E-Commerce in Bangladesh: Prospect and Challenges

“Bangladesh is a fertile ground for e-commerce to take root and benefit companies
and consumers alike,”
------Shamika N. Sirimanne, UNCTAD Director of Technology and Logistics.
In this era of information and communication technology, e-Commerce has become a
slogan of businesses. It is the process of conducting all forms of business through computer
network and digital communication. Ecommerce operates in different types of market
segments and can be conducted over computers, tablets, smartphones, and other smart
devices. Almost anything can be purchased through ecommerce today; for this reason,
ecommerce is often highly competitive.
E-Commerce:
Ecommerce, also known as electronic commerce or internet commerce, refers to the buying
and selling of goods or services using the internet, and the transfer of money and data to
execute these transactions. Ecommerce is often used to refer to the sale of physical products
online, but it can also describe any kind of commercial transaction that is facilitated
through the internet. Whereas e-business refers to all aspects of operating an online
business, ecommerce refers specifically to the transaction of goods and services.
“E-commerce and mobile commerce have dramatically changed the way brands
reach customers, making it faster and easier for consumers to make purchases on the
fly while avoiding the hassles of going to the store.”
-Hil Davis, Co- founder of the online men’s retailer
History of E-commerce:
For beginning just, a short while ago, the history of e-commerce is dramatic. In 1969,
CompuServe was the first major e-commerce company to be formed in the United States.
Although it seems distant now, computer time-sharing services grew from email providers
to facilitating tele-shopping in the 1970s. Finally, e-commerce became possible in 1991
when the Internet was opened to commercial use. E-commerce refers to the paperless
exchange of business information using the following ways −
Electronic Data Interchange (EDI)
Electronic Mail (e-mail)
Electronic Bulletin Boards
Electronic Fund Transfer (EFT)
And used of other technologies.
The use of advanced technologies paved the way to spread e-commerce full-fledged.
E-commerce category:
At present situation of digitalization, electronic commerce can be divided into two
categories. The first category is business based on types of goods sold. The second category
is based on the nature of the participant (business-to-business, business-to-consumer,
consumer-to-consumer, and consumer-to-business.). Currently, three types of E-commerce
are popular in Bangladesh. They are- business-to-business (B2B), business-to-consumer
(B2C) and consumer-to- consumer (C2C).
1.Business to Consumer(B2C):
B2C ecommerce companies sell directly to the product end-user. Instead of distributing
goods to an intermediary, a B2C company performs transactions with the consumer that
will ultimately use the good. This type of business model may be used to sell products (i.e.
your local sporting goods store's website) or services (i.e. a lawncare mobile app to reserve
landscaping services). This is the most common business model and is likely the concept
most people think about when they hear ecommerce.
2.Business to Business(B2B):
B2B transactions are often entail larger quantities, greater specifications, and longer lead
times.
3.Business to Government(B2G):
B2G ecommerce companies must often meet government requests for proposal
requirements, solicit bids for projects, and meet very specific product or service criteria.
In addition, there may be joint government endeavors to solicit a single contract through a
government-wide acquisition contract.
4.Consumer to Consumer(C2C):
C2C ecommerce platforms empower consumers to both buy and sell without the need of
companies.
5.Consumer to Business(C2B):
Modern platforms have allowed consumers to more easily engage with companies and
offer their services, especially related to short-term contracts, gigs, or freelance
opportunities.
6.Consumer to Government(C2G):
Less of a traditional ecommerce relationship, consumers can interact with administrations,
agencies, or governments through C2G partnerships. These partnerships are often not in
the exchange of service but rather the transaction of obligation.
The present scenario of E-commerce in Bangladesh:
In 1999, e-commerce was started in Bangladesh through a website named Munshiji.com.
Even though Muncji.com was shut down, the journey of e-commerce in Bangladesh did
not stop. The e-commerce sector in Bangladesh has been growing rapidly for the last 2-3
years with more and more consumers buying goods through online.
➢ Bangladesh's e-commerce market currently stands at USD 1.6 billion and will
double to USD 3 billion by 2023.
➢ About 50,000 entrepreneurs are associated with e-commerce businesses through
Facebook pages, out of which 20,000 Facebook pages are active.
➢ Currently around 7,500 companies are involved in e-commerce business
➢ According to e-cab data, about 75 percent of online buyers are between the ages of
18-34. Only 1 percent of the total population shop online.
➢ Customers prefer cash on delivery as payment system, 90 percent of products are
sold on cash on delivery.
➢ Here is a region-wise statistics of e-commerce buyers in Bangladesh

