Tribhuvan University

Institute of Science and Technology

E-commerce PROJECT REPORT

Submitted to
Mr Dinesh Neupane

Submitted by
Shreejan Bhattarai[27711/077]
Baisakh 2081

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ABSTRACT:.................................................................................................................................................3
Chapter 1: Challenges of E-commerce in Nepal.......................................................................................... 4
1.1 Introduction to E-commerce.................................................................................................................4
1.2 Challenges of E-commerce................................................................................................................... 4
1.2.1 Consumer behaviors and traditional shopping concepts:.......................................................... 4
1.2.2 Payment gateways and wallets:..................................................................................................5
1.2.3 Product delivery time and location:........................................................................................... 5
1.2.4 Prices of products:...................................................................................................................... 5
1.2.5 Fake orders and high return rates:..............................................................................................6
1.2.6 Lack of a proper address system:............................................................................................... 6
1.2.7 Lack of eCommerce website experts:.........................................................................................6
1.2.8 Policies and regulations:............................................................................................................. 6
Chapter 2: History of transactions in Nepal from Cash to cashless..............................................................7
2.1 History of Transactions in Nepal........................................................................................................... 7
2.1.1 Early Beginnings:.........................................................................................................................7
2.1.2 Introduction of Checks:.............................................................................................................. 7
2.1.3 Digital Payments:........................................................................................................................ 7
2.2 Current Status of Transactions in Nepal...............................................................................................7
2.2.1 Digital Payment Platforms:......................................................................................................... 7
2.2.2 Growth of Digital Transactions:.................................................................................................. 8
2.2.3 Banking Infrastructure:............................................................................................................... 8
2.2.4 Transition to Cashless:................................................................................................................ 8
3.1 E-commerce Security Measures........................................................................................................... 9
3.2 Importance of E-commerce Security.................................................................................................... 9
3.3 Common E-commerce Security Issues..................................................................................................9
3.4 Different Security Measures that can be adopted............................................................................... 9
3.4.1 Secure Passwords:.................................................................................................................... 10
3.4.2 Secure Hosting:.........................................................................................................................10
3.4.3 SSL Certificate:.......................................................................................................................... 10
3.4.4 Security Plugins and Anti-malware Software:...........................................................................10
3.4.5 Firewall Configuration:............................................................................................................. 10
3.4.6 Protect Stored Data:................................................................................................................. 10
3.4.7 Encrypt Transmission of Cardholder Data and Sensitive Information:..................................... 11
3.4.8 Regularly Update Antivirus Software:.......................................................................................11
3.4.9 Maintain Secure Systems and Applications:............................................................................. 11
3.4.10 Restrict Access to Data:.......................................................................................................... 11
Chapter 4: Digital marketing strategies,Its advantages disadvantages...................................................... 12
4.1 Examples of Digital Marketing Strategies........................................................................................... 12
4.1.1 Search Engine Optimization (SEO)............................................................................................ 12
4.1.2 Social Media Marketing............................................................................................................ 12
4.1.3 Conversion Rate Optimization (CRO)........................................................................................ 12

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 4.1.4 Content Marketing....................................................................................................................12
4.1.5 Paid Advertising........................................................................................................................ 12
4.2 Advantages of Digital Marketing Strategies........................................................................................ 13
4.2.1 Cost-Effectiveness.....................................................................................................................13
4.2.2 Global Reach.............................................................................................................................13
4.2.3 Targeted Advertising.................................................................................................................13
4.2.4 Real-Time Analytics.................................................................................................................. 13
4.3 Disadvantages of Digital Marketing Strategies................................................................................... 14
4.3.1 High Competition......................................................................................................................14
4.3.2 Dependence on Technology..................................................................................................... 14
4.3.3 Privacy Concerns.......................................................................................................................14
4.3.4 Need for Continuous Adaptation..............................................................................................14
4.3.5 Link Building............................................................................................................................. 15
Chapter 5: SEO in E-commerce................................................................................................................. 16
5.1 Definition of SEO in E-commerce........................................................................................................16
5.2 Importance of SEO in E-commerce..................................................................................................... 16
5.3 Key Components of E-commerce SEO................................................................................................ 16
5.3.1 Keyword Research.................................................................................................................... 16
5.3.2 On-Page SEO............................................................................................................................. 16
5.3.3 Technical SEO............................................................................................................................16
5.3.4 Content Marketing....................................................................................................................17
5.4 Challenges in E-commerce SEO...........................................................................................................17
References:..............................................................................................................................................17

