Unit 2 (E- COMMERCE)

2.1 E-commerce definition

2.2 Components of e commerce
2.3 Types of e commerce
2.4 Application of e commerce
2.5 Advantages of e commerce
2.6 scope of e commerce in Nepal
2.6 Government’s steps in implementation of e commerce in Nepal

2.1 E-Commerce definition

E-commerce, or electronic commerce, refers to the buying and selling of goods and services over
the internet. It involves the use of electronic platforms, such as websites, mobile applications,
and social media, to conduct transactions between businesses and consumers or between
businesses. E-commerce has revolutionized the way businesses operate and has created new
opportunities for entrepreneurs and consumers alike.
One of the primary benefits of e-commerce is that it offers a more convenient and efficient way
to conduct business. Consumers can browse and purchase products from the comfort of their own
homes, while businesses can reach a global audience without the need for a physical storefront.
E-commerce has also enabled businesses to streamline their operations by automating many of
the tasks involved in the sales process, such as inventory management, order processing, and
shipping.
2.2 components of e commerce

1) User: This may be individual /organization or anybody using the e

commerce platforms
2) Internet/ Network: The success of e commerce trade depends upon the
internet capability of organization. The faster net connectivity leads to
better e commerce.
3) Web portal is the application through which user interacts with the e
commerce vendor i.e the front end.
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 This web portals can be accessed through desktops/laptops/smart phones
and now through smart tv also.
4) Payment gateway: payment gateway represents:
The way e commerce vendors collects their payments or the payment mode
through which customers shall make payments.
5) E-commerce vendors: This is the organization / entity providing the user
goods/services asked for. Example: Amazon, flipkart.
6) Technology Infrastructure: E-commerce is technology driven.
Various types of e commerce applications and technologies are being used
by the organization to increase the scope of business.
Technological infrastructure covers the computers,servers,database,mobile
apps etc which enables the e commerce transactions.

2.3 Types of E-Commerce

E-commerce business models can generally be categorized into the following categories.

• Business - to - Business (B2B)

• Business - to - Consumer (B2C)
• Consumer - to - Consumer (C2C)
• Consumer - to - Business (C2B)
• Business - to - Government (B2G)
• Government - to - Business (G2B)
• Government - to - Citizen (G2C)

Business - to - Business

A website following the B2B business model sells its products to an intermediate buyer who
then sells the product to the final customer. As an example, a wholesaler places an order from
a company's website and after receiving the consignment, sells the endproduct to the final
customer who comes to buy the product at one of its retail outlets.

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Business - to - Consumer

A website following the B2C business model sells its products directly to a customer. A
customer can view the products shown on the website. The customer can choose a product
and order the same. The website will then send a notification to the business organization via
email and the organization will dispatch the product/goods to the customer.

Consumer - to - Consumer

A website following the C2C business model helps consumers to sell their assets like
residential property, cars, motorcycles, etc., or rent a room by publishing their information on
the website. Website may or may not charge the consumer for its services. Another consumer
may opt to buy the product of the first customer by viewing the post/advertisement on the
website.

Consumer - to - Business

In this model, a consumer approaches a website showing multiple business organizations for
a particular service. The consumer places an estimate of amount he/she wants to spend for a
particular service. For example, the comparison of interest rates of personal loan/car loan
provided by various banks via websites. A business organization who fulfills the consumer's
requirement within the specified budget, approaches the customer and provides its services.

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Business - to - Government

B2G model is a variant of B2B model. Such websites are used by governments to trade and
exchange information with various business organizations. Such websites are accredited by
the government and provide a medium to businesses to submit application forms to the
government.

Government - to - Business

Governments use B2G model websites to approach business organizations. Such websites
support auctions, tenders, and application submission functionalities.

Government - to - Citizen

Governments use G2C model websites to approach citizen in general. Such websites support
auctions of vehicles, machinery, or any other material. Such website also provides services
like registration for birth, marriage or death certificates. The main objective of G2C websites
is to reduce the average time for fulfilling citizen’s requests for various government services.

