Changing The Market Dynamics of Bangladesh

Currently, E-commerce has shifted towards creating traffic through creating mobile-friendly interfaces to ensure that Bangladeshis from all walks of life can access it comfortably. It turned out to be an incredibly strategic and fruitful move as the traffic on sites from mobiles is 10 times greater than that on desktops. Most of the e-Shoppers of Bangladesh are using E-commerce service through mobile devices. It can be justified quite easily as the number of internet users in Bangladesh has crossed 123 million marks already in 2021.

Progress of countries across the world in the 21st century can be threaded back to one singular industry: technology. The ripple created by the globe to get digitalized and get ahead of the time have given birth to couple of specialized sectors. However, none of them have been able to stand out significantly as the e-commerce industry. Bangladesh’s huge marketplace
also rapidly adopting with the blessings of e-commerce. Convenience is the focal point of this business which ensures the complex process of buying and selling in a flexible number of quantities occur with just a click of the button. It’s identity as a digital marketplace have brought forth the wonders of shopping to all the corners of the world. Getting to choose your required products and services from your device and getting it without having to step out of the comfort of your homes is what makes it so widely popular while also adding layers of lifestyle upgradation to human beings.

E-Commerce & Bangladesh

When it comes to the e-commerce industry, no countries have made a more remarkable adaptation than Bangladesh. 2012 marked the beginning of the journey of e-commerce industry throughout the local market in Bangladesh. The start was accelerated by the increase in internet connections increasing the size of the potential market for e-commerce.  And with the introduction of digital payment along with the gradual support and authorization of online payment by the Bangladesh Bank the infrastructure for e-commerce became even more strengthened. Within the past 5-6 years, some factors have surfaced and played a major role in the development and growth of the e-commerce market. The penetration of mobile internet within the lifestyle of the masses and the growth of active mobile internet usage has become the biggest catalyst for the increased reach of ecommerce. Furthermore, the inclusion of feature phones and smart phones within the purchasing power of the masses further fueled their growth. The E-commerce industry in Bangladesh is also progressing at a swift pace due to the initiatives taken by businesses and the government towards digitalization. Bangladesh Telecommunication Regulatory Commission’s (BTRC) statistics discovered that the number of internet subscribers were doubled in five years in the country. The number stood at 111.875 million at the end of 2020 whereas the number was 54.120 million at the end of December 2015. The Covid-19 pandemic triggered a drastic upward shift in retail E-commerce in the country. Because of the lock down & physical distancing, consumers were compelled to modify their age-old habit of going to markets; and start shopping online. The state of the pandemic served as a blessing for the E-commerce industry where businesses like Daraz, Chaldal, Rokomari, Foodpanda etc. experienced exponential growth  along with massive market development that allowed them to expand their businesses.

Currently, E-commerce has shifted towards creating traffic through creating mobile-friendly interfaces to ensure that Bangladeshis from all walks of life can access it seamlessly. It turned out to be an incredibly strategic and fruitful move as the traffic on sites from mobiles is 10 times greater than that on desktops.

Most of the e-Shoppers of Bangladesh are using E-commerce service through mobile devices. It can be justified quite easily as the number of internet users in Bangladesh has crossed 123 million marks already in 2021. According to the figures published by the telecom regulator, the number of mobile phone users has also increased to over 181 million. Large e-commerce companies are also inclined towards for advanced experience of e-shopping on mobile devices. Bangladeshi local e-commerce companies have adopted the concept of becoming mobile friendly as consumers are more active in Social Media Shopping. Shopping through social media platforms is escalating at an exponential rate in Bangladesh. This rate is higher as new business groups have joined social media platforms like Facebook marketplace.

What Stats Shows

As per Statista, the following projection shows how the rates of mobile usage will go up by 2025. Social media shopping has been making more revenue than traditional e-commerce sites. Online payments system in Bangladesh is getting more enhanced day by day. Mobile Financial services like bKash, Nagad, and DBBL- Rocket with other online banking systems are achieving the trust of people and promoting them to do all their transactions online. This has affected the E-commerce industry of Bangladesh in a very positive way as people are related to purchase and pay for products more easily.