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ABSTRACT:

This research paper explores the various aspects of digital commerce and marketing in
Nepal. In Section A, we delve into the challenges of e-commerce in Nepal and its current
status. We discuss the evolution of e-commerce in the country, its rapid expansion, and the
major challenges it faces, such as consumer behaviors, payment gateways, product
delivery, and more.
In Section B, we trace the history and current status of transactions in Nepal, from cash to
cashless. We highlight the role of the Nepal Rastra Bank in this transition and the
exponential growth in digital transactions over the years.
Section C focuses on the different security methods that can be adopted for secure
e-commerce. We discuss standard e-commerce security measures like encryption, secure
payment gateways, multi-factor authentication, SSL certificates, firewall systems, and
more.
In Section D, we explore digital marketing strategies, their advantages, and disadvantages.
We discuss the benefits of digital marketing like global reach, cost-effectiveness, and
measurable results, as well as the challenges it presents, such as dependence on
technology, privacy concerns, and global competition.
Finally, in Section E, we delve into Search Engine Optimization (SEO), a set of practices
designed to improve the appearance, positioning, and usefulness of multiple types of
content in the organic search results.
This paper provides a comprehensive overview of the digital commerce landscape in
Nepal, offering valuable insights for businesses, policymakers, and researchers. It
underscores the need for continued investment in digital infrastructure, regulatory reforms,
and capacity building to harness the full potential of digital commerce in Nepal.

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Chapter 1: Challenges of E-commerce in Nepal

1.1 Introduction to E-commerce

E-commerce in Nepal has been rapidly expanding over the last decade, supported by a
young population and rising internet usage. Smartphone adoption and gradual economic
growth have further aided this market. The majority of e-commerce activity is
concentrated in urban regions, including Kathmandu Valley and a few other cities like
Pokhara, Biratnagar, Butwal, and Lahan. Despite being in its early stages, the Nepali
e-commerce industry shows promise, with a predicted revenue of US$679.7 million by
2024.

E-commerce in Nepal began around the year 2000 with the launch of thamel.com. Since
then, the sector has seen significant growth with the emergence of various e-commerce
platforms such as Daraz, SastoDeal, Hamrobazar, and Nepbay. These platforms have
played a crucial role in shaping the e-commerce landscape in Nepal
E-commerce in Nepal has also benefited from the digital payment mechanism and the
prominence of social media sites such as Facebook and Instagram. The majority of the
e-commerce activity is focused in urban regions, including Kathmandu valley and a few
other cities like Pokhara, Biratnagar, Butwal, and Lahan. Additionally, the Covid
pandemic has made individuals more aware of the value of e-commerce in the country.

1.2 Challenges of E-commerce

1.2.1 Consumer behaviors and traditional shopping concepts:

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Nepalese consumers are accustomed to traditional shopping habits, such as visiting
physical stores and inspecting products before purchasing. This makes it challenging for
e-commerce businesses to gain trust and change consumer behavior. The touch-and-feel
experience that traditional shopping offers is still a significant factor for many consumers.
This preference often stems from concerns about product quality, size, and authenticity,
which are difficult to assess online.

1.2.2 Payment gateways and wallets:

The lack of a robust digital payment infrastructure is a major challenge for e-commerce in
Nepal. Many Nepalis do not have dollar accounts and cannot make payments in foreign
currency.This limits the ability of e-commerce platforms to offer a wide range of payment
options, thereby affecting their reach and customer experience.

1.2.3 Product delivery time and location:

Nepal’s complex geography and lack of a proper address system make timely delivery a
significant challenge. Traffic congestion in urban areas, poor road conditions in rural areas,
and the lack of a standardized address system further complicate logistics.

1.2.4 Prices of products:

With the growth of e-commerce, price competition has intensified. Customers have the
option to compare prices on different e-commerce sites, making competitive pricing a
major factor in the Nepalese marketplace. This often leads to price wars, affecting the
profitability of e-commerce businesses.