2.4 Applications of E-Commerce

Common applications of E-commerce:

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• Retail and Wholesale

Ecommerce has numerous applications in this sector. E-retailing is basically a B2C,

and in some cases, a B2B sale of goods and services through online stores designed
using virtual shopping carts and electronic catalogs. A subset of retail ecommerce is
m-commerce, or mobile commerce, wherein a consumer purchases goods and services
using their mobile device through the mobile optimized site of the retailer. These
retailers use the E-payment method: they accept payment through credit or debit
cards, online wallets or internet banking, without printing paper invoices or receipts.

• Online Marketing

This refers to the gathering of data about consumer behaviors, preferences, needs,
buying patterns and so on. It helps marketing activities like fixing price, negotiating,
enhancing product features, and building strong customer relationships as this data
can be leveraged to provide customers a tailored and enhanced purchase experience.

• Finance

Banks and other financial institutions are using e-commerce to a significant extent.
Customers can check account balances, transfer money to other accounts held by
them or others, pay bills through internet banking, pay insurance premiums, and so
on. Individuals can also carry out trading in stocks online, and get information about
stocks to trade in from websites that display news, charts, performance reports and
analyst ratings of companies.

• Manufacturing

Supply chain operations also use ecommerce; usually, a few companies form a group
and create an electronic exchange and facilitate purchase and sale of goods, exchange
of market information, back office information like inventory control, and so on. This
enables the smooth flow of raw materials and finished products among the member
companies and also with other businesses.

• Online Booking

This is something almost every one of us has done at some time – book hotels,
holidays, airline tickets, travel insurance, etc. These bookings and reservations are
made possible through an internet booking engine or IBE. It is used the maximum by
aviation, tour operations and hotel industry.

• Online Publishing

This refers to the digital publication of books, magazines, catalogues, and developing
digital libraries.

• Digital Advertising

Online advertising uses the internet to deliver promotional material to consumers; it

involves a publisher, and an advertiser. The advertiser provides the ads, and the

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 publisher integrates ads into online content. Often there are creative agencies which
create the ad and even help in the placement. Different types of ads include banner
ads, social media ads, search engine marketing, retargeting, pop-up ads, and so on.

2.5 Advantages of E-Commerce

Advantages to Organizations

• Using e-commerce, organizations can expand their market to national and

international markets with minimum capital investment. An organization can easily
locate more customers, best suppliers, and suitable business partners across the globe.
• E-commerce helps organizations to reduce the cost to create process, distribute,
retrieve and manage the paper based information by digitizing the information.
• E-commerce improves the brand image of the company.
• E-commerce helps organization to provide better customer services.
• E-commerce helps to simplify the business processes and makes them faster and
efficient.
• E-commerce reduces the paper work.

Advantages to Customers

• It provides 24x7 support. Customers can enquire about a product or service and place
orders anytime, anywhere from any location.
• E-commerce application provides users with more options and quicker delivery of
products.
• E-commerce application provides users with more options to compare and select the
cheaper and better options.
• A customer can put review comments about a product and can see what others are
buying, or see the review comments of other customers before making a final
purchase.
• E-commerce provides options of virtual auctions.
• It provides readily available information. A customer can see the relevant detailed
information within seconds, rather than waiting for days or weeks.
• E-Commerce increases the competition among organizations and as a result,
organizations provides substantial discounts to customers.

Advantages to Society

• Customers need not travel to shop a product, thus less traffic on road and low air
pollution.
• E-commerce helps in reducing the cost of products, so less affluent people can also
afford the products.
• E-commerce has enabled rural areas to access services and products, which are
otherwise not available to them.
• E-commerce helps the government to deliver public services such as healthcare,
education, social services at a reduced cost and in an improved manner.

