How feasible is the 7-day delivery deadline?: Experts weigh on the proposed policy to regulate e-commerce
We also need to initiate escrow services in the e-commerce business
The commerce ministry has recently prepared a draft E-commerce policy. As per the draft plan, e-commerce companies have to ship products to buyers within 7-10 days after completing orders, depending on delivery locations. Failing to do so, they will face fines and have to refund the customer. The Business Standard reached out to two prominent IT and e-commerce industry insiders for their thoughts on the policy.
"Delivery timeframe in regulation won't let companies deceive consumers"
Syed Almas Kabir/President, BASIS
The commerce ministry has already prepared a draft policy for web-based e-commerce companies. In the draft, it is mentioned that e-commerce companies have to ship products to buyers within seven to ten days after completing orders, depending on delivery locations.
In my opinion, there should be this kind of bindings in the policy so that companies cannot deceive customers. For example, a customer has paid in advance for a certain product, and the company has given a timeframe of 30 days to deliver the product. The customer also agreed on the proposition.
But often we see the customer cannot get the desired product within the timeframe. The delivery timeframe, in this case, will not allow these companies to break the rule, and stop the MLM business.
However, I think it would be better if we set the timeframe depending on product category, rather than a general one.
For example, for perishable goods, the timeframe should be less than seven days. Because, if you are ordering vegetables or medicines, you would like to have it delivered to you as soon as possible. There is no use of such products if you do not get it on time.
On the other hand, if we set this timeframe for B2B dealings, it might be troublesome. For example, if retailers are ordering in bulk amounts, the manufacturing and assembling processes take time. Also, bringing the products from suppliers can even take more than a month.
This is normal, and we must give them the lead time. So, a timeframe of seven to ten days for B2B deals will not work. Thus, the regulation can be relaxed in such cases.
To protect consumer rights, there should be a substantive law in the regulations, which would ensure that customers get the exact product they have ordered. Companies should ensure transparency about the product in terms of colour, weight, country of origin and price. If transparency is not ensured, the supplier might say they had not promised to give the product shown in the advertisement.
If the customer remains unsatisfied with the product, they must get a full refund or even a partial refund after deduction of service charges. The regulators must ensure that consumers get this right, and they should include a return policy in the regulation.
If we can ensure inclusion of the above policies, the companies will not send faulty or low-quality products to customers. Because doing so will only create hassles for them as the refund rate will rise and they will lose their credibility. On the other hand, such policies will also encourage a consumer to order more products online, and the e-commerce companies will gain trust.
It might not be possible to return the item instantly. But like in developed countries, there should be clear instructions for customers about a certain timeframe they can return the product within. For example, within three to seven days. Also, if a company says it will refund within seven days, it needs to be ensured as well that the customer gets the refund within that timefreame.
We also need to initiate escrow services in the e-commerce business. With an escrow service, a consumer will be able to stay confident by paying in advance. They will know that the money is safe with a third-party operator and it will only be released after they confirm that they have received the right product.
And if the product is unsatisfactory, the consumer will return the product and get their money back. Thus, the consumer will have peace of mind, and will order more online. As we have not initiated escrow service yet, around 70 percent of people still prefer the cash on delivery method. But to digitalise the system and become a cashless society, we need to initiate escrow services as soon as possible.
Apart from these, there should be nothing illegal or invalid in the terms and conditions of a company. We are often required to accept the terms and conditions to buy something from a website. As there are many conditions, we often accept it without going through the details. Thus, there should be no conditions which can be used against consumers.
Also, there should not be any browse-wrap or clickwrap on the website. Through these, a company does not even show the terms and conditions. It is assumed that consumers have accepted the terms and conditions as they are clicking on, or viewing the website.
Additionally, we often see disclaimers that say the seller is not liable for the goods sold. This cannot go on. A seller must be liable for the goods they are selling. Because they know what they are selling, and they must take the liability.
Finally, companies must ensure data privacy of users. They should not ask for any unwanted data that is not required for delivery of the goods. For example, there is no need to know the gender or age of a consumer. And they must ensure data security so that it does not get in the hands of a criminal who can later exploit the consumer.
The regulatory body is drafting a policy for web-based e-commerce companies. But many sellers market and sell their products through social media. This is known as the f-commerce market, and its size is around Tk312 crore. So, if we say that you cannot buy products from them as they do not have licences, it will be a massive loss for the industry.
There should be a policy for them as well to ensure consumer rights. And the policy should not be very rigid. For example, a homemaker who is selling products from a village will certainly face trouble if she needs to obtain a trade licence.
But if we can give them registration numbers like those provided to freelancers by the government, the sellers will be able to show that they are registered, and the consumers will also be able to rely on them.