Technologies like Cloud services are getting popular gradually to host E-commerce websites.  Financial technologies such as bKash, Nagad, ipay, Rocket, iBanking etc. are nowadays used in a nominal scale to make the payment. Bangladesh government is considering the E-commerce sector as one of the most prospective business sectors and provided major support from the government. To implement the vision of digital Bangladesh, the government is uplifting the e-commerce industry is one of their key areas. 

From the statistics of e-Commerce Association of Bangladesh (e-CAB), and official reports, online sales rose about 70% in 2020 from 2019, and market size of the industry stood at nearly $2 billion as of August 2020. However, net neutrality, high-speed net, parcel delivery logistics and assurance of quality products are the key concerns in E-commerce sector. Foreign companies also pose competition and risk to local start-ups. The sector currently suffers from lack of logistics and sound transportation system that restrict e-commerce trading to expand. There are several contributing factors to a weaker customer penetration ranging from operational challenges, culture, and overall poor digital literacy. The current irregularities, complaints of undelivered products, refusal to pay refunds have been making headlines and posing a big threat in the growth of this sector.

In future, the size of Bangladesh’s E-commerce sector is projected to be around US$ 3 billion by 2023. The revenue in the E-Commerce market is projected to reach US$ 8,030m in 2022. User penetration will be 35.0% in 2022 and is expected to hit 43.8% by 2025. As there has been solid historical indication of consumers paying more money on fashion, food, and consumables with higher expendable income. There is potential and capacity for growth in E-Commerce sector. The revenue from E-commerce websites in 2021 was USD 6587 million. Considering the growth of the market, the revenue from E-commerce will be more than double in 2025 as per Statista.

Delivery process will be automated in Bangladesh in near future for the products purchased from e-commerce platforms. This technique will allow to deliver parcels using delivery drones and automated shipping trucks. Amazon has already confirmed this feature of delivering package using drone in Bengaluru, India (neighboring country of Bangladesh). This technique will reduce fuel costs, save delivery time, and enhance customer experience. We can expect the same service in Bangladesh and It’s just a matter of time. However, we must consider the affordability of the AI services in all E-commerce sellers’ context as the system is costly.

Along with the increased internet subscription, the number of E-commerce user will increase robustly in 2025. In 2021, the total number of E-commerce user was 105 million and in 2025 it is projected by Statista that the number will be almost 168 million. The electronic, fashion and food are the top 3 sectors for this market. The increased availability of smart devices, stable internet connection, increased income etc. will influence the users. People will be using 4G service in a greater scale as currently only 27% are under the coverage of 4G. Thus, people will invest more on E-commerce websites by purchasing products and services. It is predicted that by 2025, the mobile adoption rate and 4G adoption rate will be 62% and 54% respectively.

Mobile Adoption Rate: 62% by 2025

4G Adoption Rate: 54% by 2025

“Last 3 years have been the gamechanger for E-commerce market, it is very much accepted among customers. Currently it is a billion-dollar industry, but E-commerce is an untapped market, and the number of players is less. Now Khacchibhai, Salam’s kitchen etc. are also relying on food delivery services. This market will be booming in future as only 5% of the retail market is in the E-commerce sector. In future, we can expect that it will be a very defining factor for Bangladesh and evolve in a way where it can deliver more efficiently.” -Rafeed Redwan, Category Lead-Sports, Daraz Bangladesh.

We can see that percentage of online shopping will have around 7.4% customers. Though it will have billions of market value, overcoming the laggings in the market will bring greater value in the future.

