Nation needs an updated e-commerce policy

Smartphone revolution and growing internet penetration have created fertile grounds for e-commerce. But, like any other trend and businesses, e-commerce too is driven by the ecosystem.

Sellers have started reinforcing e-commerce with extra effort after the outbreak of Covid-19, while many customers have joined online shopping. The government, on the other hand, is also in the process of introducing regulations to supervise the e-market.

The scenario seems supportive at the surface level. However, despite the potential in the growth of e-commerce, what lacks in the Nepali market is the coordination among stakeholders in the ecosystem.

What customers’ experience?

From good, bad, to worse, Nepali customers have been getting all kinds of experiences in online shopping.

Rajan Joshi from Kathmandu uses an online shopping medium to order goods for his office as well as for personal use. “I did online shopping since the establishment of Munchha.com. But in between, I stopped doing so. Again with the growing popularity of online shopping, I resumed it,” he says.  However, nowadays, his orders often don’t get delivered. Joshi says that he had ordered from a few Facebook pages too. Some online sellers charge extra for delivery even when at times we have to return the product if the quality is not satisfactory,” he says, adding, “And some of the sellers fail to deliver despite having the order.” He adds that he only pays in cash.  “With these sorts of unreliable services in Nepal, digital payment revolution is a distant dream,” he shares.

Pranisha Shrestha from Kapan is a regular online shopper. Her experience till now is fine. But she says she has to compromise on issues like exchange policy and number of days for delivery. “In case I want to exchange a product, it takes around two weeks for replacement. The delivery time has to be reduced so that the customers can have confidence to shop online,” she says.

E-commerce Strategy 2019

The government adopted e-commerce strategy in August, 2019. This was indeed a critical step to encourage the e-commerce players as they were waiting for a related law. Due to the absence of proper laws, many customers are being cheated by the players who are not legally registered.  The strategy has provision to take legal action against the e-commerce players selling fake products, the ones who do not deliver the products or the ones who deliver it late. The 40-page strategy mentions points like proper monitoring of e-commerce business, affordability of internet service, data protection and other infrastructures.

“The strategy is ambitious. We need a strong political will to meet all these targets,” opines ICT expert Manohar Bhattarai.

The strategy also mentions about strengthening the infrastructure at customs points but nowhere has it mentioned about the tax implications on electronic purchase. “What if a person has to buy an e-book or any software from an online platform? Strengthening customs points does not make any sense in this case,” says Rishi Ram Adhikari, chairman of Kitab Yatra. “An international payment gateway should be introduced first,” he says.

Bhattarai views that interoperability  in payment system plays a big role to facilitate and grow such kind of online purchase.

On the other hand, logistics and infrastructures relating to location identification is weak or almost absent in Nepal. The most convenient way to give a direction to delivery person is to either show him the way towards a school, temple or point him/her towards a red house with brown gate. Well, in the absence of street numbers and house numbers, it takes around 15 minutes extra for a delivery person to reach his/her customers. “These logistics are basic, and the government must include these issues in the policy and implement them as soon as possible,” says Sangam Singh, founder of NepXpress Logistics.

Gyanendra Khadka, the co-founder of Gyapu, says that there are lots of problems in issues like customer satisfaction, refunding, return, exchange policy and delivery of the right product. “These points are mentioned in the strategy, but the government must consult with consumers’ association for research and proper implementation of the strategy,” opines Khadka.

As mentioned above, there are lots of fraud cases in e-commerce as the industry is in nascent stage and is operating without a policy. Khadka suggests that there must be strict regulations like deposit system while registering an e-commerce company. “The government can use the deposit to compensate the customers in case any of them get cheated from the respective online platform,” he says.

According to expert Bhattarai, apart from registration, the government also must form a body dedicated to handle the complaints and solve the issues of online customers.

Tedious and confusing registration process

The government has recently started supervising the online market, which is a welcome sign. But monitoring without a proper understanding and knowledge of the area complicates the problems instead of resolving them.

The Department of Commerce, Supplies and Consumer Protection Management had monitored and slapped fine on a few e-commerce companies including Daraz, Gyapu, Offering Happiness and some others. Stepping ahead to monitor and supervise the market is definitely a good initiative as the e-commerce market in Nepal is yet to be systematic. But the officials have been using the same approach for e-commerce companies like monitoring of other brick-and-mortar. Gyapu that started in the wake of the lockdown was fined with Rs 50,000 for not being registered.  Khadka, co-founder of Gyapu, said that they had no idea about the new rule which requires an e-commerce company to get registered with the Department of Industry. “We had already registered with the Department of Trade and Commerce as well as Company Registration Office and other local bodies in 2019. There was no regulation to register with the Department of Industry at that moment. So, we initiated the operation,” says Khadka. After the fiasco, Khadka says they submitted the documents and registered with the Department of Industry. “The government must bring clear registration process in the policy,” says Khadka.

Adhikari from Kitab Yatra says that a proper one-window policy should be introduced for startup registration. “Startup founders are energetic, innovative and have a different vision. They are highly motivated when they start,” adds Adhikari, “But when they face these bureaucratic hurdles in the beginning itself the motivation and energy slow down. So, the government has to implement a system where the startups can register their companies really quickly.”

Apart from this, Khadka opines that the Ministry of Industry, Commerce and Supplies must frequently interact with the e-commerce players. “The market is new and most of the players have an intention to grow. If we get to do frequent interactions with the government representatives, we will be updated about their decisions concerning the e-commerce sector.”

Do we need an association?

Forming an industry association can be an effective way to connect the gaps between the government and the private sector. It gives a platform for private sector players and the government to share their challenges.

“We need a formal association to work as a bridge between the government and the e-commerce players,” says  Adhikari from KitabYatra.  “It is not that we are not invited at government meetings on policy formulation, but as we are growing it is high time to elect representatives to speak and coordinate on behalf of e-commerce members.”

Raja Ram Nepal, CEO of Thulo.com, says that forming an institution will help the e-commerce players to tackle the challenges collectively.

While everyone recommends the formation of an association, they are also concerned about the purpose of the association. Kiran Timsina, co-founder of Urban Girl, opines that forming an association is important. “However, the players in the association must lobby for the issues which hinder the long-term growth of e-commerce. We need to focus on making a conducive environment for the upcoming startups rather than just focusing on short-term challenges,” says Timsina.

Need of well-researched policy

According to Baikuntha Aryal, secretary at the Ministry of Industry, Commerce and Supplies, the E-commerce Strategy 2019 is in the cabinet now and the policy will be formulated soon.  Entrepreneurs and experts say that the government needs to learn from a country like India which has a well–researched e-commerce policy. Various stakeholders from the ecosystem are demanding more interaction with the government before formulating the e-commerce policy.