E-commerce in Bangladesh: Where are we headed?

Sunera Saba khan | Published:  January 10, 2020 20:33:11 | Updated:  January 15, 2020 20:24:20
https://thefinancialexpress.com.bd/views/views/e-commerce-in-bangladesh-where-are-we-headed-1578666791

E-commerce involves buying and selling of products and services by businesses and consumers through an electronic
medium. Broadly, e-commerce is classified into four categories: business to business or B2B (Cisco), business to
consumer or B2C (Amazon), consumer to consumer or C2C (eBay) and Business-to-Government (B2G). Business-to-
business e-commerce involves agreements between the businesses and businesses. Distribution management,
inventory management, channel management, supplier management and payment management are some of the
areas in which B2B applications are widely used. In Bangladesh, bgmea.com.bd, bizbangladesh.com are examples of
B2B platforms. B2C commerce involves e-commerce between businesses and the consumers. This form of e-
commerce involves the purchase of books or any form of consumer goods. It also includes purchase of software, e-
books, games, songs as well as e-banking. ajkerdeal.com, bdbazar.com, daraz.com, bajna.com are some examples of
B2C. Advantages of B2C platforms to companies are reduced operating costs, bigger outreach, globalisation,
customer convenience and knowledge management. Consumer-to-consumer e-commerce involves transactions
between individual consumers. For instance, online auction, peer-to-peer system for money or file exchange can be
classified as forms of C2C e-commerce. In Bangladesh bikroy.com, clickbd.com are examples of C2C platforms. B2G is
usually used for licensing process, public purchasing and other government operations. B2G e-commerce is rather
insignificant when compared to the other three forms. However, B2G can be one of the driving forces for running
the public sector known as e-governance.
A wide range of technologies is used in e-commerce that includes electronic data interchange (EDI), electronic mail
(e-mail), electronic funds transfer (EFT). In case of Electronic Data Interchange (EDI) there needs to be an agreement
between trading partners. EDI is a standard method for exchanging business data. E-mail and fax are also forms of
EDI. In Bangladesh small, medium and big enterprises have taken up e-business platforms. When compared to
developed countries, developing countries have a higher potential for improving the business structure and raise
productivity by using e-commerce as a medium. M-Commerce (Mobile Commerce) and F-Commerce (Facebook
Commerce) are very popular in today's e-business world. Over the years, the number of online transactions has been
on the rise. According to BTRC officials the number of internet subscribers in Bangladesh had crossed 80 million in
2017. At present there are approximately 2,000 e-commerce sites and 50,000 Facebook-based outlets delivering
almost 30,000 products a day. Currently, 80 per cent of the online sales are taking place in Dhaka, Chattogram and
Gazipur.
Online transactions in Bangladesh have been increasing over the years. Improvements in standard of living coupled
with advancement in livelihood, shopping behaviour has experienced a significant shift. In Bangladesh the e-
commerce industry set sail in the late 90s but was unable to expand immediately. Gradually, over the years, banking,
logistics communications and payment methods have improved creating opportunities for the e-business sector to
develop. A number of sectors including the banking sector are now using the internet payment system. As
consumers can avail credit, debit card services and digital wallet, the cash-on-delivery system is now more
accessible.
 The local e-commerce industry in Bangladesh began evolving as a proper ecosystem from the year 2012. This was
facilitated by expanded internet connections along with the gradual legalisation and approval of online payment by
the Bangladesh Bank. Initially, several banks did not support the online payment gateway system.
Over the last few years, internet connections have improved and the number of people who have access to the web
has increased thus making way for e-commerce business to flourish. In 2016, $50 million was invested in the e-
commerce sector in Bangladesh. Out of which $10 million was from Foreign Direct Investment. In 2017, the B2C e-
commerce business market measure equalled USD 110-115 million (around BDT 9.0 billion) compared to BDT
1335.71 billion made by the retail market. The outreach of the e-commerce business market exceeded Tk 17.0 billion
in 2017 from Tk 4.0 billion in 2016, as revealed from the findings by e-Commerce Association of Bangladesh (e-CAB).
The market measure for e-commerce is expected to equal Tk 70 billion by 2021.
In Bangladesh retail e-commerce is growing at 72 per cent a month. At present, more than 35,000 individuals and
above 25,000 small and medium enterprises (SMEs) are part of this sector. Till 2018, the number of e-commerce
business sites and e-commerce pages equalled 2,500 and 150,000 respectively. It was estimated that the number of
deliveries per day added up to about 15,000 to 20,000 at the retail level.
Before 2013, the government had placed restrictions on the purchase and sale of goods and online services through
international credit cards (export.gov, 2017). In the first three quarters of 2016, the e-commerce industry achieved
67 per cent growth whereas, the country's e-commerce transaction reached BDT 3.59 (Xinhua, 2016).
According to Bangladesh telecommunication regulatory commission (BTRC) in 2016, internet penetration rate was
recorded at 13.2 per cent, and the number of internet users was 66.6 million. In 2017, the number of internet users
reached 80.6 million along with an increase in the penetration rate to 48.4 per cent. In 2018 the number of internet
users further increased to 91.3 million and the penetration rate was 52.77 per cent. Currently the number of internet
subscribers has reached 96.199 Million (June, 2019). According to market analysts Bangladesh's e-commerce
business market will reach USD 20 billion by 2020. According to June 2019 statistics of BRTC, 90.4 million users
subscribe to the mobile internet, 0.06 million subscribe to WiMAX, and 5.73 million to ISP + PSTN connections.
Although the e-commerce sector has grown over the years, there remain a number of obstacles. Some of the key
challenges are net neutrality, high-speed net, parcel delivery logistics and assurance of quality products. Foreign
players also pose competition and risk to local start-ups. The sector suffers from lack of logistics and sound
transportation system that restrict e-commerce trading to expand. Transportation system affects the delivery of
products. Challenges also persist in the logistics sector. A large chunk of almost 65 per cent of the operations of the
e-commerce companies takes place in the capital and Chattogram. The e-commerce companies fail to reach all parts
of the country, including of course the rural areas, due to poor infrastructure and inability to access remote areas for
lack of adequate transport facilities.
In Bangladesh, in majority of the cases payment is made upon delivery. 80 per cent of the payments are done
through cash-on-delivery method, whereas only 15-20 per cent are done through mobile payment gateways. Cash-
on-delivery leads to the risk of tax evasion and also results in lack of transparency in transactions. This is largely due
to a lack of trust and the absence of a reliable and safe payment system.  In addition, the number of credit and debit
card users in the country is low, as a result many customers are unable to make online payments.  The e-wallet
system is expected to overcome this problem to some extent.  bKash has partnered with the e-commerce ventures
in the country and in addition, if banks also follow suit, it will be beneficial.
The e-commerce industry in Bangladesh is an emerging industry. This sector is steadily growing and attaining
competitiveness. The local e-commerce companies which have been in the market since inception of the e-
commerce industry should be given protection. Simultaneously, foreign investments are required in this sector. The
payment procedures offered by e-commerce sites need to be made more secure. Low-cost, high-speed internet
needs to be ensured in the rural areas. The e-commerce industry needs to put more emphasis on delivery logistics
and customer service. Immediate action to ensuring consumers' rights needs to be taken since a regulatory authority
is not present to prevent consumers from being cheated and given low quality or date-expired products.
Despite the obstacles, the sector has a lot of potential and in the next few years, contribution of e-commerce to the
country's GDP is likely to be significant. The government should be more forthcoming in supporting this sector as
part of its Digital Bangladesh initiative.
Sunera Saba Khan, Research Economist, SANEM.

