A Brief History of E Commerce in Bangladesh

I am sure you are wondering why a GHOORI promotional video is in the top of this article. Is this a native marketing for Ghoori? Yes this is confusing but trust me, I put it there for a very particular reason. Ghoori is a very important part of the e-commerce history as it started a new concept and hope. Therefore, please pardon me for this unconditional love for our own creation and let’s start the “Brief journey of our ecommerce history”…

The story of e-commerce is older than you thought. Basically, our country saw a limited version of ecom in late 90s with the idea to serve NRBs who were looking for options to send gifts to their beloved ones in Dhaka. Slowly and steadily ecommerce started to grow from 2000 and in between 2008. But the major issues were payment gateway, delivery system and customer education against its rapid growth.

Situation started to change when the first payment aggregator SSL COMMERZ launched their business in 2010. And with the inclusion of WiMAX, internet speed got a bump as well during the same time which gave a boost to the online business too. Beside this improvement, we saw some major investments during this period, companies like ajkerdeal, rokomari, akhoni [now bagdoom] etc. started their operation as well.

Classified sector along with ecom got some serious attention from the foreign investors beside the local movement. For example: olx, bikroy, daraz, kaymu etc. In 2016, Bangladesh has seen the first ever and now the biggest pure ecommerce platform GHOORI from a local company called Chorki Limited. With a vision to connect all fShops [more than 7K fShops are active in the market right now]. Ghoori started their operation and now they have more than 3000 small merchants under a single integrated platform.

The concept of online marketplace was introduced in 2012/13 by akhoni and ajkerdeal. From 2015 onwards Kaymu and Daraz is disrupting the market by investing a huge amount of money in marketing for quick sales, which eventually is proven a wrong step and ultimately kaymu merged with Daraz in 2017.

Rokomari.com is another big inclusion in e commerce market back in 2013. They have successfully implemented a proven business model [amazon] and sold books worth of 1 crore in their first year of operation. Now rokomari is one of the top names in the industry and started expanding their business in other categories.

Meanwhile bikroy.com has shown a true class and distinguished themselves from other front runners by becoming the largest marketplace for buying and selling any consumer item. Unfortunately, due to huge investment pressure and lack of vision our own home grown classified site CLICKBD lost the momentum and lose the race eventually.

We have seen tremendous development in delivery industry during this period. Many companies opened just to serve ecom merchants. Food delivery services like HUNGRYNAKI started their operation in 2013 [might be 2014] and doing amazing at present. Last but not the least, we have sheba.xyz, who are shaping the service industry using online channels. Nonetheless, Chaldal.com redefined grocery shopping for us. They are the only company who has silicon valley investment and we hope they will change the shopping experience as a whole for our country within a short span of time.

Big FMCG like pran started their e commerce journey in 2016 as othoba. Not only that, Edison group started Pickaboo and they are now in the top three ecom sites in Bangladesh. Brands like BTI, Transcom, ACI [Swapno], Epyllion, Meenabazar etc. are expecting to launch their online sales center this year.

What is Happening in E-Commerce Currently:

Below slide is showing the current market situation of e-commerce. Though we came a long way, unfortunately market is still premature. Only 22% of total internet users are using online channel to purchase and the market size in amount is below BDT 150 crore [we have seen various data from various sources, this is what I think is the approximate value of total ecom market]. Not more than 1.5 million people are using e-commerce which is mainly dhaka based.

But opportunities are there and nation is expecting a growth of around 72% over the next couple of years. Companies like Rocket Internet invested $50 million already in less than 3 years and obviously hasn’t finished investing.

Let’s compare the market in China and India now. E Commerce industry contributed more than 4% in overall GDP of China [thanks to Alibaba]. Indian e-commerce market is expecting to grow more than $14 bill and China is $527 bill in 2017. Bangladesh is just passing the phase what India has passed 5/6 years back.

Below picture explains how and what things are influencing Indian market for the last couple of years:

We have seen some major players in Indian Market: Flipkart, Amazon, eBay etc. have invested billions to develop infrastructure, merchants, customers. More to add, India has reached the critical mass of Internet users as well. Indian govt. played a very important role too. Due to the entrepreneur friendly environment, local companies like Myntra, Snapdeal etc are coming up and competing with the big giants, which is eventually helping the market to become huge for the customers. In last decade, Indian middle class sector has grown a lot in terms of culture and purchasing power. So this huge hungry sector of the population needs quick and easy solution for satisfying their hunger of purchase and ecommerce industry is just doing that.

