Many could not understand the concept of selling goods online at that time as the Internet had just been introduced in the country, says Tuladhar, who used to work as a credit officer at Himalayan Bank in those days. [break]
“Even my parents, who were in trading business for decades, did not understand what I was trying to do,” recalls Tuladhar, tracing back his path from where he started his journey as an online retailer.
Yet the MBA degree holder from an American university was firm on his plan. He had seen the evolution of e-commerce while pursuing studies in the US and was pretty confident that “brick and mortar stores would one day have to make transition to the world of Internet if they wanted to continue growing.”
This self-assurance propelled him to quit his job at the bank. He then approached Infocom Private Limited, which designed a web page for him.
“It cost me around Rs 70,000 of my savings to build the site,” Tuladhar says.
Simultaneously, he also started negotiations with American companies to develop payment gateway to facilitate online transactions.
Finally, Nepal´s first exclusive online store, munchahouse.com, now shop.muncha.com, came into operation in 2000.
As the presence of an online retail site spread by word of mouth, Tuladhar started getting one or two orders every two to three days.
“In those days, my core clients were Nepalis based aboard as platforms to facilitate online payments in the domestic market were non-existent,” says Tuladhar. “All the while, my parents were wondering how it was possible to sell goods through the Internet.”
A lot has changed since that time.
Today there are over 1,000 online retail stores in the country that sell everything from grocery items, fashion wear, books, music, videos and movie tickets to consumer electronics, home appliances, motorbikes and automobile. Dozens of online stores have also emerged on social network sites such as Facebook that generally depend on ´friends´ to promote their businesses.
The proliferation of online stores that the country is witnessing today is the result of availability of faster Internet connections at cheaper prices.
“When I first opened the online store, many were relying on 56kbps dial-up setup,” says Tuladhar.
Users had to wait for minutes to load a website, around half an hour to download a song and several hours to download a video.
“What was even more annoying was that the painfully slow Internet service used to cost Rs 8 per minute during normal hours,” says Tuladhar. “That´s why we used to wait till late at night to surf the net when tariff used to come down to Rs 2 per minute.”
Major changes were noticed in the first half of 2000 when many internet service providers started offering broadband services, which allowed data transmission at a higher speed. But those services were beyond the reach of many, as they were quite expensive.
It was only after state-run Nepal Telecom launched ADSL service around seven years ago that people of mid-income group could have an access to faster Internet connection at relatively affordable prices.
Since that time, availability of high-speed broadband services at relatively cheaper prices and smartphones - that allowed mobile browsing - have further pushed up the number of Internet users in the country.
Today, over 5.53 million Nepalis have subscribed to the Internet service, of which almost 90 percent use phones or data cards to browse the net. Considering 30,000 Internet subscribers as of mid-January 2004, this is a huge leap.
This tremendous rise in the number of Internet users have prompted many to vouch for a bright future of e-commerce in the country.
“We all know this (e-commerce) is the future. How fast can we move on to that platform is still a big question,” says Asgar Ali, CEO of Fonepay Private Limited, a firm that provides financial services through mobile devices.
Although many Nepalis still cannot make full-fledged use of e-commerce because of the government´s ban on issuance of cards that are accepted worldwide, around half a dozen online payment gateways have been established in the country to facilitate online transactions on domestic sites.
These sites, such as e-sewa.com, ipay.com.np and payway.com.np, basically allow users to transfer amount from internet bank accounts to accounts created on these sites.
The parent company of Fonepay, e-Sewa -- Nepal´s first online payment gateway established in 2009 -- has signed agreements with over 25 commercial banks to offer this service. This means, customers, who have subscribed to internet banking service offered by these 25 banks, can transfer funds to their e-Sewa accounts via Internet to make online payments.
So far, over 80,000 people have subscribed to e-Sewa´s service - which is also accessible through mobile devices - of which 45,000 are active users. Lately, its daily transaction has also soared to around Rs 2 million.
“But almost 90 percent of the transactions are related to payment of utility bills and purchase of mobile phone top-up cards,” says Ali. This is the same with many other sites that offer online payment gateway service.
Recently, Nabil Bank has also paved the way for its debit and credit cardholders to shop at e-stores based in India.
Since the launch in late November 2012 of the service called eSecure, the bank has recorded close to 1,000 transactions - including service subscription - of which majority are related to purchase of air and train tickets in India.
“In terms of infrastructure development to facilitate e-commerce a lot has been done in a relatively short period of time,” says Tuladhar. Yet the number of Nepalis visiting online stores to make purchases is very low.
“Of around 18 transactions that take place on muncha.com every day, only one order is placed from Nepal,” says Tuladhar.
Bhatbhateni Online shares similar experience.
“Of around five to six orders that are placed every day, almost all come from abroad,” says Manish Shrestha, portal chief of bhatbhatenionline.com.
“This is because domestic consumers still feel comfortable with the legacy system, although online transactions are much secure these days.”
An example of people´s attachment to the conventional payment system is seen around shopping centers, where many shoppers are seen visiting ATM kiosks prior to entering stores that accept debit or credit cards, according to Shrestha. “This is because they are either not used to using cards or are afraid of falling victim to scams.”
Another reason is the absence of a system that allows consumers to make use of cards, like Visa, issued by Nepali banks on e-stores. This is mainly because Nepali banks that are members of card service providers, like Visa and MasterCard, are currently not authorized to rope in merchants, like e-stores, to their networks. In other words, sites that accept cards, like muncha.com and bhatbhatenionline.com, are currently using online payment gateway set up abroad.
But Nabil says it is soon filling this void.
“We are currently negotiating with Visa and MasterCard so that we can offer payment gateway service to online stores and service providers,” says Niraj Sharma, head of the card division at Nabil Bank.
If things go according to plan, the system will be set up within next six to eight months, according to Sharma.
“With the introduction of eSecure service, we have already empowered buyers (cardholders). If we are able to offer payment gateway service, we will be empowering the sellers as well,” Sharma says. “Once that is done people will probably start getting the hang of online shopping and we might be able to see more diversification in the shopping habits of customers as well.”
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INTERVIEW
´There´s little awareness about benefits of shopping online´
Amrit Tuladhar, CEO of muncha.com
How has the e-commerce sector changed in the last decade?
A lot has changed over the years. Internet service is widely available at affordable prices these days. The quality of service is also improving day by day. Because of these reasons, the number of Internet users is also going up. As more and more people go online, sellers are also promoting their goods and services through the Internet.
Despite these developments, not many people are purchasing goods and services online.
It has only been two years since the online stores targeted at the domestic crowd started emerging in large number. This phenomenon, coupled with easy access to Internet service, has laid a foundation for e-commerce in the country. Gradually, payment gateways are also being established to facilitate online transactions and more and more banks are offering Internet banking service.
So what is preventing customers from buying goods and services online?
It´s just that people have not developed the habit of purchasing goods online. Once they do, they´ll realize its benefit. Besides, frequent power cuts are also preventing many from spending more time on the Internet, which is hampering growth of e-commerce.
Or is it because of lack of promotional activities?
Yes, there is little awareness on benefits of shopping online as many have opened e-stores just to experiment. But we are planning to actively make use of social media to spread the word about our online store. However, there are few companies that have set up e-commerce site just to bag advertisement. These sites are more interested in generating revenue through sales of space on their sites rather than goods.
What about security? How safe are the online transactions on e-stores?
Regarding my site, it is totally secure. We continuously upgrade security system to prevent hackers from intruding. We are well aware that we have to be a step ahead of cyber thieves.
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