With its economic growth, expanding consumer base and their evolving lifestyle, and progressive government, Bangladesh can expect an e-commerce explosion, believes Indian smart logistics maestro TA Krishnan.
The co-founder and CEO of India's top B2C delivery service firm Ecom Express during his recent Dhaka visit told The Business Standard (TBS), "The e-commerce market in the country is evolving and it has a huge headway."
Ecom invested Tk100 crore in local door-to-door parcel delivery pioneer, Paperfly, a year ago and the tech-based courier firm now covers rural Bangladesh to serve 98% of the population.
When Krisnan, with his 25 years of experience in logistics, co-founded Ecom in the then-nascent e-commerce market of India in 2012, online orders were accounting for less than 1% of formal retail trade there, which stands at 4.5% to 5% now.
In Bangladesh, e-commerce is still making less than 2% of the formal retail and the market has chances to grow at a staggering 30-40% annual rate as soon as it enters the needed rhythm, he said.
Bangladesh would need some more serious e-commerce players like Daraz to improve the industry ecosystem alongside an improved funding environment that would include more venture capital and private equity investors, he added.
In China and USA, 28%-30% of the former retails are online now. As many of the developed matured markets are still registering a decent double-digit to high double-digit growth, the less penetrated developing markets like Bangladesh have a bigger opportunity to grow.
Replicating the success in a similar market
In less than a decade of operations, Ecom Express emerged as the largest third-party B2C logistics firm in India thanks to its technology-based operations.
Ecom is covering 95% of the nation's population of 1.4 billion through 100% coverage in 22 states. Over 2,950 delivery centres are spread across the vast geography of all the 29 Indian states.
Picking a parcel from the remotest place of a corner of India and delivering it to the farthest neighbourhood at the opposite corner of the country takes a maximum of 5-6 days for Ecom while it connects the convenient points in the same way by the next day.
"We found Bangladesh as our very next destination to replicate the smart logistics success," TA Krishnan said.
In India, it needs a 3-hour flight to connect the farthest corners, while in Bangladesh a mere 15-hour road trip is enough.
Both are good markets due to their population density that can offer comparatively higher volume for cost-effective logistics, he said.
The nascent market of Bangladesh was still stuck with the traditional point-to-point delivery – manually booking at courier offices and picking from their other office at the other end – model instead of the needed model of doorstep pickup and doorstep delivery across the country.
This is the value proposition Paperfly brought in the Bangladeshi market and people loved it.
Following Ecom's Tk100-crore investment, the 5-year-old local smart logistics firm co-founded by four local talents now runs its nationwide network for guaranteed deliveries within 48 hours to anyone's door in the country from the same at even the farthest point within Bangladesh.
Paperfly trucks are running across all 64 districts to carry goods and parcels, while it already has 186 delivery hubs across Bangladesh.
Its business has grown 2.5 times since the beginning of the pandemic that accelerated the online orders' growth.
The best part of Paperfly's story is it has embraced completely technology-dependent operations.
Paperfly also collects the cash on delivery on behalf of the e-commerce firms and settles the transaction in an hour.
A complete solution to a lot of problems e-commerce companies and their customers face.
Technology at the heart
Once a strong truck tray network was enough to be a big logistics company. Now technology makes a difference in the industry.
B2C e-commerce is entirely a smart logistics' arena, while B2B logistics also is embracing technology, T A Krishnan said.
Technology is the enabler of convenience, efficiency, and improved customer experience.
"Your smartphone is enough to order, pay, track the delivery, and interact with the service providers that dramatically improved customer experience."
The server and app-based operations that also use data science help smart logistic firms like Ecom and Paperfly better predict demand, map the origin to destination, better position and equip the service and delivery centres, smart timing, and also better behaviour analysis.
After the capital expenditure and operational expenses for technology, it all helps reduce the cost of logistics.
Smart logistics and e-commerce for each other's growth
E-commerce and smart logistics are vital to each other's growth.
The E-commerce boom is significantly contributed by smart logistics across the world and India, Bangladesh is no exceptions, Krishnan said.
In both markets, online orders from non-metro city customers are rising faster. Smart logistics has a big role there while the emerging non-urban market is becoming an opportunity for the logistic firms to gain the needed scales for cost efficiency.
Some e-commerce platforms depend on their internal delivery network, some do not. But third party delivery firms are crucial to all as additional orders at a time make them take the support of third parties.
An 8%-10% of the e-commerce industry top line would remain the smart logistics industry top line, anticipates Ecom boss.
His company will remain focused on the Bangladesh market that is set to grow much bigger.
He said, it might take some time to get the full ecosystem supportive, to get people to adopt the smart ways, but the expected change is a must – today or tomorrow.