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E-commerce Business Scenario in Bangladesh from 2006 to
2018
https://brainstation-23.com/e-commerce-business-scenario-in-bangladesh-2006-to-2018/
E-commerce business is booming in Bangladesh recently. With better access, inclusion and a consistently developing
web population, the prospect for e-Commerce is splendidly growing for the last couple of years.
Presently utilization of technology in every single part has been exceptionally common. In this time of globalization,
we can barely discover any part working without utilizing technology. A new horizon has been opened up for
business, to be specific electronic commerce (E-commerce) by none other than one and only internet. E-commerce
business involves the utilization of the Internet in the marketing, identification, payment, and delivery of product
and services all are finished by e-commerce utilizing the web. In Bangladesh a population of 165 million with 33%
mobile internet user, the E-commerce market is by all means considerably potential in up and coming days. Close by,
e-commerce is being largely aligned to the Mobile Financial Service (MFS) as it’s mode of payment, which
complements each other and demonstrates incredible guarantee to develop.
Current E-commerce Industry Scenario in Bangladesh
The buyers and sellers both have much power nowadays as a result of the massive utilization of ground-breaking
technologies just as the internet. A large portion of the business at present is working under the e-commerce criteria
over digital networks. The web connects the general population with companies. The E-commerce market in
Bangladesh, made a quantum jump in 2017; developing at an incredible 70% from 2016. In 2017, the B2C E-
commerce business market measure adds up to USD 110-115 million (around BDT 900 crore) against the 133,571
crores total retail market. On the contrary, the measure of the Indian mega e-commerce business market remains at
USD 17 billion. As indicated by the specialists, Bangladesh E-commerce business is at a phase where the Indian
market was most likely 5-7 years prior. The extent of the E-commerce business market crossed the Tk 17.0 billion-
stamp in 2017 from Tk 4.0 billion in 2016, as indicated by the information accessible with the e-Commerce
Association of Bangladesh (e-CAB). The market measure is relied upon to reach Tk 70 billion (Tk 7,000 crore) by
2021.
E-commerce business in the Asia-Pacific overall is blasting with 71 percent of APAC buyers making an online buy.
Bangladesh is a noteworthy player in this region. Starting in 2016, a sum of $50 million was invested in this sector. Of
the total, $10 million came as Foreign Direct Investment. Be that as it may, the sum would be a lot higher as Chinese
e-commerce giant Alibaba had recently acquired leading online marketplace Daraz. The Retail E-commerce is
developing at 72 percent a month in Bangladesh. Currently, 35,000 individuals and 25,000 little and medium
enterprises (SMEs) are included with this division. The quantities of e-commerce business sites and E-commerce
pages are 2,500 and 150,000 respectively. The quantity of delivery is assessed at 15,000 to 20,000 at the retail level
every day. Of them, the market share of Daraz is estimated to be 40 percent.

