ON A very optimistic estimate, the size of Bangladesh’s e-commerce sector is projected to be around $3 billion by 2023. Bangladesh is also set to graduate from a least developed country to one of middle income around the same time. There has also been strong historical evidence of consumers spending more money on fashion, food, and consumables when they have higher expendable income. So, there is potential for growth in this sector, and the growth of mobile financial services and stronger internet coverage in suburban regions have been credited to the growth of e-commerce in the past years. Owing to the Covid pandemic, e-commerce saw a natural boost globally as nationwide or regional lockdowns have been in place. Companies have been innovative and acquired extra market shares by giving consumers what they wanted while consumers have been able to order consumables, conventional and non-conventional goods and services from the safety and comfort of their homes. The evidence in Bangladesh lies with the online sale of cattle during Eid-ul-Adha, for example, as sales have been significantly higher than last year.

However, if recent hiccups in the industry taught us anything, it is that all is not well and while there has been significant growth in this sector in the past decade owing to infrastructural and technological advancement in the country, the growth is nowhere close to that of our neighbours. In 2018–2020 India has witnessed about 40 per cent year-on-year growth. Let us look into why we have not been able to achieve similar growth while the economy has been performing well and growing at par or higher than that of our neighbour’s for years. There are several contributing factors to a weaker customer penetration ranging from operational challenges, culture, and overall poor digital literacy.

Although there is a strong road and railway network in Bangladesh, it is undeniable that we still do not have a strong and developed delivery channel. We have a few conventional courier delivery services and in the past few years, modern app-based delivery service providers can facilitate a swift delivery but mostly the same day or swift delivery services are limited to Dhaka and a few other cities. We are comparatively a small nation and this makes the distance between central hubs in the capital Dhaka and other cities significantly lesser than many nations in the west and yet we do not have a strong and dependable delivery channel that buyers and sellers can depend on. Last-mile delivery refers to the specific journey of a good from the hub to the consumer’s doorstep and there is still a long way to go to develop a digitally equipped workforce and courier solution that is scalable and reasonable. While the rest of the world is exploring sustainable drone technology driven by AI to deliver goods and services, we are way behind as we still do not have a dependable service. Quality of packaging is also another concern, as companies attempt to save costs by using cheaper packaging at the risk of damaging the goods.

Seller behaviour is another aspect where Bangladesh lags behind. A lot of the vendors or sellers listed on many e-commerce websites or even Facebook pages do not have their own stock or business. These are basically resellers, who, upon order, will source the goods from another wholesaler or local vendor and then sell it on websites for a margin. Now this itself is a good business model but when a significant portion of the sellers sources goods upon ordering, there is usually a higher turnaround time, which stretches the entire process, and because they are delaying to send their product to e-commerce hubs, there is a delay in the delivery. This is a major reason why many consumers prefer to buy from physical outlets rather than wait for a long period of time as there is no assurance that goods will be delivered on schedule. There is also a small portion of sellers who takes undue advantage of the system and would sell subpar products or products lower than that announced on their sites or pages.

All of this results in consumers not being able to completely rely on online vendors or e-commerce sites. This results in slower growth in this sector. There have also been issues in recent times where several e-commerce platforms have not been straightforward with the consumers in terms of the goods they will receive when they will receive them. These events are detrimental to industry growth and when these events occur repetitively consumers lose faith and the entire industry loses momentum. Hence, consumer trust is not in ideal shape at the moment. Owing to all these challenges, overall customer satisfaction is also not in a very encouraging shape right now.

Although there has been major growth in mobile financial services usage (MFS) in Bangladesh, interoperability remains a challenge to date. Another challenge is associated with the return or cancellation of goods. In case the payment is made in advance, there are instances where the total refund process takes as many as 45 days. Since consumers opt for several different payment methods other than cash on delivery on different occasions and platforms such as MFS, payment through local or international cards, bank transfer, etc. It becomes difficult to make refunds instantly due to challenges associated with the interoperability of different payment methods and services. In some cases, the banking process itself is slow and results in delay in refunds.

Another major hindrance to the path of growth is the poor digital literacy and education level of the majority of the consumers. Although, ordering through or operation of an app or a website does not require a strong command of the English language, however, there is still a rising concern for digital literacy. Often it is a significant challenge outside urban areas, especially in poorer or rural communities. Digital literacy refers to the skills and knowledge individuals possess that enables them to access and utilise information digitally and reap the benefits of different applications, websites, and social media platforms. However, there were 47.61 million internet users in Bangladesh as of January 2021 — a sharp 8 per cent increase from last year. Thanks to cheaper smartphones, infrastructural improvements, and the pandemic, internet use is at all-time high. This is an indicator for faster technological adaptation of the consumers. The growth of MFS in Bangladesh is also increasing and serves as an indicator that e-commerce has strong potential ahead.

It will not only be rational to expect that policy changes will address all these challenges and there will be smoother growth. Rather, it will take some time for both consumers and sellers to learn the norms and practices of online trade and transactions. Local and international giants are already eyeing the Bangladeshi market as there will be a lot of opportunities in the future for them. It is high time policy intervention ensured consumer protection and helped build trust. Local entrepreneurs should also come forward to develop related services that aid growth in this sector.

Collected from