"Merchants will suffer if regulation is imposed prematurely"
Fahim Ahmed/ CFO and President, Pathao
Bangladesh is still at the early stage of e-commerce and digital marketplace. And I appreciate the fact that regulators are adopting policies to ensure consumer rights.
Nonetheless, it seems to me that a fair number of policies have been formulated to address their concerns that have been arising from certain practices of one particular e-commerce platform, which have been widely reported in the past.
The concerns are very legitimate, and it is essential for a platform to ensure credibility in building consumer trust. But, there are more direct ways to address those concerns than formulating a more extensive policy.
The draft policy for e-commerce mentions that products must be picked up within 48 hours of order and customers should get it delivered within 7-10 days. Moreover, you cannot order a product which is out of stock.
These things are all connected. You certainly cannot pick up an out-of-stock product within 48 hours.
To me, transparency is more important. Sellers should fulfil their contract obligations to their customers.
If you look at countries around the world, you will see there is a way to pre-order upcoming products. For example, when major cell phone manufacturers prepare to launch a new flagship device, they allow customers to pre-order that device.
And, that is understandable, because a new product has potentially limited stock and lots of people want to get a hold of it, so this might happen.
People who use e-commerce platforms are amongst the more aware consumers. They want to get hold of products that are the best in terms of quality or otherwise hard to access. The inventory for such products may not be readily available in our country.
The supply chain might get disrupted because of multiple issues like infrastructure challenges, Covid-19 challenges, etc. Hence, putting an arbitrary cap on the deliverability on inventory at the time of purchase is very limiting.
If you look at e-commerce platforms around the world, you'll find that most of them already have a largely developed infrastructure. For example, Amazon in the United States would not be able to achieve its fame, if it were not for the US postal service, or FedEx, UPS or other third-party logistics service providers. These logistics service providers provide the door to door delivery service that is necessary for these types of products.
Unfortunately, in Bangladesh, we did not have those three peer logistics service readily available, and we had to replicate that ourselves. In many cases, e-commerce platforms have developed their own logistics team, and in some instances, they take help from third-party logistics service providers.
Also, services of third-party logistics like the courier services are not adequate for e-commerce services. They are more point to point, and you need to collect products from their depots, which is a significant concern for the e-commerce business.
Therefore, what is happening is that you are relying upon other third-party logistics services that are new. And it takes a lot of time and a lot of investment to build an infrastructure, and a lot of technology to build up this whole system. This is because it is not only about point to point delivery inside Dhaka, it is also about places outside the capital. Nowadays, a large portion of orders are coming from outside Dhaka, and such orders account for around 30-35 percent of total orders.
Thus, you have to have the first-mile service to go and pick up the product, and your sorting facility and then rely on the line howl and finally you have to have the last-mile service. And you will need this last-mile service to the remote upazila levels as well.
Building such infrastructure over a short period is no easy task. For this reason, the policy that makes it mandatory to deliver products within 7-10 days of their orders appears very restricted and arbitrary. It also limits the type of business models that can be available and accessible to e-commerce platforms.
If you look at who are the e-commerce merchants in Bangladesh, you will see there is only one international operator here. We have a few local platforms and a long tail of small e-commerce merchants.
Even though we have seen a few reports that say this policy attempts to make a distinction between e-commerce and f-commerce, the reality is that the line is blurred. For example, many merchants may have their website, and also are selling products through social media. So, on whom would this policy be applicable?
If you impose these requirements prematurely, the potential of tens of thousands of e-commerce and f-commerce merchants who have been building their business for the past couple of years would be tamed. Therefore, we have to be very careful in this regard.
Also, we already know about the logistics challenge and limitations in delivering products to the remote areas of the country. In consideration of all these things, delivering products within 7-10 days appears tough.
Third-party logistics service providers usually pick up products a day later, although e-commerce platforms have a ready inventory. So, it takes more than 24 hours to pick up a product, and after that, the logistics companies have to sort out the products and all. So, there has to be some rational approach.
If you look at the USA, you will find multiple shipping options. You can choose the next-day shipping by paying some extra money or choose a usual shipping method which will take time. And, in case a product is out of stock at the moment, the website will show how long it will take to reach the product to you if you order it now.
Also, people will spend on quicker delivery service depending on the price of products. For example, if the cost of your ordered product is Tk5,000, you would be interested in investing around Tk200 for a same-day delivery option. But, if your basket size is of Tk500 or below, you will certainly not want to pay the amount required for the same-day delivery option. Thus, product prices also have an impact on delivery time.
What is much more important is transparency and accountability. We need to make sure that e-commerce companies fulfill their promises to customers, instead of coming up with one solution for all.