Digital commerce: Disciplining the sector and winning customer confidence

The popularity of digital commerce or online shopping has grown significantly during the Covid-19 pandemic, especially during lockdowns. 

People who never thought about shopping on the internet before have also embraced digital commerce during these times of frequent imposition of lockdown. People have developed a habit of buying daily necessities, food items, medicines, etc. online. 

Customer acquisition has remained a big challenge of any business. The pandemic has expanded the customer-base for these digital commerce businesses. In a way, the Covid-19 situation has been a blessing in disguise for digital commerce, although the sudden demand impaired the logistics part of digital commerce on many occasions.

Meanwhile, the 'Digital Commerce Operational Guidelines-2021' has been issued to ensure accountability and transparency in the digital commerce business for creating employment opportunities and at the same time increasing consumer confidence, by bringing discipline to this digital business. 

This will not only create a competitive market but is equally believed to create new entrepreneurs.

Multi-level marketing and digital commerce

Lately, there has been a tendency to do multi-level marketing (MLM) business using digital commerce. Much like gambling, such schemes lure investors to continue to invest money. But in most cases, the outcome of these businesses does not yield any benefit for common investors, barring a few. 

More importantly, as it sets examples of deceiving people, it spoils the business ground for the entire digital commerce sector. As a result, the digital commerce industry was losing customer confidence. This guideline, therefore, prohibits digital commerce businesses to get involved or follow the MLM methods.

Data privacy and security

Data privacy coupled with its security is now a very important issue in 'Digital Bangladesh'. Provisions have been made to ensure that the customer's personal information such as name, date of birth, address, national identity card number, etc. may be collected with pre-approval of the client. Clients' permission will also be needed for where the information will be stored and how it will be used. 

ICT Division and Bangladesh Association of Software and Information Services (BASIS) have been working rigorously on data privacy policies, with which the published guidelines must  be aligned to ensure coherence and applicability. 

For instance, the guideline provides for the preservation of all information related to business transactions for at least six years to ensure transparency and facilitate further investigation if pursued by the government. 

Certainly, from the point of view of conducting an investigation, the more information an agency can have, the better investigative report it can make. But, the space needed for storing such a large volume of data for such a long period of six years can be a matter of concern to the startups, micro, small and medium businesses, as it may add more costs to their operations. 

Moreover, it remains to be rechecked, whether keeping customer information for so long violates the Data Privacy Guidelines or not.

Lottery, gift or cash voucher

A digital commerce merchant should be careful not to confuse or deceive consumers by showing the temptation of the lottery. However, in the case of marketing needs, such special arrangements may be subject to the permission of the concerned authority from time to time. 

In case of issuance or sale of gift or cash voucher, prior approval of Bangladesh Bank will be required from now on. However, there is nothing mentioned at the present operational guideline in detail, which is much required to be in place. 

Many people buy these vouchers and give them as gifts to their loved ones. Since these vouchers are prepaid, sellers also prioritise and initiate the sale of these vouchers to increase their revenue very frequently. 

If such marketing activities or sales promotions are required to take approval from the authorities, then it will surely lessen the ease of doing business for digital commerce entrepreneurs and will disrupt the regular marketing activities. Provision may be made, however, to keep the selling price of the vouchers equal to the face value for protecting customer rights.

Procedure of taking consent of buyers on the detailed terms and conditions

The Digital Commerce websites and Facebook-based commerce pages have been instructed to keep all the terms and conditions, including sales, refund, exchange/return, delivery method and time in Bengali, and if necessary in other languages. 
Due care must also be taken that these terms do not conflict with the prevailing laws or regulations of the land. It is important to make sure that the customer agrees to these terms. 

Some websites take this consent from the buyers following 'Browse Wrap' method, which means that the customer's approval is implied just for viewing or browsing of that webpage. Such a consenting method is not suitable for Bangladeshi consumers as they have not yet become fully aware of these legal matters. 

Therefore, it is required to set up a 'checkbox' with the provision of taking all the consent in the 'Click Wrap' method, through which customers will be giving their consent by clicking on a specific place on the page.

Prohibition of forcing the buyer to purchase

Digital commerce merchants cannot force the buyer to purchase goods or services in any way. These guidelines are justified in terms of protecting consumer rights without any doubt. But in cases where the buyer places an order for a custom-made product on mutually agreed terms, and then, after some time if the client refuses to take the product, who will bear the cost liability of that custom-made product? So, there must be some very specific remedial guidelines addressing such issues as well.

