Barriers to E-Commerce in Nepal

Barriers to E-Commerce and Competitive Business Models in Developing Countries: A Case Study Written by: Nir Ksetri

Presented by: Marc !ill  "ravis  " ravis Cain  #anelle Boucer Boucer

$ntroduction

Marc !ill

Barriers to E-Commerce in Developing Countries 

Economic Barriers

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Sociopolitical Barriers

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Cognitive Barriers

E-commerce Business Models

 "ravis D% Cain

Wat is a Business Model& 

'A description o( a company)s intention to create and capture value by lin*ing ne+ tecnological environments to business strategies%,

 "ypes o( Business Models 



am and .arrison-Wal*er estimated about /0 revenue-generating ebusiness models%  "ere are di1erent approaces to describe te models% "e (ollo+ing are a list o( tese approaces%

Approaces to describe types o( Business Models 2%

5%

3esearcers +it mar*eting orientation use product4 price4 place4 and promotion% 6ters4 in terms o( structural caracteristics around te value cain o( suppliers and buyers4 $" systems and arcitectures4 tecnical plat(orms4 and security and tra7c scale%

Dimensional Models 

am and .arrison-Wal*er analysed business models employed by $nternet companies and reduced tem troug te use o( t+odimensional models% 2% 3elational ob8ectives 5% 9alue-based ob8ectives

3elational 6b8ectives 

 "ese are used to classi(y e-business models based on te $nternet)s connectivity caracteristic%



 "arget Mar*et

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Connectivity-related ob8ects

9alue-based 6b8ectives 

 "ese are related to a value (ormula suc as generation o( revenues and oters benets%



E;amples include non-nancial contributions suc as increased mar*eting e1ectiveness or improvement in consumer attitudes%

$ssues in Developing Countries& 

9ery (e+ rms sell products online and so tis model is not +idely employed in developing countries%



Many service providers in developing countries ave invented viable business models% Some argue tat ecommerce can be a *ey competitive advantage i( it is used e1ectively in tese ,imper(ect, mar*ets%   

 "amel%com
 "amel%com +as establised in 2=== as a +eb portal%



$ts pysical o7ce is located in "amel4 a street in Katmandu

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 "amel%com originally targeted tourists%  "en te company si(ted its (ocus on Nepalese e;patriates% Acted as a gi(t provider to e;patriates and teir (amilies%

 "amel%com
   

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$n 50024 =004000 Nepalese lived outside te country% .iger $nternet adoption rates4 .iger disposable incomes .iger rate o( credit cards o+nersip%  "is mar*et is e-commerce ready +it a greater value-creation opportunity%  "e company also targeted (oreign E;patriates living in Nepalese% $n 500>4 ?0@ "amel%com customers +ere Nepalese e;patriates and 50@ +ere (oreigners

E-commerce Barriers $n Nepal 

Economic factors 2==>4 $nternet introduced in Nepal  2===4 0%2/ @ users o( total population  500>4 0%=@ users o( total population  Developing countries e-commerce mar*et lac*s economies o( scale%  $C" access carges e;pensive 

Montly $nternet access 50rs+* +as more tan per capita annual income  Still +as a cas-based society over credit cards 

E-commerce Barriers $n Nepal 

Socio-Political factors 

Classi(ying Asian countries by level o( adoption o( digital and electronic signatures as put Nepal at level 0%



As o( mid-500>4 Nepal adn
E-commerce Barriers $n Nepal 

Cognitive factors 

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 

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Kno+ledge4 s*ill and condence related to e-commerce usage are even stronger 5@ estimate o( population are Englis literate in Nepal  o( adult population is illiterate  .igly undeveloped and unreliable postal systems roblems o( postal system in Nepal include ine7cient security4 unreliability and te(t %

 "amel%com
 #anelle Boucer

 "amel%com
Combination o( te (ollo+ing: 

An internet portal



A bundle o( services



A manu(acturer


A virtual mall

 "amel%com as an $nternet ortal 

 "+o most popular models (or a portal: 

Free model 61ers some (ree goods and services to create ig tra7c  Advertising opportunity 



Content sponsorsip model 

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Gses content4 lin*s and services to attract visitors to generate advertising revenue

 "amel%com used te content sponsorsip model%

 "amel%com as a Bundle o( Services 

rovides multiple services as a pac*age deal (or customer 

Facilitates online ordering and payment o( goods

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Delivers gi(ts to te customer

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Conrms delivery by ta*ing a digital poto o( te gi(t being delivered to te customer

 "amel%com as a Manu(acturers< Agent 

According to am and .arrison-Wal*er4 a manu(acturers< agent represents 'more tan one seller4 and sometimes an entire industry4 to sell specic types o( products,

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$n 500>4 "amel%com (eatured over H4000 products representing diverse industries suc as cocolates4 ceremonial goats4 birtday ca*es4 sil* saris and ceese

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Facilitates vendors suc as te goat erders +o do not ave teir o+n +ebsites by providing in(ormation on teir products on te "amel%com +ebsite



3evenue comes (rom user (ees4 advertising4 sponsor commissions

 "amel%com as a 9irtual Mall 

.osts multiple online mercants on its +ebsite

 "amel%com as a 9irtual Mall

 "amel%com
 "argeted te population tat e;perienced relatively (e+er economic barriers I te e;patriates

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6utsourced paymenttransaction processing (unctions to te GS  "amel%com as an alternative to Nepal
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rovided delivery service and delivery conrmation potos $nitially Katmandu ad no street addresses ma*ing it di7cult to nd recipients< omes   "roug a partnersip +it te Municipality o( Katmandu and teir mapping system4 tey created delivery Jones around +ell-*no+n landmar*s  "oo* digital pictures o( te delivery o( te gi(t to te recipient +ic +ould be sent to te buyer as delivery conrmation4 and a tan* you note (or using te service 

Wat can small developing countries learn (rom tis Nepal case study& 2%

$n a developing country4 a company
 "amel%com
Wat can small developing countries learn (rom tis Nepal case study& 5%

$n relatively small mar*ets o( developing countries4 companies can add value by bundling togeter various products and services

Wat can small developing countries learn (rom tis Nepal case study& %

 "o deliver (ull potential4 developing country-(ocused $nternet business models are reLuired to outsource some (unctions to te industrialiJed +orld 

$mpossible to brea* all e-commerce barriers

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6utsourcing can enance value delivery

Conclusion and 3ecommendations 

 "e developing +orld still as muc to learn about e-commerce% "ese countries must realiJe tat:

%$$

%$Not all business models targeting te developing +orld are eLually success(ul% Developing countries still need to deeply researc te (actors tat di1erentiate success(ulunsuccess(ul e-commerce business models%  "amel%com
Conclusion and 3ecommendations 

Countries in te developing +orld must: $$

%$$9%

9%

Determine te optimum siJe o( te e-commerce mar*et (or companies in teir country to protable e;ploit% Determine te types o( companies tat are li*ely to (orce teir business partners to adopt $C"s $n(ormation and Communications "ecnology% Determine te optimal level o( involvement (or government and private organiJations in combating various e-commerce barriers%