rest of the world in e-commerce and online economy. Much like how people are working from home and students are taking online classes, Nepalis have taken to online shopping, in particular there has been significant surge in stay-at-home orders for all kinds of goods.
Ironically, e-commerce, which struggled for years to gain a viable market in Nepal, is perhaps the only sector with positive growth in 2020. In fact, despite the economic fallout of the pandemic, Daraz’s annual 11.11 sale in November broke all previous records with transactions worth Rs20.52 million within the first hour, a 60% increase from last year.
The event saw significantly higher numbers in online pre-payment via wallet and bank card taking up 45% of the total sales.
“During this pandemic we saw the kind of growth we were expecting to take place in the next two years. There were challenges but we have seen consumer confidence in contactless transaction grow significantly during this time,” says Amitesh Roy, Chief Commercial Officer at Sastodeal, which recently merged with India’s biggest online store, Flipkart.
Neighbouring India and China have dominant e-commerce players, but Nepal has lagged far behind due to the primate state of electronic payment mechanisms. But the fact that e-commerce giants like Alibaba and Flipkart have entered the Nepali market with their partnerships with Daraz and Sastodeal mean they see a bright future for e-commerce in Nepal.
It is expected that a rapidly increasing Internet penetration rate (which was only 9% in 2011 and has now grown to 60%) will significantly aid in the growth of e-commerce industry.
But most online sites still rely on cash payment on delivery or mobile-wallet companies like e-Sewa and Khalti. Online payment by credit or debit card would streamline e-commerce, but it has yet to take off in Nepal. Digital shopping is also still limited to main cities.
International online purchase by credit card is also hindered by Nepal Rastra Bank regulations on cross border payments because of concerns over money laundering and credit card fraud.
But the proposed electronic commerce bill is expected to pave the way forward, streamline and standardise the online payment process while protecting user data and privacy. The draft also has provisions for easy return, exchange and refund of the goods.
Buyers can also cancel the order within 24 hours and businesses have to deliver on time given the nature of products purchased. Any traders found violating the rules will be fined anywhere between Rs25,000 to Rs300,000.
Says Roy: “We are trying to be a relevant as a local player in this market where we are competing against global e-commerce giant like Alibaba which just goes on to show that we have a real potential here.”