E-Commerce: to enhance SMEs’
Performance
E-commerce is
a process of doing just about every aspect of business over the internet,
which uses diverse technologies and embraces a wide range of financial forms
such as electronic banking, electronic trading, electronic data interchange
(EDI), electronic mail (E-mail) and all forms of messaging between
Enterprises. E-commerce is a modern business methodology that
addresses the needs of organisations, merchants, and consumers to cut costs
while improving the quality of goods and services. This is also an
unavoidable reality as the prime promoter of commerce and trade around the
world.
E-commerce
offers unprecedented opportunities to both consumer and supplier. From the
supplier prospective Companies are not limited to physical locations or
their own organizational boundaries for providing products and services.
E-commerce allows trade to become simpler and more streamlined, thus
increasing the value and speed of transactions. Any company can enter global
markets where size and location have become rather irrelevant. From the
consumer prospect the number one advantage of e-commerce is convenience of
use. The user can browse online stores; compare prices and order products
and services sitting at home on his/her PC. This provides considerable
advantages over traditional commerce such as no dealing with traffic on the
road or rude salesmen and access to a large market and wide range to explore
before buying or selling without getting out of their comfortable chair.
Apart from these obvious advantages, e-commerce also provides some other
specific features, which gives it an edge over traditional commerce. One
such feature is online customer service. According to Forrester Research, 37
percent of online consumers use customer service more from Web retailers
than traditional retailers because of its potential for ease of use and
quick response times.
Small and
Medium Enterprises (SMEs) are important in a developing country like Nepal.
It has a significant contribution to the nations’ Gross Domestic Product
(GDP). According to the Federation of Nepal Cottage and Small Industries (FNCSI),
the SMEs contribute 90 per cent to the industrial GDP of Nepal, and this
sector engages 87 per cent of the labour force and employment. The
Department of Cottage and Small Industries (DoCSI) statistics show that
there are a total of around 170,000 cottage and small industries (CSIs)
registered in the country, and they provide employment to about 1.6 million
people. Small and Medium Enterprises (SMEs)
have been playing a crucial role in the economic development of Nepal. They
have been generating employment, leading to increased participation of
indigenous people, use of local resources, generation of technological
innovations and provision of skills and training at a low cost to the
people. The major exportable items like woollen carpet, pashmina products
and handicraft goods produced by SMEs have been major sources of earning
foreign currency. SMEs are more suitable for Nepal because they generate
employment since they use relatively less imported material and equipment
while the large business sector is very dependent on such imports.
The growth, integration,
convergence and sophistication of information and communications
technologies (ICT) are changing society and economy. The basic structures
and trend of marketing also have changed. One can see visible changes in
international marketing strategies. Many companies have started to use the
Internet to increase their marketing access and have improved their
profitability by doing so. A profound change is likely to result, as
consumers can now directly order manufacturers. It threatens to displace
market intermediaries, such as insurance agents, travel agents,
stockbrokers, bookstores, and consumer product retailers. These middlemen
will be disintermediated and virtually replaced by infomediaries or modern
internet technologies and also help consumers to become more empowered with
product information. This process will make consumer more demanding, they
know what is possible and unwilling to accept anything less than the best.
Although
Small and Medium Enterprises (SMEs) play a crucial role in the country’s
economy, and can play vital roles in creating dynamic and market-oriented
economic growth, employment for the growing work force especially in the
rural areas and for reducing poverty in Nepal. They could not face the
challenges of changing European and American markets using information
technology of the 21st century. In this context, electronic-commerce can be
a good medium for today’s competition and modernisation, to recognise the
modern multilateral trading system and to participate in the international
trade. For LCD countries like Nepal technology plays important role to boost
nation’s overall production capacity and efficiency. E-commerce accelerates
the process of economic growth by speeding up the diffusion of new
technologies. Potential benefits of e-commerce for Nepalese SMEs are
immense. Any company can enter global markets where size and location have
become rather irrelevant. Success in e-commerce will have an immediate
impact not only on productivity and profits, but also generate new jobs
employment and livelihood.
Since,
developing a basic e-commerce site doesn’t require heavy investment, using
an e-commerce site need not necessarily incurs additional expenses. Having
an e-commerce site is possibly one of the best ways to make money from
internet. It is just like to set up an additional virtual store in a minimal
cost. This can be a second branch office for your business where customers
from around the globe can explore products and services and place orders on
their convenient time. As e-commerce isn’t dictated by any geographic
barrier, SMEs, by using the online business model, can potentially market
their products and services in a global market. A recent research shows that
the number of online shoppers worldwide is increasing each day, and it’s
obvious that online shopping will dominate the retail market in coming days.
As we know that because of the internet technologies consumers are being
more empowered with product information. This could be an opportunity for
Nepalese business firm because Nepalese products will be less expensive than
the western ones. But we must pay attention for the quality of the products.
To trap this opportunity Nepalese Small and Medium Enterprises (SMEs) should
take further steps towards international marketing and promotion of their
products and services through e-commerce.
Apart from isolated effort
undertaken by few business firms there is still lot to do in the field of
e-commerce in Nepal. Some Nepalese business entrepreneurs use internet but
they use it only for research and email purpose. There are very few business
firms which are utilizing e-commerce as their marketing tools such as
Muncha.com, which is a good example in this category.
www.muncha.com is an online extension of Muncha House, one of the
oldest departmental stores in Kathmandu. This is the pioneer internet
venture to offer Daal, Chaamal on the internet. The handicraft Association
of Nepal has started a vertical portal at
www.nepalhandicraft.com.np which has links to its member home pages and
other information to promote their interest internationally.
www.b2b.com.np
is the
National Business to Business (B2B) e-Commerce Market Place as a single
electronic gateway to promote the market linkages within the country and
with the international markets. Some other business firms such as
netfornepal.com, shopnbds.com, thamel.com, nepala.com and so on are also
utilizing e-commerce as their marketing tools. Other business firms who have
not yet actively participated in this race should learn from those who
already have established their presence in the new economy to trap the
opportunities provided by modern technologies
After
accession of WTO, We have tremendous opportunities for exporting our
products in the international market. But to substantially benefit from
international trade, we must need to strengthen our capacity by increasing
our competitiveness through enhancement of technological capability to
increase efficiencies in the productions, distribution and sale of goods and
services. There is an urgent need for Nepali entrepreneurs, involved with
SMEs, to market their product to outer world; otherwise they will be left
behind. There is lack of awareness among the Nepalese entrepreneur about the
benefits of e-commerce and also majority of Nepalese businessmen
those who are involved with SMEs don’t have the basic knowledge about how a
basic e-commerce website works. They give least important to sales and
promotion activities because they are regarded as a higher cost seeking
component; it is just a perception, through the internet they can promote
their products and services worldwide at nominal cost.
Nepal’s Government and other
stake holders should create an image of e-commerce awareness and leadership
and demonstrate to the business community the importance of e-commerce.
Government should consider e-commerce issues at the highest level.
Government should also identify e-commerce as a critical element of
international competetitiveness. And also Nepalese entrepreneur should
realize that there is urgent need for SMEs to follow e-commerce to cope with
the fast changing global business environment.
About me
Tika R. Kandel
Graduated From, Swinburne University of Technology, Australia
Currently working in the field of e-commerce in Nepal
Email: kandeltika@gmail.com