How online shopping is changing Bangladesh

With new merchant sites emerging every month, e-commerce is growing rapidly in the country.

According to the E-Commerce Association of Bangladesh (e-CAB), transactions worth about Tk. 1,000 crore have been made annually through e-commerce. There are 1,000 websites and 15,000 Facebook pages relating to e-commerce. As many as 50,000 people are involved in this sector directly or indirectly.

When asked about the size of the market, e-CAB president Razib Ahmed told The Independent: “Approximately Tk. 1,300–1,500 crore are being transacted every year. The overall transaction during the last Ramadan was worth about Tk. 500 crore.”

According to e-CAB, the country delivers approximately 30,000 parcels daily and about 2,00,000 orders have been placed daily through e-commerce. On an average, products worth about Tk. 3-4 crore are sold every day through e-commerce websites. Of these, 85 per cent are done by cash-on-delivery.

Speaking on the online payment system, Razib Ahmed said e-commerce cash payment would be converted into online method in five years’ time.

Explaining the challenges of e-commerce, the e-CAB president said: “The demand outside Dhaka has increased significantly. But we need to promote the e-commerce business aggressively. There is no research centre yet to get accurate information on the e-commerce business and thus we need to develop a research centre to get more authentic information about the e-commerce business.”  

He suggested that the government provide funding to develop more research centres to help entrepreneurs in investing in the e-commerce business.

Highlighting the cross-border issue in the e-commerce sector, Razib Ahmed said international e-commerce is called cross-border commerce when consumers buy online from merchants located in other countries and jurisdictions. “We can’t implement the cross-border issues due to some rules and regulations of Bangladesh Bank and it needs to be addressed,” he added.    

The commerce ministry, the finance ministry, the World Trade Organisation (WTO), the Access to information (A2i) and the Posts and Telecommunications Division have shown keen interest in boosting the e-commerce sector, he said.

Elaborating the problems of e-commerce, the e-CAB president said a lot of people are operating e-commerce through Facebook and other platforms or websites. “But the problem is that not all businesses have their own trade licences or Taxpayer Identification Numbers (TIN),” he added.

Certain rules and regulations have to be enforced so that there is a level playing field in the market, he said.  

He also pointed out the dearth of funding. He said unlike local firms, foreign firms have no funding problems. Besides, venture capital firms are not robust enough to invest in local firms in Bangladesh.

Talking about the marketing strategy, Razib Ahmed said local firms need to pay Google or Facebook to give advertisement as part of the marketing strategy. But owing to currency exchange problems, Bangladesh faces an unfair situation in the e-commerce sector, he noted.               

Local e-commerce entrepreneurs will have to pay 35 per cent corporate tax for the current year and this will create more problems for them, he observed.

Talking about this sector’s potential in generating jobs, the e-CAB president said: “Within the next 10 years, the e-commerce sector will generate around one million jobs, mostly for educated persons, and we’ll have around 10 million jobs in 20 years’ time.”

Currently, e-CAB has 635 member companies, he mentioned.

Speaking on the market size, bdjobs.com chairman Fahim Mashroor said: “A few years back, the market was worth about Tk. 350–400 crore, but now the scenario has changed. The market has increased by 20-25 per cent annually.”

Speaking to The Independent on the challenges and problems, Mashroor, who is also the owner of ajkerdeal.com, an e-commerce site, said: “E-commerce has penetrated rural areas of the country, but a lot of issues, such as logistics problems, slow Internet speed, inadequate funds for starting a business, and insufficient fibre optic connectivity, need to be addressed.”          

“3G services are very expensive and not flexible enough to do e-commerce business or transactions,” he added.

Talking about sharing the same platform, Mashroor said: “2,500 to 3,000 merchants have already used our platform. We’re providing marketing strategy for them as well.”

He also said nearly 1-1.5 lakh people are engaged in the e-commerce sector directly and ajkerdeal employs around 150 people in the business.

When asked about sharing the global platform, Mashroor said: “Before sharing the global platform, we need to address the local market demand of the e-commerce industry.”

He further said more investment must be made to boost the local firms so that they can play a key role in the global market.

Talking about this sector’s potential in generating jobs, Mashroor said the country’s e-commerce sector would generate about 8 lakh jobs within the next four to five years. “The government, however, must take the following initiatives to generate jobs in this sector: increase connectivity, reduce Internet costs, and use post offices as a distribution channel,” he added.

