During the first wave of the Covid-19 pandemic, online businesses in the country boomed. Now every day, various e-commerce platforms, under the umbrella of e-Commerce Association of Bangladesh, are handing almost two lakh orders daily.
E-commerce association leaders projected that in the eight months starting from March last year, e-commerce companies' sales crossed around Tk16,000 crore. The association saw a growth of 80% last year.
Last year, when the Covid-19 pandemic entered the country, many new entrepreneurs entered the e-commerce industry with various products. A large chunk of them were women entrepreneurs.
Shomi Kaiser, the incumbent president of e-Commerce Association of Bangladesh (eCAB) is a women entrepreneur herself and she has witnessed the changes taking place in the e-commerce industry in the last one year firsthand.
"It has been possible because IT infrastructures such as 4G and optic fibre connections were ready. We also have a digital e-commerce policy that fed the growth, which was revised in 2019. This policy has helped us grow in a consolidated way," said Shomi who now heads an association with more than 1,500 e-commerce companies and at least 50,000 Facebook-based entrepreneurs.
However, this booming sector has some challenges as well. Shomi believes that insufficient logistics and cash on delivery systems are the two major challenges they are facing in the business now.
Insufficiencies in the logistics and delivery system
Although the online marketplace has seen huge growth, the same cannot be said for the logistics and delivery sector corresponding to this industry. As a result, the customers have to wait for their orders to be delivered for weeks at a stretch. The logistics and delivery systems are not coping with the market demand.
Shomi said, "In the last one year, around 25 logistic and delivery companies have come into the business. Altogether, around 60 logistics and delivery companies in the country are helping to run the e-commerce businesses."
The logistics and delivery system is a big challenge for the e-commerce industry. The entire delivery system is bound to a handful of companies, Shomi said, adding, "Online businesses need more and more logistics and delivery partners now to smoothly run their operations. But the number of newcomers in the logistics and delivery sector is low and the main reason behind this is financing.
"With the e-commerce industry growing at a fast rate, there are huge opportunities in the logistics and delivery sector. But the problem is funding because these sectors need huge investments as it involves vehicles," Shomi informed.
She also said that some local companies such as Shohoz and e-Courier are playing an important role in the logistics and delivery aspect and they are doing well.
Shomi believes that the banking system should come forward in financing the emerging logistics and delivery sector. "I will request our financial institutions to be more supportive to our logistics and delivery companies," she voiced.
She has another idea about the growth of the logistics and delivery sector which is inspired by the South African model. In South Africa, community-based delivery systems have become a popular business model.
"In this business model, a delivery company is set up in a specific neighbourhood. This delivery service model has been successful in South Africa," Shomi explained.
The problem with cash on delivery
The next challenge is cash on delivery. A huge number of online customers prefer to pay in cash on delivery. The main reason behind this is distrust. Many times customers are deceived by showing one product online but get delivered an inferior quality one. As a result, customers want to check the product first and then pay in cash.
"We are repeatedly telling our customers that we discourage cash on delivery. Trust building is a continuous process. It will not happen overnight," Shomi told the correspondent.
She added, "The good news is that more and more people are using digital payment systems. If customers use digital payment systems more often, fraudulent activities and financial corruption will decrease."
If customers transact digitally, Bangladesh Bank and NBR will be notified about the financial figures and other information.
Shomi's association has decided to launch a campaign with trusted e-commerce and logistics and delivery companies soon. The purpose of the campaign is to boost trust among customers.
Speaking about the plan, Shomi said, "We will disclose the names of the trusted companies so people can buy products from them."
The association has also opened a 24-hour complaint box where customers can drop their complaints about products.
"Interestingly, customers do not complain properly. If someone posts a Facebook status, they make it viral. Then it becomes difficult for us to track down the seller and there is nothing we can do by relying on the status," said Shomi.
The association members have already sat with the commerce minister to procure a standard operating procedure in order to make sure that customers get the advertised products on time.
As a part of the trust-building process, Shomi Kaiser said they are not giving any new company membership. "We are giving membership to a company only after scrutinising them," Shomi said.
Regulations circling f-commerce
The government has decided to make trade licenses mandatory for over five lakh small e-commerce businesses on Facebook in efforts to bring them under regulations to expand the tax net.
E-commerce companies are opposing the government's move saying that the enforcement of strict regulations may obstruct the growth of this booming sector.
"Most of the entrepreneurs doing business on Facebook are small and it will be tough for them to get a trade licence. Ultimately, it will be a barrier to the creation of new entrepreneurs," said Shomi.
She added "Like the government, we also want Facebook-based entrepreneurs to come under the payment system. I do not think small entrepreneurs like these have the capacity to run a business via obtaining a trade licence."
The association is currently in discussion with the government for a way out. "We are thinking of introducing code or identity numbers as an alternative to trade licence," Shomi said.
"We hope that we will be able to do something for the logistics and delivery companies by June," Shomi informed.
According to Shomi, city-based e-commerce businesses have done well in the past and are still doing well. They plan on empowering e-commerce businesses in the rural areas as an entrepreneur from a distant village can sell their products in Chattogram or Khulna.
Shomi also plans to develop cross-border e-commerce businesses so local entrepreneurs can send local products abroad. This is a highly potential marketplace.
"Our entrepreneurs are already sending local handcrafted products to China. We are working on it. I believe this industry has the capacity to earn more than the RMG sector," said Shomi.