E-commerce faces Tk3,480cr loss during shutdown

The country's e-commerce industry is set for around Tk3,480 crore in operational and inventory losses amid coronavirus shutdown, which has had severe adverse impact on 82% of the e-commerce firms.

This came out in a recent study titled 'Impact of Covid-19 on E-commerce Industry of Bangladesh' by the E-Commerce Association of Bangladesh (E-CAB).

The study shows that only a small number of firms, 1.5%, managed to avoid losses because of their products line which are medical and grocery items; they rather saw 3-4% increase in business.

About 16.5% of e-commerce firms are affected moderately, it adds.

Industry insiders have said the sector is already facing huge shipment crisis because of the virus outbreak, long before the country went into shutdown, as majority of the online goods are imported from China where the virus originated from.

Nature of impacts

Sadaruddin Imran, chairman of E-CAB Research Center, mentioned lack of availability of raw materials due to shipment cancellation along with the huge inventory of fashion goods targeted for Pahela Baishakh as having major impact on the industry.

Talking to The Business Standard on Saturday, he said the impact would be on operational costs and on opportunity costs.

"Currently, the industry is worth Tk8,263 crore and to our estimate Tk3,000 crore loss will be inventory and Tk480 crore operational or fixed costs like salary, rent and utility. This is the biggest blow for the industry which was growing very fast," he said.

Imran urged the government to provide low cost fund with long grace period for the e-commerce industry to recover from the situation.

According to the E-CAB, around 60% of the local e-commerce products, especially electronic gadgets, are imported from China.

The country's largest e-commerce company Daraz Bangladesh's Head of PR, Media & Communications Shayantani Twisha told The Business Standard on Saturday that the firm cancelled one of its largest shopping events of the year designed for Pahela Bayshakh.

"In Pahela Bayshakh campaign every year we see 5% increases in sales compared to a regular day. This year we decided to cancel the campaign for the coronavirus outbreak," she said.

Global position of Bangladesh e-commerce

According to a study by German statistic company Statista, the country was ranked 46th in the global e-commerce index last year with $1.6 billion trade.

According to the Statista report, the online fashion market in Bangladesh is currently worth $598 million and it has the prospect to reach up to $1.24 billion by 2023.

Electronic products amounting to $457 million and furniture and appliances worth about $196 million are sold online annually.

The online sales of furniture and appliances will go up to $352 million after four years, the report predicts.

Online sales of toys and hobby products stand at $260 million and it can almost double to $442 million by 2023.