He also stressed that logistics firms should join this sector to deliver products outside Dhaka and in remote areas where a post office can play a critical role in reaching goods.

Injamul Huq, business development executive of ajkerdeal.com, told The Independent that more than 2,000 merchants, 99 per cent of which are SME entrepreneurs, were involved in the market to promote their products.

Fahim Mashroor also said: “The SME sector is a large sector in Bangladesh which can create a huge number of jobs. Thus, if we can promote SME entrepreneurs to boost their business through our platform, more jobs will be created.”

When asked about the challenges, Razib Ahmed pointed out three problems— inadequate access to finance, inefficient delivery services, and a dearth of skilled manpower. “Proper valuation of websites is needed to boost the e-commerce sector. The hindrance to financing an e-commerce site is inadequate website valuation. If we can evaluate websites properly and effectively, we will be able to get e-commerce funding from the government,” he added.

Globally, venture capitalists, who back the industry more than anyone else, have been behind the rise of the e-commerce industry, he said.

Replying to a question, the e-CAB president said: “In Bangladesh, we don’t have big venture capital firms to finance start-up businesses. Moreover, proper laws and institutions are required for venture capital fund management. Venture capital is needed to swap the funding process. Foreign capital companies should come forward to build partnership with our local start-ups so that the companies are assured of sustainable future growth.”

Fahim Mashroor said: “Banks in Bangladesh, just like other countries, don’t finance start-ups. All the successful start-ups have raised funds themselves and from corporate firms.”

The amount of money required to launch a start-up depends entirely on a firm’s size and condition, he noted.

“When I started bdjobs, a Japanese firm provided Tk. 10 crore to start the business,” he added.

According to e-CAB, kaymu.com.bd has published a report titled "A Report on e-commerce Trends in Bangladesh". The report has thrown some light on the growing e-commerce in Bangladesh and provided some valuable information about the demographics of the users.

E-commerce buyers are highly centralised and city-based. As much as 80 per cent of the total visitors come from Dhaka, Gazipur and Chittagong.

Dhaka attracts the highest traffic with 35 per cent, Chittagong 29 per cent and Gazipur 15 per cent. The next two cities are Narayanganj, which is adjacent to Dhaka, and Sylhet, another large metropolitan area. Seventy-five per cent of the users are between 18 and 34, the report said.

 