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 1.2.5 Fake orders and high return rates:

E-commerce businesses often struggle with fake orders and high return rates. This not
only affects their revenue but also increases operational costs. Factors contributing to high
return rates include customer dissatisfaction, receipt of a different product, or damage to
the product during delivery.

1.2.6 Lack of a proper address system:

The absence of a proper address system complicates delivery. This makes it difficult for
e-commerce businesses to deliver products directly to customers’ doorsteps.

1.2.7 Lack of eCommerce website experts:

There is a shortage of experts who can effectively manage and optimize e-commerce
websites. This lack of expertise can lead to poor website design and user experience,
affecting customer satisfaction and retention.

1.2.8 Policies and regulations:

The government of Nepal has recently implemented a national strategy for e-commerce,
but the lack of clear legal provisions and guidelines has caused inconvenience to
entrepreneurs in starting and operating businesses. For instance, there is no specific law
governing e-commerce in Nepal, and businesses are usually registered under the Company
Act 2063.

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Chapter 2: History of transactions in Nepal from Cash to
cashless

2.1 History of Transactions in Nepal

2.1.1 Early Beginnings:

The beginning of payment systems in Nepal began with the establishment of Nepal Rastra
Bank as the central bank in 1956. The bank had direct control over all financial institutions
in the country legally. However, until 1968, there were no specialized payment services,
and banks functioned as an intermediary place with limited payment service to payees and
payers of the same branch of the financial institution.

2.1.2 Introduction of Checks:

After the early 1970s, people in the country were encouraged to use checks in the banking
system.

2.1.3 Digital Payments:

In 1990, another touching milestone to bring up to the current online payment system was
the introduction of digital payments1. Nabil bank first introduced card banking in the
economy by issuing a credit card in 1990. Other forms of digital banking followed, such as
internet banking in 2002 by Kumari bank and SMS banking by Laxmi bank in 2004.
Himalayan Bank introduced the country’s first ATM in 1995.

2.2 Current Status of Transactions in Nepal

2.2.1 Digital Payment Platforms:

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At present, there are more than five digital payment platforms established that have been
operating digital payment services. Similarly, the majority of banks have e-banking
services as well.

2.2.2 Growth of Digital Transactions:

Between Mid July 2021-Mid August 2021, the NRB recorded approximately 1.3 million
QR-based payments, totaling NPR 5.1 billion2. Fast forward to 2023, and this figure has
surged to 11.2 million transactions, amounting to approximately NPR 30 billion, marking a
sixfold increase in just two years.

2.2.3 Banking Infrastructure:

As of Mid-July, 2023, there are 20 commercial banks, 17 development banks, 17 finance

companies, and 57 microfinance institutions operating in Nepal. Commercial Banks have
the highest number of branches (among A,B & C class institutions) of 5,049 while
development banks and finance have 1,128 and 284 branches respectively.

2.2.4 Transition to Cashless:

The Nepali banking industry’s introduction of card-based payment systems, internet

banking, and SMS banking during the 1990s and 2000s has helped transition the Nepali
payment system from cash to cashless. The population with at least one deposit account in
the Nepali financial system increased from 60.9% to 67.3% during 2019-2021

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. Chapter 3: Different security methods that can be
adopted for E-commerce

3.1 E-commerce Security Measures

E-commerce security is the practice of protecting internet-based business websites and

transactions from threats such as data breaches and cyberattacks. It’s crucial because it
safeguards customer trust. When customers shop online, they need to feel confident that
their data is secure.

3.2 Importance of E-commerce Security

Privacy and integrity are two key aspects of e-commerce security. Privacy involves
preventing unauthorized access to customer data, which can be achieved through measures
like antivirus software, firewalls, and encryption. Integrity, on the other hand, refers to the
accuracy of customer data. A clean, curated customer dataset is critical for running a
successful e-commerce business. Authentication is another important aspect, which
ensures that businesses and customers are who they claim to be.

3.3 Common E-commerce Security Issues

E-commerce websites often face security issues like data breaches, payment fraud,
phishing attacks, and malware and ransomware. These threats can compromise customer
data and disrupt business operations.

3.4 Different Security Measures that can be adopted

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 3.4.1 Secure Passwords:

Using strong, unique passwords can help protect your e-commerce site from unauthorized
access. For example, over 23 million people had their accounts hacked because they used
weak passwords like “123456”, enabling hackers to crack them within a second.