Area Percent
Dhaka 35%
Chattogram 30%
Gajipur 15%
Others 20%
Source: E-Cab
➢ In 2019, Bangladesh was ranked 103rd in global e-commerce index by UNCTAD,
which moved to 115th position in 2020 due to the pandemic. Global e-commerce
index by UNCTAD for the last 6 years :

Year Position
2016 117
2017 103
2018 88
2019 103
2020 115

➢ Different companies are providing their online shopping service in different

categories: online marketplace (e.g. E-valy, Daraz, AjkerDeal, Bikeny), online
grocery (e.g. Chaldal, Khaas Food, Meenaclick), lifestyle shopping (e.g. Bagdoom,
Othoba), online electronic market (e.g. Pickaboo, Rokomari), online ticketing (e.g.
Shohoz, Sharetrip) and many more.
Prospects of E-commerce in Bangladesh
In 2013-2014 time frame, the e-commerce world in Bangladesh began. Over the years,
banking, logistics communications, and payment methods have increasingly improved and
opportunities have been created by the e-business market. Even though e-commerce is still
at a very early stage in Bangladesh, the industry seems to be very emerging in the next few
days, with more than 165 million inhabitants and 113 million internet subscribers till
January 2021. Some factors have driven the growth of the e-commerce industry in the last
4-5 years. Mobile internet adoption and successful mobile internet use have been
noteworthy. Besides, the e-commerce sector has been widened considerably because of the
accessibility of lower middle class to technology to some extent. Bangladesh's young and
vibrant population is rapidly popularizing e-commerce websites. Roughly 50% people are
potential users of e-commerce. The pandemic of COVID-19 has locked the whole world
indoors, but that doesn't mean that demand has gone out of the market. The situation has
been adopted by consumers and online shoppers and online sales are known to have risen
by 70 to 80% compared to the general time.
In terms of e-commerce revenues, Bangladesh is ranked 47th in the global ranking,
according to a study by the German online portal Statista, Statista's latest figures
demonstrate that the Bangladesh e-commerce industry stood at $1,649 million in 2019, and
will touch to $3,077 million in 2023, The economic variables and growth rates are affected
by e-commerce. E-commerce transactions increase the growth of GDP and, thus, help
Bangladesh to achieve the Sustainable Development Goals (SDGs). It leads to higher
incomes, higher living standards for individuals, market expansion, increased sales, and
exports, thus rising production and growth rates, Bangladesh's e-commerce industry
generates tremendous growth in opportunities for jobs. At present, this sector comprises
40,000 individuals and more than 30,000 SMEs (small and medium enterprises). Along
with hundreds of entrepreneurial organizations, around four lakh female entrepreneurs also
sell goods on different online platforms.
Advantage and Disadvantage of E-commerce in Bangladesh:
Advantages:
Some primary advantages of e-Commerce are given bellow:
➢ Greater pace in the buying/selling process, as well as convenience of finding desired
products
➢ Transaction and communication can be done 24/7
➢ Unlimited customer reach with no theoretical geographic limitations
➢ Low operational transactional costs and better quality of services
➢ Almost zero requirement of physical infrastructure for company set-up
➢ Easy to start and manage a business
➢ Customers can make payment using their chosen payment method, from anywhere,
at anytime
Disadvantages:
There are some basic infrastructure problems those exist in e-commerce sector of our
country. Such as-
➢ Due to financial constraint, most of our people are poor. So, they can't bear the cost
of Internet.
➢ Many people are not conscious about e-commerce.
➢ Purchasing products through online is, quite often, costly. So, people are not
interested.
➢ We have a few numbers of e-commerce sites. They can't provide sufficient services.
➢ We don't have adequate regulations regarding e-commerce business.
Challenges of E-commerce in Bangladesh
While the e-commerce industry has expanded over the years, still many challenges remain.
Challenging factors of e-Commerce includes technological factors, socio economic
factors, political factors, etc. Some of the main challenges are mentioned below:
 ➢ Appropriate national policies supporting e-commerce;
➢ Poorly developed socio-economic and physical infrastructure
➢ Lack of trust between buyers and sellers.
➢ Lack of expertise in running an E-Commerce venture
➢ Low number of customers who are ready to use debit/credit cards for payments
➢ High rate of card processing fees lack of trusting e-commerce environment;
➢ Public's lack of habit and fear of online shopping;
➢ Cross boundary regulations imposed by Government
➢ The reluctance of banks to promote in-store and e-Commerce transactions
➢ Inadequacy of skilled IT professionals
➢ Lack of adequate knowledge among government, judicial and law enforcing
agencies’ officials regarding e-Commerce management and development
➢ Insufficient e-Commerce delivery channels and poor logistical support
➢ Poor standard of transportation and communication facility
➢ lack of trusting e-commerce environment;
➢ Large variation of Tele-density
➢ Unavailability of Network connectivity all over the country, especially in
rural/remote areas
➢ Low bandwidth and unreliable internet connection
➢ High price of Internet data offered by telecom operators
➢ Poor website and mobile app which are not capable to take a huge amount of traffic
➢ No incentive package to develop the e-commerce sector and Lack of adequate
publicity etc.
Future of E-commerce in Bangladesh:
Ecommerce is new concept for Bangladesh. The future of ecommerce in Bangladesh is
bright. TV and other traditional media advertising are considered an intrusion. Ecommerce
puts the control of when and how we will buy products and services into the hands of the
buyer. In Bangladesh, most of the people think commerce means only transactions, but in
real sense it covers the whole area of business from production to end-users. And today’s
most of the companies use e-commerce with their developed IT systems.