How online shopping is changing Bangladesh

With new merchant sites emerging every month, e-commerce is growing rapidly in the country. According to the E-Commerce Association of Bangladesh (e-CAB), transactions worth about Tk. 1,000 crore have been made annually through e-commerce. There are 1,000 websites and 15,000 Facebook pages relating to e-commerce. As many as 50,000 people are involved in this sector directly or indirectly. When asked about the size of the market, e-CAB president Razib Ahmed told The Independent: Approximately Tk. 1,3001,500 crore are being transacted every year. The overall transaction during the last Ramadan was worth about Tk. 500 crore. According to e-CAB, the country delivers approximately 30,000 parcels daily and about 2,00,000 orders have been placed daily through e-commerce. On an average, products worth about Tk. 3-4 crore are sold every day through e-commerce websites. Of these, 85 per cent are done by cash-on-delivery. Speaking on the online payment system, Razib Ahmed said e-commerce cash payment would be converted into online method in five years time. Explaining the challenges of e-commerce, the e-CAB president said: The demand outside Dhaka has increased significantly. But we need to promote the e-commerce business aggressively. There is no research centre yet to get accurate information on the e-commerce business and thus we need to develop a research centre to get more authentic information about the e-commerce business. He suggested that the government provide funding to develop more research centres to help entrepreneurs in investing in the e-commerce business. Highlighting the cross-border issue in the e-commerce sector, Razib Ahmed said international e-commerce is called cross-border commerce when consumers buy online from merchants located in other countries and jurisdictions. We cant implement the cross-border issues due to some rules and regulations of Bangladesh Bank and it needs to be addressed, he added. The commerce ministry, the finance ministry, the World Trade Organisation (WTO), the Access to information (A2i) and the Posts and Telecommunications Division have shown keen interest in boosting the e-commerce sector, he said. Elaborating the problems of e-commerce, the e-CAB president said a lot of people are operating e-commerce through Facebook and other platforms or websites. But the problem is that not all businesses have their own trade licences or Taxpayer Identification Numbers (TIN), he added. Certain rules and regulations have to be enforced so that there is a level playing field in the market, he said. He also pointed out the dearth of funding. He said unlike local firms, foreign firms have no funding problems. Besides, venture capital firms are not robust enough to invest in local firms in Bangladesh. Talking about the marketing strategy, Razib Ahmed said local firms need to pay Google or Facebook to give advertisement as part of the marketing strategy. But owing to currency exchange problems, Bangladesh faces an unfair situation in the e-commerce sector, he noted. Local e-commerce entrepreneurs will have to pay 35 per cent corporate tax for the current year and this will create more problems for them, he observed. Talking about this sectors potential in generating jobs, the e-CAB president said: Within the next 10 years, the e-commerce sector will generate around one million jobs, mostly for educated persons, and well have around 10 million jobs in 20 years time. Currently, e-CAB has 635 member companies, he mentioned. Speaking on the market size, bdjobs.com chairman Fahim Mashroor said: A few years back, the market was worth about Tk. 350400 crore, but now the scenario has changed. The market has increased by 20-25 per cent annually. Speaking to The Independent on the challenges and problems, Mashroor, who is also the owner of ajkerdeal.com, an e-commerce site, said: E-commerce has penetrated rural areas of the country, but a lot of issues, such as logistics problems, slow Internet speed, inadequate funds for starting a business, and insufficient fibre optic connectivity, need to be addressed. 3G services are very expensive and not flexible enough to do e-commerce business or transactions, he added. Talking about sharing the same platform, Mashroor said: 2,500 to 3,000 merchants have already used our platform. Were providing marketing strategy for them as well. He also said nearly 1-1.5 lakh people are engaged in the e-commerce sector directly and ajkerdeal employs around 150 people in the business. When asked about sharing the global platform, Mashroor said: Before sharing the global platform, we need to address the local market demand of the e-commerce industry. He further said more investment must be made to boost the local firms so that they can play a key role in the global market. Talking about this sectors potential in generating jobs, Mashroor said the countrys e-commerce sector would generate about 8 lakh jobs within the next four to five years. The government, however, must take the following initiatives to generate jobs in this sector: increase connectivity, reduce Internet costs, and use post offices as a distribution channel, he added. He also stressed that logistics firms should join this sector to deliver products outside Dhaka and in remote areas where a post office can play a critical role in reaching goods. Injamul Huq, business development executive of ajkerdeal.com, told The Independent that more than 2,000 merchants, 99 per cent of which are SME entrepreneurs, were involved in the market to promote their products. Fahim Mashroor also said: The SME sector is a large sector in Bangladesh which can create a huge number of jobs. Thus, if we can promote SME entrepreneurs to boost their business through our platform, more jobs will be created. When asked about the challenges, Razib Ahmed pointed out three problems inadequate access to finance, inefficient delivery services, and a dearth of skilled manpower. Proper valuation of websites is needed to boost the e-commerce sector. The hindrance to financing an e-commerce site is inadequate website valuation. If we can evaluate websites properly and effectively, we will be able to get e-commerce funding from the government, he added. Globally, venture capitalists, who back the industry more than anyone else, have been behind the rise of the e-commerce industry, he said. Replying to a question, the e-CAB president said: In Bangladesh, we dont have big venture capital firms to finance start-up businesses. Moreover, proper laws and institutions are required for venture capital fund management. Venture capital is needed to swap the funding process. Foreign capital companies should come forward to build partnership with our local start-ups so that the companies are assured of sustainable future growth. Fahim Mashroor said: Banks in Bangladesh, just like other countries, dont finance start-ups. All the successful start-ups have raised funds themselves and from corporate firms. The amount of money required to launch a start-up depends entirely on a firms size and condition, he noted. When I started bdjobs, a Japanese firm provided Tk. 10 crore to start the business, he added. According to e-CAB, kaymu.com.bd has published a report titled A Report on e-commerce Trends in Bangladesh. The report has thrown some light on the growing e-commerce in Bangladesh and provided some valuable information about the demographics of the users. E-commerce buyers are highly centralised and city-based. As much as 80 per cent of the total visitors come from Dhaka, Gazipur and Chittagong. Dhaka attracts the highest traffic with 35 per cent, Chittagong 29 per cent and Gazipur 15 per cent. The next two cities are Narayanganj, which is adjacent to Dhaka, and Sylhet, another large metropolitan area. Seventy-five per cent of the users are between 18 and 34, the report said.