Bibek Chaudhary is the third generation of his family to be involved in the handicraft business in Kathmandu. His Ruby Handicraft in Thamel has been in business for 40 years, with most of its exports traditionally shipped through cargo services.

Chaudhary knows that displaying his products on international e-commerce platforms could help expand his business. He sees strong demand for Nepali handicrafts in international markets.

But for him, there are many constraints.

“I am sure I will get global buyers in good numbers if I put my products on e-commerce platforms like Alibaba,” he said. He is, however, wary of cancellations on online platforms, a problem he has faced in the past. “The price changes every day, and so does the demand for quality and quantity.”

He is more comfortable selling goods after orders have been confirmed, following the traditional way of exporting.

Chaudhary is not an isolated case. Many Nepali exporters have been unable to integrate themselves into the global digital business regime.

A study by the South Asia Watch on Trade, Economics and Environment (SAWTEE) and the International Labour Organisation on Nepal’s garment sector shows that adopting e-commerce could increase exports of high-quality readymade garments by 25 to 35 percent.

The think tank said exports of other potential products could also grow if they were integrated into international e-commerce platforms.

According to the 2025 E-commerce Trends Report by DHL, a multinational logistics company, clothing is the most-purchased product category globally, followed by electronics, footwear, cosmetics and beauty products, and home furnishings.

Nepal exported garments worth Rs9.30 billion in the last fiscal year, which ended in mid-July.

“The export potential of garments shows that there is substantial potential for selling goods through e-commerce platforms,” said Kshitiz Dahal, senior research officer at SAWTEE.

Globally, buyers are shifting towards e-commerce from traditional channels.

“We might miss the trend if we do not make reforms and participate in digital trade, which will also help address the impact of LDC graduation,” Dahal said.

With Nepal preparing to graduate from the least developed country category, the country will eventually lose the trade preferences it has been enjoying.

“So, it has become important to diversify export markets and buyers,” Dahal said. “For this, e-commerce is a key platform, which offers a relatively low-cost avenue for small and medium-sized enterprises to reach new markets beyond traditional trade channels.”

Despite the rapid growth of online business in Nepal, exporters have not been able to fully seize the opportunity because of various constraints.

Trade experts said there is a need for improved facilitation of e-commerce exports, simplified cross-border digital payments, greater market diversification and better access to digital platforms.

A SAWTEE report shows that only one out of 25 firms in Nepal uses e-commerce, with exporters relying primarily on informal, small-volume shipments because of seemingly insurmountable operational barriers.

These problems include a lack of onboarding on established marketplaces such as Temu, Alibaba and Zalando, among others, as well as limited access to international e-payment systems for small-volume e-commerce transactions.

The firms surveyed for the research said e-commerce lowers operational costs while broadening access to global markets. They also expected significant growth in export volumes after adopting digital sales channels. Despite this potential, actual e-commerce adoption among local export firms remains extremely low.

People are increasingly busy with work, limiting the time they have to go shopping. This has increased the trend of ordering food, goods and even services online.

This makes it increasingly important for Nepal to prepare its exporters to make their products easily available for online delivery to global consumers, trade experts said.

“If we look at our domestic market, online orders for goods have been rapidly increasing. So, if we do not make our goods available through digital trade, we will miss a huge opportunity, affecting our trade,” said Rabi Sainju, a trade expert. “We should be able to make our products available on Amazon and other platforms to make our products reach global markets.”

To facilitate exports through international e-commerce platforms, Nepal needs to amend various rules and regulations, he said.

Amendments to the Postal Act, 1963, Customs Act, 2007, and Export and Import (Control) Act, 1957, among others, have become important to ensure that the legal framework recognises digital trade, Sainju said.

National rules, regulations and trade policies must be formulated in an integrated manner—from production and supply chains to the import of goods and their delivery to consumers—taking into account modern digital realities rather than being developed in isolation, he said.

There are obstacles not only in regulations but also in customs and logistics, digital literacy and market access.

There is limited access to international payment gateways for exporters who want to sell their products through their own websites, said Dahal, the researcher.

International buyers often prefer to make payments through PayPal, but Nepal does not allow payments through such international payment systems, he said. While exporters can accept payments through debit or credit cards, banking charges are high, making their products more expensive.

Integrating with cross-border e-commerce platforms makes payment easier because such platforms already have payment gateways integrated into their systems, he said.

The DHL report said that, in terms of payment methods, 88 percent of consumers prefer credit or debit cards. Buyers using digital wallets accounted for 72 percent while those paying cash on delivery figured 54 percent.

Krishna Dutta Bhattarai, chief of retail and other deposits at NMB Bank, said in a recent interaction that both buyers and sellers require greater awareness of cross-border trade transactions.

He called on the government to ease regulatory hurdles, including time-consuming reporting requirements related to product returns and refunds.

Dedicated payment-processing modalities for e-commerce remain lacking, he said.

Citing international examples such as the Philippines, Bhattarai said relaxing financial controls while regulating marketplaces through strict vendor assurances could boost trade confidence, minimise product returns and significantly expand national exports.

International e-commerce platforms do not make advance payments until goods are sold, said Dahal. Nepal, however, cannot export goods to third countries without an advance payment certificate.

“So, the advance payment system needs to be reformed,” he said.

De minimis provisions, which exempt shipments below a specific threshold from destination tariffs, could serve as a critical buffer for business-to-consumer exports, helping safeguard Nepali products as the country prepares for LDC graduation, he said.

A logistics expert said Nepal needs to build an entire mechanism for logistics if it wants to embrace digital trade.

“I do not see small goods being price-competitive unless they are of high value and have good buyers,” said Rajan Sharma, a trade and logistics expert. “The government should develop a mechanism for the flow of goods and money for internationally ordered goods. The flow of information and return-logistics provisions are important parts of selling goods through international e-commerce.”

According to SAWTEE, small enterprises dominate Nepal’s export sector, and a targeted capacity-building programme to improve digital literacy is important so businesses can navigate algorithm-based platforms and ensure their products secure visibility on the crucial first few pages of global marketplaces.

The absence of third-party logistical support in Nepal to handle product returns and refunds is a major gap, driven partly by low initial export volumes.

To build international trust, researchers said Nepal needs a standardised legal framework featuring quality-assurance controls, anti-counterfeiting market regulations and a collective national branding initiative, such as a certified “Made in Nepal” trademark, alongside individual manufacturer branding to prevent the export of substandard goods.

According to the Global Trade Update, a publication of the United Nations Conference on Trade and Development, services are reshaping global trade, but least developed countries lag in digital exports.

Many developing countries, particularly LDCs, remain only marginally integrated into the rapidly growing services trade, especially in digitally deliverable services.

LDCs have not kept pace. Their services exports grew by only 3 percent a year, while their share of global services exports fell to 0.6 percent in 2025.

Digitally deliverable services account for just 16 percent of LDC services exports, compared with 61 percent in developed economies.

Inadequate connectivity, costly international payments and skills shortages constrain participation in digital services trade. Affordability and connectivity gaps remain significant between developed and developing economies, the report said.

Half of the countries with the highest remittance costs are LDCs.

Artificial intelligence could also intensify existing inequalities because computing capacity, data, finance and expertise remain concentrated in a small number of economies and firms. Less than one-third of developing countries have adopted national AI strategies.

Of the preferential trade agreements signed between 2000 and 2025, 55 percent include e-commerce or digital trade provisions. Since 2020, 90 percent of developed countries, 62 percent of developing countries and 66 percent of LDCs have participated in agreements containing such provisions.