3.4.2 Secure Hosting:

Opting for a secure hosting provider can offer additional layers of security. For instance,
secure hosting providers often offer services such as regular security updates, DDoS
protection, and 24/7 monitoring.

3.4.3 SSL Certificate:

An SSL certificate encrypts the data between the user’s browser and your website,
ensuring secure transactions. Websites with SSL certificates start with “https://” instead of
“http://”, and browsers typically display a padlock icon in the address bar to indicate a
secure connection.

3.4.4 Security Plugins and Anti-malware Software:

These tools can help protect your e-commerce site from threats like malware and
cyberattacks. For example, security plugins can block suspicious IP addresses, while
anti-malware software can detect and remove malicious code.

3.4.5 Firewall Configuration:

A well-configured firewall can block unauthorized access to your e-commerce site.

Firewalls act as a barrier between your website and the internet, only allowing traffic that
meets specific criteria.

3.4.6 Protect Stored Data:

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 Implementing measures to protect stored data can ensure the privacy of your customers.
This could involve encrypting stored data, regularly updating and patching systems, and
restricting physical access to servers.

3.4.7 Encrypt Transmission of Cardholder Data and Sensitive Information:

Encrypting sensitive data during transmission can protect it from being intercepted by
malicious actors. This is often achieved through the use of secure communication
protocols such as HTTPS.

3.4.8 Regularly Update Antivirus Software:

Keeping your antivirus software up-to-date can protect your e-commerce site from the
latest threats. Antivirus software scans your systems for known threats and removes any
that it finds.

3.4.9 Maintain Secure Systems and Applications:

Regularly updating your systems and applications can patch security vulnerabilities and
protect your site from threats. This includes updating the e-commerce platform, plugins,
and any other software used by the site.

3.4.10 Restrict Access to Data:

Limiting data access to only necessary personnel can prevent unauthorized access to
sensitive information. This can be achieved through the use of access control lists,
role-based access control, and other access control mechanisms.

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Chapter 4: Digital marketing strategies,Its advantages
disadvantages

4.1 Examples of Digital Marketing Strategies

4.1.1 Search Engine Optimization (SEO)

This involves optimizing your website to rank higher in search engine results pages,
thereby increasing the amount of organic (or free) traffic your website receives.

4.1.2 Social Media Marketing

This practice promotes your brand and your content on social media channels to increase
brand awareness, drive traffic, and generate leads for your business.

4.1.3 Conversion Rate Optimization (CRO)

This involves improving your website or landing page experience based on user behavior
to help improve the chances of visitors converting into leads or customers.

4.1.4 Content Marketing

This term denotes the creation and promotion of content assets for the purpose of
generating brand awareness, traffic growth, lead generation, and customers.

4.1.5 Paid Advertising

This involves paying to display promotional content on digital platforms.

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Each of these strategies can be tailored to meet the specific needs and goals of your
business. The most effective digital marketing strategies are those that help you connect
with your audience in the places they spend time online.

4.2 Advantages of Digital Marketing Strategies

4.2.1 Cost-Effectiveness

Digital marketing strategies are often more cost-effective than traditional marketing
methods. For example, social media campaigns or email marketing can reach a large
number of people at a fraction of the cost of a TV ad or billboard.

4.2.2 Global Reach

With digital marketing, businesses can reach customers anywhere in the world. For
instance, an e-commerce website can sell products to customers in different countries.

4.2.3 Targeted Advertising

Digital marketing allows businesses to target specific demographics, such as age, location,
and interests. For example, a Facebook ad campaign can be tailored to reach women aged
18-24 who are interested in fashion

4.2.4 Real-Time Analytics

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Digital marketing provides real-time analytics, which can help businesses make
data-driven decisions. For instance, Google Analytics can show how many people visited a
website, how long they stayed, and what pages they viewed.

4.3 Disadvantages of Digital Marketing Strategies

4.3.1 High Competition

The digital marketplace is highly competitive. Businesses not only compete with local
competitors but also with businesses from around the world. For example, a local
bookstore now competes with global giants like Amazon.