• The technical structure of e-commerce platforms in Bangladesh will need to be more advanced aspects such as websites need to be stronger, secure, and fast to cater to increase the number of customers. 
• Improved seller behavior is another aspect which can increase the customers in future. As faster delivery service is expected in future, the sources need to be sufficient with products. Many vendors or sellers listed on many e-commerce websites don’t have Facebook pages, their own stock or business. These are basically resellers, who will source the goods from another wholesaler or local vendor and then sell it on websites for a margin. As, significant portion of the sellers’ sources goods upon ordering with a higher turnaround time, it stretches the entire process.  In future, when there will be assurance of goods being delivered on schedule, these vendors need to change their model to sustain in the game.
• Easy delivery tracking systems will be developed to be straightforward with the consumers so that they can rely on accurate timing and contribute to industry growth. Owing to all these challenges, overall customer satisfaction is also not in a very encouraging shape right now.
• Considering the future of cashless transactions, the use of mobile financial services (MFS) in Bangladesh will be booming as it has grown 159% in last 4 years. Easy and effective payment methods in the sites will be necessary for everyone in the market. Immediate cashback on return or cancellation of goods will be on demand as the process currently takes up-to 45 days. A model on interoperability of different payment methods will solve the problem.
• As, the market of E-commerce will be gigantic in future, Local and international titans will be entering Bangladeshi market for the upcoming opportunities. It will require proper monitoring and regulations implemented in the market for a safer place for both buyer and seller 
• Year 2021 exposed the need for sustainable business models in the aftermath of investment ideology promoted by the fraudulent e-commerce sites to collect more money. Hence, to avoid such occurrences in future, Bangladesh needs to have a detailed yet implementational guideline which will help in building a safer marketplace for both buyer and seller in online.

It’s safe to say that the trajectory the e-commerce industry of Bangladesh has been on is nowhere at an end. Considering the recent shift in user preferences and the convenience-based lifestyle people are adapting, it’s safe to say that its growth will double in the immediate future if not more. If Bangladesh can take care of a few factors like SEO, delivery smoothening, proper enforcement of legal regulations, and additional comfort factors for the consumers; its overall growth will get boosted significantly. Furthermore, the recent preference of Bangladeshi brands to transform themselves into “Super Apps” is poised to make the digital realm a one-stop spot for users to fulfill all their needs. On top of that, the layers of organization and inventory amplification will make it a platform that’s suitable for use for people who have the most minimal education too.  The unparalleled potential and prospects of this industry is what makes it a major future contributor to Bangladesh’s GDP.

In this regard, Press Xpress had an exclusive interview with Md Abdul Wahed Tomal, General Secretary of the e-commerce Association of Bangladesh (e-CAB).

How is e-commerce evolving herein this country?

Now we have almost 13 crore smartphone users in the country. But only 4% of the total population is getting the benefits of e-commerce. To spread the sector this government is working hard. As we know the entrepreneurs at the grassroots level are now getting involved with this business. Both the merchants and buyers are increasing and getting involved. The government is also changing some policies to ease local e-commerce business. Many small entrepreneurs are now getting connected, the government is issuing UBID and many more business-friendly policies are being developed. Besides these activities,’ the government is developing many platforms to merchandise products of grassroots and small entrepreneurs.

 How much impact can e-commerce have in the local market?

People are dependent on people and some qualitative changes have taken place in this regard. A large part of the general population is now shopping online but now the people who are buying from the general market are not completely dependent on online, A completely different online market sector has created a big market and some big demand and the demand from which people now feel more comfortable shopping online but the current trend shows that in the next couple of years this may be a big part of the general market. That means 15 to 20 percent of buyers will now move to the online market.

Do you think Bangladesh is a good market for e-commerce?

Bangladesh is actually a very good market for e-commerce but only 4% of the current population is shopping online. Maybe by end of this year, it will go up to the top 5%. Also, 80% of purchases are from urban areas and only 20% are from rural areas. Internet and communication system are now quite strong and the delivery system was well developed. Although there are still some barriers in Bangladesh for technical e-commerce business, it is a very good market for local businesses.

How important e-commerce is for Bangladesh to go ahead in global market?

Some policy issues are now hindering the cross-border eCommerce of Bangladesh. Changing these policies can also help to activate the 5 billion dollars target for export. The payment system is a major problem now like if anyone wants to order something from outside of the country have issues paying online as well as exporters can’t able to export without opening LC. These policies are already changed in many countries and if Bangladesh can do this.

Where do you envision local e-commerce in next few years in terms of growth, coverage and employability?

We have seen the e-commerce market growth has reached its estimated target based on the projections we had predicted almost 7 years ago. But we can make this growth double and more in the next two years if we can enhance and engage more digital platforms and services.