E-commerce platforms of Bangladesh

Government Playing a Vital Role to Encourage E-commerce Business
International Finance Corporation, the private division loaning and investment arm of the World Bank, has been
following Bangladesh’s entrepreneurial ecosystem the past few years. In its shortlisted 43 new companies which
they are effectively observing, Chaldal tops the rundown as a potential investee organization which happens to be an
E-commerce platform. Not only foreign investors but our government also playing a vital role to boom the e-
commerce sector of Bangladesh. To support the home-developed investors, the government rolled out the long-
awaited National Digital Commerce Policy. The new policy does not enable outside foreign investors to hold a stake
of over 49% in any E-commerce business in Bangladesh. This approach was taken to protect and boost the local
investors. The policy also mandated that the e-commerce entities clearly highlight the details of the products they
sell online, which include the product’s quality along with its return policy- in a bid to prevent fraudulence and
protect customer rights. E-commerce companies will have to also sign deals with the products’ suppliers, delivery
channels and payment gateways to ensure that customers’ rights are protected properly- an attempt to make the
supply chain transparent. The draft of the e-commerce policy is now ready. It will be sent to the cabinet for its final
approval.
Bangladesh leading Towards a Bright Future in E-commerce Sector
As indicated by market analysts, Bangladesh’s E-commerce business market will flood to USD 20 billion by 2020, by
when, as per Goldman Sachs, India’s online retail market is expected to reach USD 69 billion. Worldwide financial
investors who are heading to India are starting to make a stopover at Bangladesh. The business potentials in
Bangladesh prompted Delhi-based digital marketing company MoMagic Technologies to start e-commerce platform
Pickaboo, which is timing month to month income of USD 600,000. Big investors like IFC and Alibaba has just got
engaged with the Bangladesh E-commerce environment and a lot more big investors like them are probably going to
put resources into this e-commerce space understanding its potential.
E-commerce business has changed numerous conventional habits of the transaction and got a progressive change to
the economy. Bangladeshi people are currently upgrading their way of life utilizing the internet. Suppliers can now
get the orders from consumers from the internet and also can save much of their time by doing online trade. A
significant number of commercial activities of large corporations as well as supermarkets are using the website to
receive orders from consumers and sending particular goods to them. Last few years statistics says that this sector
has good growth rate. In order to make it sustainable both government and entrepreneurs need to be more
conscious and take proper steps. Usage of business intelligence is also helping the E-commerce businesses to dive
deep in to the needs to customers.  If E-commerce companies can ensure security and provide the best service to
their customer the industry will grow immensely fast.