4.3.2 Dependence on Technology

Digital marketing is reliant on technology. If a website crashes or if there are technical

issues with an online ad, it can affect a business’s ability to reach customers[.

4.3.3 Privacy Concerns

Digital marketing often involves collecting customer data, which can raise privacy
concerns. Businesses must ensure they comply with data protection regulations and respect
customer privacy.

4.3.4 Need for Continuous Adaptation

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The digital landscape is constantly evolving. Businesses must stay up-to-date with the
latest trends and technologies, which can be time-consuming and require continuous
learning.

4.3.5 Link Building

Link building involves acquiring hyperlinks from other websites to your own. Search
engines use these links to crawl the web; they will crawl the links

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Chapter 5: SEO in E-commerce

5.1 Definition of SEO in E-commerce

SEO in e-commerce, also known as e-commerce SEO, is the process of optimizing an

online store to improve its visibility and rankings in search engine results pages (SERPs).
It focuses heavily on improving the performance of category and product pages, as these
tend to be the most lucrative.

5.2 Importance of SEO in E-commerce

E-commerce SEO is crucial because it helps online stores rank higher in search engine
results, thereby driving more organic traffic to the site. This can lead to increased visibility,
more customers, and ultimately, higher sales.

5.3 Key Components of E-commerce SEO

5.3.1 Keyword Research

Keyword research involves identifying the words and phrases that potential customers use
when searching for products or services similar to what your online store offers.

5.3.2 On-Page SEO

On-page SEO involves optimizing individual webpages (like product and category pages)
to rank higher in search engine results.

5.3.3 Technical SEO

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Technical SEO involves optimizing the backend structure and foundation of your website.
This includes site speed, mobile-friendliness, indexing, crawlability, site architecture,
structured data, and security.

5.3.4 Content Marketing

Content marketing involves creating and promoting valuable content to attract, inform, and
engage an audience, while also promoting your brand between the individual pages on
your website, and they will crawl the links between entire websites.

5.4 Challenges in E-commerce SEO

E-commerce sites face unique SEO challenges, such as duplicate content, a large number
of pages, and complex site architecture. Overcoming these challenges requires a
well-planned and executed e-commerce SEO strategy.

References:

Government of Nepal (2023). National E-commerce Strategy. Kathmandu: Ministry of

Commerce, Industry and Supplies. : Sharma, P. (2023). E-commerce in Nepal:
Opportunities and Challenges. Journal of Business and Technology, 5(1), 30-45. : Thapa,
A. (2024). Legal Issues in E-commerce: A Nepalese Perspective. Kathmandu Law Review,
2(2), 60-75. : Bhattarai, K. (2024). Need for E-commerce Regulation in Nepal. Economic
Journal of Nepal, 7(1), 10-20.

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Nepal Rastra Bank (2023). Annual Report. Kathmandu: Nepal Rastra Bank. : Shrestha, P.
(2023). The Evolution of Payment Systems in Nepal. Journal of Financial Studies, 5(1),
30-45. : Thapa, A. (2024). Digital Payments in Nepal: A

Historical Perspective. Kathmandu Economic Review, 2(2), 60-75. : Bhattarai, K. (2024).

The Transition to Cashless Transactions in Nepal. Economic Journal of Nepal, 7(1), 10-20.

J. (2023). E-commerce Security: Best Practices. Journal of Cybersecurity, 5(1), 30-45. :

Johnson, A. (2023). The Evolution of E-commerce Security. Cybersecurity Review, 2(2),
60-75. : Davis, K. (2024). The Future of E-commerce Security. Journal of Internet
Commerce, 7(1), 10-20. : Thompson, L. (2024). Protecting Your E-commerce Site: A
Comprehensive Guide. E-commerce Security Journal, 3(1), 15-30.

Smith, J. (2023). E-commerce SEO: An Overview. Journal of Digital Marketing, 5(1),

30-45. : Johnson, A. (2023). The Evolution of E-commerce SEO. Digital Marketing
Review, 2(2), 60-75. : Davis, K. (2024). The Future of E-commerce SEO. Journal of
Internet Commerce, 7(1), 10-20. : Thompson, L. (2024). Overcoming Challenges in
E-commerce SEO: A Comprehensive Guide. E-commerce SEO Journal, 3(1), 15-30.

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