What is E-commerce and how does it work in Bangladesh
As it’s more popularly referred, the electronic commerce or e-commerce is defined as any form of trade or exchange of goods, services, and information while using electronic means. Since the dot-com boom and bust in the 90s, the application of e-commerce has been rapidly gaining acceptance globally.
It’s largely due to the ability of e-commerce to go beyond international boundaries and enable activities within the virtual marketplace at the level of international acceptance and popularity among businesses, especially small businesses, and entrepreneurs.
And at a relatively low cost, it enables entrepreneurs to do business internationally. Besides, it’s predictable to fare particularly well in developing countries in the e-commerce sector. As traffic jams and consequent of the restriction in physical mobility can constitute a significant barrier to business growth, this is perhaps more inevitable for a developing country like Bangladesh.
In addition, as the sector still considers being at an embryonic stage, some e-commerce businesses have risen to prominence in the context of Bangladesh. And after the ongoing phase of customer familiarization and comfort with e-commerce increases, its contribution to economic growth expects to increase exponentially.
An Overview of e-Commerce in Bangladesh
When Bangladesh needs widespread internet access or a reliable online transaction system, the e-Commerce sector has seen dramatic growth since the early 2000’s. And the country’s central bank authority, Bangladesh Bank, began permitting online transactions in 2009. Also, they come to provide permits allowable the purchase and sale of goods and services online using international credit cards.
Moreover, the number of internet users has nearly 3X from 6.5 percent of the population in 2013 to 18.2 percent in 2018 and continues to grow according to the International Telecommunication Union (ITU). A 17.8 percent of the population has a mobile-broadband subscription where only 2 percent of the population has a fixed-broadband connection. And the position of Bangladesh on the ITU’s ICT Index ranks 145 out of 175.
Besides, the trade body for eCommerce in Bangladesh, the eCommerce Association of Bangladesh (E-Cab) estimates there are 700 eCommerce sites and around 8,000 e-commerce pages on Facebook.
This is because Facebook remains a popular method for advertising and selling products, to a point that many businesses forgo creating websites. And according to a 2017 E-Cab report, a ten billion Taka (US$10 million) in transactions takes place on eCommerce sites per year.
How Does E-commerce Work in Bangladesh
The Information and Communication Technology (ICT) Act, 2006 was enacted in order to facilitate e-commerce and encourage the growth of information technology. Including provisions for imprisonment and/or fines for cyber-crimes, the ICT Act was passed.
For e-commerce and mobile commerce in Bangladesh, the enactment of the ICT Act has significant implications. By low usage of credit and debit cards (cash remains the major payment method), the growth of the industry has been inhibited. For example, there is the unavailability of major online transaction sites like PayPal.
But, State-own Sonali Bank announces it signs a memorandum of understanding with PayPal in June 2016. There are the following four types of eCommerce are popular in Bangladesh currently;
- Business-to-Business (B2B)
- Business-to-Consumer (B2C)
- Consumer-to-Consumer (C2C)
- Business-to-Employees (B2E)
In addition, there are some challenges to eCommerce in Bangladesh and they include:
- Insufficient delivery mechanisms
- A comparatively low internet penetration rate
- The shortage of a robust online transaction system
- The pervasiveness of online fraud
- Immature online marketing practices
Domestic eCommerce (B2C) in Bangladesh
As evidenced by the growth of online food delivery sites like HungryNaki and FoodPanda, B2C websites have become popular in large urban areas. Also, it’s helped drive demand for home delivery services despite highly congested roads and poor driving conditions.
Among the other initiatives of B2C, there are Facebook-based commerce platforms such as Shopr.bd and ShoptoBd which allow Bangladeshi customers to purchase products from leading online shopping sites in the USA, UK, India, and China. Related- Best Online Business Ideas in Bangladesh
C2C eCommerce Businesses in Bangladesh
Bikroy, Ekhanei, and ClickBD are the leading players in this category. As they are similar to eBay, they are individual and auction-based online marketplaces. Also, the C2C sector has seen some consolidation with Telenor Group purchasing CellBazar and Ekhanei.com purchasing playeOLX in more recent.
So, in the private sector, online employee recruitment is also growing larger. As a result, bdjobs.com, prothom-alojobs.com, and jobsA1 are the leading online job advertisers and recruiters.
Cross-Border e-Commerce in Bangladesh
Ass there are prevent most outward flows of foreign currency for consumer purposes, cross-border eCommerce remains largely reticent by a viable online transaction system and capital controls.
Moreover, irregular customs practices hinder the growth of cross-border eCommerce along with weak logistics infrastructure. But, DHL, a leading logistics provider and they have publicly announced plans to invest in cross-border eCommerce in the future.
B2B eCommerce in Bangladesh
There are engaged in providing manufacturing and supply-chain solutions by the several B2B websites in Bangladesh. In this case, the Bangladesh Garment Manufacturers Employee Association (BGMEA) has deployed B2B e-commerce solutions for international RMG orders and procurement, for example. If you need details of B2B e-commerce business in Bangladesh, you can look at-
- Bangladesh Business Guide,
- Address bazaar
- And Biz Bangladesh
ECommerce Services in Bangladesh
As there are many Bangladeshi companies busy in eCommerce services, they have clients abroad, especially in North America. According to ECAB reports, there are approximately 550,000 freelancers in Bangladesh providing eCommerce or the similar services. Also, it’s not an issue of remitting payments from abroad into Bangladesh. Among freelancers in Bangladesh, Payoneer is a leading site for processing online payments. In the e-commerce services, Bangladeshi freelances do-
- Web design,
- Domain name purchasing,
- Secure hosting,
- Digital marketing and advertising,
- App development,
- And payment gateways etc
Online Payment via ECommerce Services in Bangladesh
Although there are some online payment systems, cash transactions are still the predominant financial transaction in Bangladesh. And more than 90 percent of eCommerce users in Bangladesh prefer the cash-on-delivery payment model according to ECAB.
Also, there are merchant accounts to facilitate credit card transactions for the most eCommerce business portals in Bangladesh. Although, almost all e-commerce websites offer multiple other payment methods, still cater to the consumer preferred cash-on-delivery system.
Mobile ECommerce in Bangladesh
There are 77.9% of inhabitants have a mobile phone subscription while 17.8 percent of inhabitants have a mobile broadband subscription according to the ITU’s latest Bangladesh profile states. Besides, Bangladesh has 99 percent geographical coverage in voice and data connectivity say e-Cab’s 2017 report states