https://economictimes.indiatimes.com/small-biz/startups/features/global-investors-heading-to-india-are-beginning-
to-make-a-stopover-at-bangladesh/articleshow/61678920.cms
Daraz Turns Five, Daraz’s Unique Opportunity And Challenge
Ruhul Kader September 8, 2019

https://futurestartup.com/2019/09/08/daraz-turns-five-darazs-unique-opportunity-and-challenge/

Alibaba owned ecommerce giant Daraz Bangladesh has turned five this month. Daraz was founded in 2012 by Rocket
Internet. The company started its operation in Bangladesh as Daraz Bangladesh in 2014. Currently, Daraz has
operations in Pakistan, Myanmar, Bangladesh, Sri Lanka, and Nepal. Last year, Chinese tech giant Alibaba bought
Daraz in an undisclosed deal.
Since the acquisition, Daraz has expanded its growth push in Bangladesh. The company says it currently has hubs in
33 districts in the country. It has built the largest sorting center of the country in Dhaka and collection points across
the country.
The company claims to have over 5 million products and 15,000 sellers on its platform.
Bottom of Form
Over the past five years, Daraz Bangladesh went through many changes. When it was first started operations in
Bangladesh in 2014, the company’s primary focus was on big brand and authentic products. First few years of Daraz
was relatively low key and slow and steady in nature.
In 2017, Daraz merged with another Rocket ecommerce entity Kaymu and expanded its platform to non-brand small
sellers. Daraz Bangladesh has since expanded and evolved both in terms of coverage of products and types of
services.
Over the past two years, the company has pushed growth through a combination of the expansion of its coverage
and a torrent of relentless offers, vouchers, and discounts. As a result, it has been able to achieve growth numbers
that are greater than almost all other ecommerce players in the market.
While the continuous push of offers and discounts helped Daraz to grow its numbers, the company suffers from a
lack of reputation in the market. Complaints against product and service quality are rampant.
To address these challenges, Daraz has introduced DarazMall, a category on its marketplace for which the company
provides product quality, service guarantee, faster delivery, and better return policy. It has also been investing in
improving its overall service quality through various measures. The company introduced its logistics operation Daraz
Express in 2018 in order to bring greater control over its logistics and customer experience. Daraz plans to move to
100% in-house logistics and has already started working towards that goal.
Daraz sees an opportunity in Bangladesh. Rightly so. Ecommerce is still in its early days in this South Asian country.
There is not much competition in the space. It is not that there are not enough ecommerce companies. There is a
long list of ecommerce players in Dhaka but a lack of proper venture capital ecosystem makes it harder for local
players to raise investment and compete against deep-pocket competitors such as Daraz which is now owned by
Alibaba. Alibaba has also bought a minority stake at local MFS giant bKash in 2018. Many digital entrepreneurs
complain about a lack of clear policy guidelines in the space and fear a competitive disadvantage in the long run.
They are pushing technology policies favorable to local initiatives, at least for time being when local players gain
enough muscle. There is the other camp of entrepreneurs who think that when international players come into the
country they bring in knowledge and expertise. They are in favor of progressive policies and in favor of international
players coming into Dhaka. At the same time, they propose policies that would help create a level playing field for all
players and limit the undue advantage of international players.
However, it does not seem like customers or the regulators care about these issues, not at least in the short-run.
Over the past years, Daraz has managed to build a user base and it continues to grow. Today, the company is the
most dominant player in Dahak’s ecommerce space.
That being said, competition is likely to intensify in the coming days as companies like Ajkerdeal, Chaldal, Deligram,
Evaly raise more money and invest more for market dominance. Since the ecommerce adoption remains relatively
low across the country, the room for multiple players remains open. Any regulatory challenge is unlikely for Daraz, at
least in the short-run. The real challenge will remain more or less the same: ensuring superior customer experience
as well as rapidly growing the ecommerce adoption across the country.
The deep pocket plus years of insight into building ecommerce across markets of Alibaba puts Daraz in a different
league in Dhaka’s ecommerce space. However, the advantage comes with its limitations as well. The more
progressive policy push in the digital space that has happened in markets like India to ensure a level playing field for
everyone and limit the undue advantage of multinational players could prove a challenge for Daraz in the long-run.
The competition in the ecommerce space is also slowly growing. Unique consumer behavior of Bangladeshi shoppers
remain a puzzle that ecommerce players are yet to solve. However, for now, Daraz is in a unique position and is likely
to continue to dominate Dhaka’s ecommerce space.