Recommendations
“In E-commerce, your prices have to be better because the consumer has to take a
leap of faith in your product”

-Ashton Kutcher, Founder of Katalyst Media

The followings are some of the recommendations that will ensure the smooth working just
as the widespread use of e-commerce in Bangladesh.

• Bangladeshi e-commerce sites ought to provide greater layers of security for their
payment procedures.
 • E-commerce businesses require rapid internet, which is absent in the rustic areas.
The government should take the internet as a fundamental element of business,
especially e-commerce business. It must ensure minimal effort, rapid internet for
rustic people to transform its vision of Digital Bangladesh into reality.
• Bangladeshi e-commerce sites should concentrate more on timely deliveries.
• Bangladeshi e-commerce sites should plan to improve customer service and address
areas of concern to reach out to the piece of the populace which isn’t selecting e-
commerce yet.
• To penetrate into the worldwide market, the government needs to reform its
regulations regarding online exchanges and upgrade the entire system.
• The Bangladesh Bank ought to formulate policies to ease the credit process for e-
commerce entrepreneurs.
• It is essential for Bangladesh to update the ICT law relating to e-commerce. It ought
to be done concentrating on international practices.

Conclusion:
“E-commerce is not an industry; e-commerce is a tactic”

-Tobias Lutke, CEO of Shopify

E-commerce is now a Global phenomenon. It is an accepted technology and changed the
Business world. It is currently one of the most significant aspects of the internet to emerge.
Though in Bangladesh, many companies use e-commerce, but they need international
support to develop the future of e-commerce. So if the e-commerce expanding in such way,
then very soon Bangladesh will become a developed country in the world.
Sources:
1.The daily star
2.UNCTAD
3.E-Cab
4.Current Affairs
5.Dainik Somokal