Disadvantages of e-commerce can be broadly classified into two major categories −

• Technical disadvantages

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 • Non-Technical disadvantages

Technical Disadvantages

• There can be lack of system security, reliability or standards owing to poor

implementation of e-commerce.
• The software development industry is still evolving and keeps changing rapidly.
• In many countries, network bandwidth might cause an issue.
• Special types of web servers or other software might be required by the vendor,
setting the e-commerce environment apart from network servers.
• Sometimes, it becomes difficult to integrate an e-commerce software or website with
existing applications or databases.
• There could be software/hardware compatibility issues, as some e-commerce software
may be incompatible with some operating system or any other component.

Non-Technical Disadvantages

• Initial cost − The cost of creating/building an e-commerce application in-house may

be very high. There could be delays in launching an e-Commerce application due to
mistakes, and lack of experience.
• User resistance − Users may not trust the site being an unknown faceless seller. Such
mistrust makes it difficult to convince traditional users to switch from physical stores
to online/virtual stores.
• Security/ Privacy − It is difficult to ensure the security or privacy on online
transactions.
• Lack of touch or feel of products during online shopping is a drawback.
• E-commerce applications are still evolving and changing rapidly.
• Internet access is still not cheaper and is inconvenient to use for many potential
customers, for example, those living in remote villages.

2.6 Scope of E-commerce in Nepal

• E-commerce is the process of buying and selling of goods and services, over an
electronic network, through the internet. E commerce is now major part of the
Internet. Many Countries and Companies have started selling online, and started
Home delivery, online payment, satisfaction guaranteed, and money back returns are
provided by e-commerce companies for trusted and quality products over the internet.

In past recent years due to education and reach to Internet among the many people in
Nepal has brightened the future of E-commerce. The interest of students in the field of
IT and the growth of IT companies has helped a lot in the awareness and interest in
youths for Internet and IT. This has directly created more opportunities to uplift E-
Commerce in Nepal. It is noted that 63% of total population uses internet service in
Nepal. This status proves that there is a good scope of E-Commerce in Nepal.

Benefits of E-commerce

• Reduce effort and time consumption

• Price will be standard for all costumers
• Easier to compare prices

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 • Lots of choices
• All time reachable
• Reduced employee costs

With the introduction of new technologies, digital stores and interactive apps, there is
a big boost in sector of e-commerce. Many online portals and shopping portals are
being launched. They are doing good business along with providing the best services.
They provide festival offers and various discounts to customers. A large number of
people in Nepal stills think twice before purchasing online. Despite of the
technological advancement, security is still a concern in people’s mind. Various
frauds and scams are hampering the growth of e-commerce in Nepal.
Some of the successful companies playing a vital role in the growth of this industry
are mentioned below:

• Kaymu (www.daraz.com.np)
• Sastodeal (www.sastodeal.com)
• Foodmandu (www.foodmandu.com)
• Muncha (www.shop.muncha.com)
• Metrotarkari (www.metrotarkari.com)

2.7 Government's steps in implementation of E-Commerce in Nepal

The government has put in place a national strategy for e-Commerce, the critical first step in
encouraging industries and enterprises to adopt e-commerce, before a relevant law to govern
the sector is drafted.

The strategy that was approved by the Cabinet in June has given the Ministry of Industry,
Commerce and Supplies one year to draft the guidelines and regulations for the e-commerce
sector.

The online marketplace is growing steadily despite a late start, but there are no laws to
regulate them. Nepal lags in e-commerce because of inadequate information and technology
infrastructure.

The strategy has provisioned taking legal action against the e-commerce firm if they are
found selling substandard products, charging a high price and not delivering the goods on
time. It has also provisioned legal action for selling goods by labelling false details.

The government plans to bring online advertisements into a legal network by enacting a new
law, according to the strategy. The strategy also has provision for a refund and return for
goods purchased online.

Currently, there is no specific law to regulate e-commerce sector, and consumers often get
cheated. According to a government official, the strategy — which will act as an initial
guideline — will allow the registration, approval and operation of e-commerce businesses.

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