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Written by: Nir Kshetri

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1 Written by: Nir Kshetri
Barriers to E-Commerce and Competitive Business Models in Developing Countries: A Case Study Written by: Nir Kshetri Presented by: Marc Gill Travis Cain Janelle Boucher

2 Introduction Marc Gill

3 Barriers to E-Commerce in Developing Countries
Economic Barriers Sociopolitical Barriers Cognitive Barriers

4 E-commerce Business Models
Travis D. Cain

5 What is a Business Model?
“A description of a company‘s intention to create and capture value by linking new technological environments to business strategies.”

6 Types of Business Models
Lam and Harrison-Walker estimated about 50 revenue-generating e-business models. There are different approaches to describe the models. The following are a list of these approaches.

7 Approaches to describe types of Business Models
Researchers with marketing orientation use product, price, place, and promotion. Others, in terms of structural characteristics around the value chain of suppliers and buyers, IT systems and architectures, technical platforms, and security and traffic scale.

8 Dimensional Models Lam and Harrison-Walker analysed business models employed by Internet companies and reduced them through the use of two-dimensional models. 1. Relational objectives 2. Value-based objectives

9 Relational Objectives
These are used to classify e-business models based on the Internet‘s connectivity characteristic. Target Market Connectivity-related objects

10 Value-based Objectives
These are related to a value formula such as generation of revenues and others benefits. Examples include non-financial contributions such as increased marketing effectiveness or improvement in consumer attitudes.

11 Issues in Developing Countries?
Very few firms sell products online and so this model is not widely employed in developing countries. Many service providers in developing countries have invented viable business models. Some argue that e-commerce can be a key competitive advantage if it is used effectively in these ”imperfect” markets.

12’s Competitive Business Model: A Case Study was established in 1999 as a web portal. Its physical office is located in Thamel, a street in Kathmandu originally targeted tourists. Then the company shifted its focus on Nepalese expatriates. Acted as a gift provider to expatriates and their families.

13’s competitive business model: A Case Study
In 2001, 900,000 Nepalese lived outside the country. Higher Internet adoption rates, Higher disposable incomes Higher rate of credit cards ownership. This market is e-commerce ready with a greater value-creation opportunity. The company also targeted foreign Expatriates living in Nepalese. In 2004, 80% customers were Nepalese expatriates and 20% were foreigners

14 E-commerce Barriers In Nepal
Economic factors 1994, Internet introduced in Nepal 1999, 0.15 % users of total population 2004, 0.9% users of total population Developing countries e-commerce market lacks economies of scale. ICT access charges expensive Monthly Internet access (20hrs/wk) was more than per capita annual income Still was a cash-based society over credit cards

15 E-commerce Barriers In Nepal
Socio-Political factors Classifying Asian countries by level of adoption of digital and electronic signatures has put Nepal at level 0. As of mid-2004, Nepal hadn’t enacted DES laws.

16 E-commerce Barriers In Nepal
Cognitive factors Knowledge, skill and confidence related to e-commerce usage are even stronger 2% estimate of population are English literate in Nepal ½ of adult population is illiterate Highly undeveloped and unreliable postal systems Problems of postal system in Nepal include inefficient security, unreliability and theft.

17’s Business Models
Janelle Boucher

18’s Business Models
Combination of the following: An internet portal A bundle of services A manufacturer’s agent A virtual mall

19 as an Internet Portal
Two most popular models for a portal: Free model Offers some free goods and services to create high traffic Advertising opportunity Content sponsorship model Uses content, links and services to attract visitors to generate advertising revenue used the content sponsorship model.

20 as a Bundle of Services
Provides multiple services as a package deal for customer Facilitates online ordering and payment of goods Delivers gifts to the customer Confirms delivery by taking a digital photo of the gift being delivered to the customer

21 as a Manufacturers’ Agent
According to Lam and Harrison-Walker, a manufacturers’ agent represents “more than one seller, and sometimes an entire industry, to sell specific types of products” In 2004, featured over 7,000 products representing diverse industries such as chocolates, ceremonial goats, birthday cakes, silk saris and cheese Facilitates vendors such as the goat herders who do not have their own websites by providing information on their products on the website Revenue comes from user fees, advertising, sponsor commissions

22 as a Virtual Mall
Hosts multiple online merchants on its website

23 as a Virtual Mall

24’s Strategies to Overcome E-commerce Barriers in Nepal
Targeted the population that experienced relatively fewer economic barriers – the expatriates Outsourced payment/transaction processing functions to the US as an alternative to Nepal’s poor technological and financial structure, and also to avoid the legal barriers Provided delivery service and delivery confirmation photos Initially Kathmandu had no street addresses making it difficult to find recipients’ homes Through a partnership with the Municipality of Kathmandu and their mapping system, they created delivery zones around well-known landmarks Took digital pictures of the delivery of the gift to the recipient which would be sent to the buyer as delivery confirmation, and a thank you note for using the service

25 What can small developing countries learn from this Nepal case study?
In a developing country, a company’s success depends on its ability to simultaneously deploy and manage multiple e-business models’s customers would never have bought products listed on the company’s website if it had just acted as a web portal

26 What can small developing countries learn from this Nepal case study?
In relatively small markets of developing countries, companies can add value by bundling together various products and services

27 What can small developing countries learn from this Nepal case study?
To deliver full potential, developing country-focused Internet business models are required to outsource some functions to the industrialized world Impossible to break all e-commerce barriers Outsourcing can enhance value delivery

28 Conclusion and Recommendations
The developing world still has much to learn about e-commerce. These countries must realize that: Not all business models targeting the developing world are equally successful. Developing countries still need to deeply research the factors that differentiate successful/unsuccessful e-commerce business models.’s model “worked” in Nepal, but may not be successful in other scenarios

29 Conclusion and Recommendations
Countries in the developing world must: Determine the optimum size of the e-commerce market for companies in their country to profitable exploit. Determine the types of companies that are likely to force their business partners to adopt ICTs (Information and Communications Technology). Determine the optimal level of involvement for government and private organizations in combating various e-commerce barriers.


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