Alibaba to help Bangladeshi SMEs heal pandemic shock

Alibaba, the world's largest wholesale e-commerce platform, will help Bangladeshi small and medium enterprises (SMEs) – the hardest hit businesses in the pandemic – to go online to explore opportunities in the international wholesale market with ease.

The online retail giant will provide Bangladeshi businesses with concessional onboarding facilities, free business development support, mentoring, and training to become online global suppliers.

Bangladeshi e-commerce platform Daraz, the local subsidiary of Alibaba, is facilitating the programme named Sprout Up, which was announced on Tuesday.

"We welcome the Alibaba move as it invites our small and medium firms to the vast world of online buyers. SMEs need it the most as they lack marketing and know-how, if compared to large traditional exporters," said Muhammad Abdul Wahed Tomal, general secretary of e-Commerce Association of Bangladesh.

In a press release, Daraz said on Tuesday that Alibaba will provide special discounts to Bangladeshi SMEs for onboarding as supplier members before October.

Alibaba will list professional third-party partners to help newly joined suppliers create an online store from the ground up, develop product listings and conduct keyword advertising. The package would be a complementary service. 

Along with support with advanced online marketing tools, Alibaba will provide the listed SMEs with regular training covering buyer behaviour, negotiations, customer support and marketing to strengthen their performance in the global online marketplace. 

The SME sector with its low resilience has been hit the hardest during the shutdown and needs market support alongside financial backing, said Dr Monzur Hossain, senior research fellow at the Bangladesh Institute of Development Studies. 

"Sprout Up is apparently a private commercial initiative so far. Such projects might have a better impact if taken in collaboration with locally effective official entities like the SME Foundation, the Ministry of Commerce and others." 

The researcher estimates that the pandemic has affected around 13 lakh micro, small and medium enterprises (MSMEs) in Bangladesh, leaving them with over Tk90,000 crore in losses during the two-month shutdown alone. Of those, around 55,000 MSMEs employing around 50 lakh people are in manufacturing business. 

Small businesses are struggling to recover, while two-thirds of them are unlikely to avail the government announced stimulus loans from the Tk20,000 crore package. 

"SMEs as an unstructured sector are not receiving their share from the stimulus loan package mainly because of distribution modalities. Marketing, of course, is a problem for them. If the new initiative can list a large number of SMEs and create a market for them, this would be good news," said Ali Zaman, president of SME Owners Association.

Opportunities and challenges online 

As of last year, e-commerce was contributing to less than two percent of the total retail sales in Bangladesh with an approximate annual turnover of Tk8,000 crore. 

This year, the pandemic and the growing popularity of e-commerce might help double the figure and contribution, according to Tomal. 

But e-commerce in wholesale or supply is virtually nothing compared to offline turnover, be it in the local market or export. 

"The problems that dog local e-commerce growth are also barriers to cross-border online sale. For international trade, the added problems are lack of policy, absence of paperless trade processing, unfavourable transaction mode, and absence of refund and return facilities on top of high logistic costs and an underdeveloped supply chain ecosystem," Tomal said. 

Currently, 40,000 Bangladeshi products, mainly textile, apparel and leather, are up online on Alibaba for global sales, the company said. 

The Business Standard reached out to Daraz for the number of firms already listed on Alibaba but received no response till the writing of the report. 

However, an e-commerce professional told The Business Standard that at least 15,000 Bangladeshi businesses are already online as global suppliers on platforms like Alibaba, TradeKey, and Tedfo Bangladesh. 

No industry association, including apparel and leather goods, has data on their members with online presence. Firms make such attempts randomly. 

Tomal said, "There are endless opportunities online, and removing the barriers soon is our main task."