Vendor and the marketplace relationship

No marketplace will be able to hold the owed amount/selling price of the original seller or vendor for more than 10 days unless there are some other agreements between the two parties. Also, the name, picture, copy of national identity card, mobile phone number, address, etc. of the original seller have to be kept in record by the marketplaces, which can be seen as a good move for ensuring tracing, if necessary.

Advance payment and custom-made product
According to the guidelines, for products that cannot be delivered within 48 hours, a maximum of 10% of the price can be taken in advance. However, the full price can be accepted through the upcoming Escrow service. 

But, keeping positive cash flow in mind for the digital commerce business, the advance payment may be set in a different slabs, such as, if delivery is within 1 month then 50% advance payment can be taken from the buyer; 30% if delivery is possible within 2 months; 20% for 3 months and up to 10% if more time is needed. 

In many real-world cases, the manufacturer does not start production without a substantial down-payment. Especially, when it comes to taking orders for a custom-made product, receiving only 10% advance payment is considerably risky for the merchants.

Product delivery and delivery partner

If the full price of the product is paid, the seller has to deliver the product within a maximum of 5 days to the buyer if they are in the same city, and if they are in a different city, the seller has to deliver the product within a maximum of 10 days. 
This is undoubtedly a good initiative in terms of securing the quality of service and protection of consumer rights. However, it would not be right to place the responsibility for the error or negligence of the delivery partner or logistics provider on the digital commerce merchants. 

Therefore, it would be rational to amend this provision to 'must be delivered to the delivery man' instead of 'must be delivered to the buyer'. At the same time, 5 days and 10 days period have to be calculated in working days.

Refund procedure

If it is not possible to provide the product or service due to any reasons that are beyond control of the seller, then the seller must notify the buyer within 48 hours of the full payment and refund the full amount received within 72 hours. 

However, instead of paying the full amount within 72 hours, there should be an obligation to start the refund process. This is because, most of the time, payment gateways, banks, payment aggregators, take seven or more working days to complete the refund process. Bangladesh Bank's intervention is expected in this regard.

Compliance officer and small businesses

It has been made mandatory for every digital commerce organization to appoint a compliance officer who will coordinate with the Department of Consumer Rights and other agencies. 

It will be quite expensive and difficult for small businesses to comply with this provision. Rather than making it mandatory, it can be encouraged. However, there may be provisions to nominate an official of the businesses to coordinate with all these departments and agencies as an additional duty.

Intellectual property rights and preventing adulteration

The guidelines call for the appropriate protection of intellectual property rights. This is very important because offering counterfeit products can confuse and dupe the customer. 

Due to the lack of enforcement of the IP law, it is being violated often. Many are openly marketing counterfeit products as 'replicas'. It has been instructed not to display adulterated products, but it is not clear whether the responsibility lies with the marketplace or the seller or the manufacturer or importer.

Foreign digital commerce platforms to get registered in Bangladesh

The 'Digital Commerce Operational Guidelines-2021' states that if a foreign company wants to do digital business in Bangladesh, it is a mandatory for the entity to get registered in  Bangladesh and obtain the approval of the appropriate authorities. 
Adequate clarification is required on this instruction. Many customers in Bangladesh legally purchase services of various foreign digital commerce platforms for hotel booking, air-ticketing, etc. 

Bangladeshi customers may lose global connectivity if this condition is imposed. Therefore, the registration obligation can be required only if a foreign company wants to sell its products or services through a domestic marketplace. The directive in this regard needs to be amended.

If the guidelines are only designed to focus on consumer rights, ignoring the need to make them business-friendly, then, the digital business sector will not grow as envisioned. In the UNCTAD's Business-to-Consumer e-Commerce Index 2020, Bangladesh already dropped by 12 notches to 115 from 103 in 2019. An operational guideline that judges a situation from one particular point-of-view only may drag down the country in this index further. 

To reap the benefits of Digital Commerce Policy-2020 (Revised) and the Digital Commerce Operational Guidelines-2021, right implementation and proper coordination between the relevant government agencies and trade bodies will create confidence in the digital commerce industry and entrepreneurs will be able to contribute to the country's economy by investing in this sector.

Syed Almas Kabir is the president of Bangladesh Association of Software and Information Services (BASIS)