How would you react to the suggestion of launching your business on the web? You might raise a skeptical eyebrow and say: "Online business in Nepal? Isn't that just for relatives abroad to send us cakes on birthdays and gifts during Dasain?"

Although traditional players like muncha.com and thamel.com have been around for about ten years, online businesses are still a fairly new concept in Nepal. E-commerce takes time to grow when people are still scared of putting their credit card information on an online form.

The scene seems to be slowly changing as several new online start-ups have made their debut in the hope of replicating e-commerce models abroad. It has now become possible for Nepali consumers to buy and sell electronic products, clothing items, accessories, air tickets and groceries on the web.

However, not only have these new players widened the market, they have also innovated new models for online businesses. For example, harilo.com allows users to purchase goods from international sites, foodmandu.com lets consumers pick dishes from their favorite restaurants in Kathmandu valley, which are then delivered to their doorsteps, and merodeal.com gives customers discounted offers at various stores.

There are two main reasons for the rise of online stores in Nepal. Firstly, online businesses provide a win-win situation for both consumers and sellers. For the consumers, the ability to purchase a wide range of products on the web, minus the burden of having to physically visit stores and the stress of commuting makes their lives very convenient. For businesses, having an online showroom allows them to cut down on operating cost.

Floor rental and staffing costs are reduced, and the sheer volume and variety of products that a company offers are no longer restricted by the physical space available. Online stores also help diminish advertising costs. Instead of relying on traditional and costly methods of advertising such as placing ads in newspapers, magazines, television, or hoardings, online businesses can take greater advantage of social networking sites with little to no cost.

Facebook, Google+ and Twitter offer real-time social networks, which mean information uploaded on a business' primary circle can be instantly shared or retweeted to millions of users in a very short time at zero cost.
The second factor contributing to the growth of online stores is the escalating number of Nepali internet users. The rate of internet usage in Nepal which stands at about 11 percent may not seem very encouraging at first glance, but there are now over a million Facebook users here. Nepal ranked fourth on the list of countries with the highest number of Google+ users in July 2011. The popularity of online media and social networks is likely to translate into a growing pool of consumers who are willing to purchase products on the web.

We have the eager consumers, we have the products, and the only problem is the lack of a trusted online payment mechanism. Credit card companies demand very high collaterals for their use and the banks here do not have the capital structure to withstand such risks. However, e-banking services and local payment portals such as e-sewa and payway are pioneering channels of online payment. The fact that e-sewa conducted transactions worth NRs 110 million in its first year of operations says a lot about the untapped potential of e-commerce in Nepal.