Fortunately, in Bangladesh we are observing the same trend. Our middle class is growing and they are also hungry for new opportunities and options which can be catered by ecommerce industry. As per my research & experience with this industry, I have seen the majority of the ecom buyers are young executives or students. This influential group will be enriched with buying power very soon. Another important thing is, our economy is spreading not only in Dhaka or Chittagong, but also in villages, small cities with proper internet connectivity. Therefore, a humongous population is ready to spend their extra disposable income for online purchase more than ever. As a result, it is safe to say we are on the verge of getting that critical mass for ensuring ecom industry growth.

Drawbacks:

Unfortunately, with so many improvements, we are facing some major drawbacks in the industry. Number one: our delivery service is mainly Dhaka based and we do not have inter city COD system in place. Still, more than 97% deliveries are completing through COD [cash on delivery] and consumers are not using available advance payment options [credit/debit card, MFS] due to reliability. More to add, merchants are misleaded by several forums and managing bodies regarding business concepts, planning and marketing. Thus there is a big understanding gap regarding how to run an ecommerce operation in terms of inventory management, order management etc. They think this is a business through which they can earn quick money. Unfortunately, ecom is nothing like that.

Another big issue is FACEBOOK dependency. Most of the small merchants are running their business through social media specially by facebook. They are using it as ecom platform without creating a proper website to run the business. Though Facebook is adding many features to support classified and e commerce business but they won’t be able to replace amazon as their business models are different. So if you want to do e-commerce, do make a website first. Our merchants are missing this simple equation every time.

Currently ecommerce is all about big cities like Dhaka or Chittagong. But we have a huge population out there beside these big cities who are crying for opportunities to buy new things. To make it possible we need nation wide delivery connectivity. Good news is POST OFFICE is finally working towards that. Lastly, lack of investment and long term vision is keeping us apart from having a successful ecommerce industry. Ecommerce is an investment hungry setup. So if you are in ecom make sure you have the proper fuel to run the business for more than 2/3 years before having any kind of possible profit. Most of the ecom businesses in Bangladesh do not have this luxury and thus close down within a short span of time.

This is not everything. After showing so much of everything, ecommerce industry does not have any rules or regulations from Govt. We do not have a guideline on how and what ways anyone/company can start an ecom business. eCAB and BASIS is working on this, but so far their activities are limited towards business expansion through youth community and arranging policy dialogues. For a sustainable growth we need a proper policy and guidelines immediately. And these forums and managing bodies need to play a very strong part.

Now comes the point COD. For ecom expansion we must make it below 80% of the total transactions [based on India]. One of the main reasons of COD is “TRUST” and we have discussed it in previous sections. Another big issue is number of cards available in the market, which is really low and insufficient. We need the intervention of BB [Bangladesh Bank] to lower the TXN cost especially for credit and debit card which will help to grow the market for online payment. The good news is, we are seeing several wallet companies are forming and people are starting to purchase through cards in recent months and more industries are adopting online payment options in their collection process.

What We Can Do To Fix These:

  • Centralized inventory management: To solve the stock mismanagement cases, we need to have a solution like shopify, where merchants will control their online and offline inventory from a single platform. Companies like GHOORI can work on this and provide us an universal POS system. If we can minimize out of stock issue, 70% discomfort regarding reliability will be solved.
  • Nationwide COD: The truth is you can not eliminate COD. So let’s make it API system oriented. We should take the help from industries like TELECOM, FMCG or POST OFFICE to build up the connectivity so that our industry can use it to connect whole nation under the same API system.
  • Escrow System: To fix the reliability issue once and for all, we need to implement escrow system in our payment methodology. Right now, we do not have such regulation or process. BB needs to come forward and guide banks to implement this as soon as possible. This will serve user interest and protect their rights. Merchants will also be benefited by detecting fraud transactions and unnecessary returns.
  • Cost of Bandwidth and Internet Availability: Govt. has done a tremendous job regarding B/W price. But unfortunately end users are not able to get the juice of it. Still we are paying more than 300 Taka for a GB in 3G. For ecom we need internet users, and so we need internet in a much cheaper rate for expanding it among rural population.
  • Merchant & Consumer Education: BASIS and eCAB has a huge role to play here. They need to bring more knowledgeable persons regarding ecom to start campaigns to promote ecom nationwide. They need to bring the collective mind of ecom industry to make these efforts a success.
  • E Commerce Policy: We don’t need another policy dialogue rather need the policy ASAP. Merchants need to know how govt. will allow them to do business in this sector.
  • International Transaction: Total online ad market in Bangladesh is more than 700 crore right now. 85% of these total ad-transaction amounts are going to Facebook and Google. Thus govt. is losing a huge amount of AIT and VAT as merchants and companies are using illegal way to transfer money to the foreign accounts. Ecommerce needs promotion and for that these platforms are very valuable for us. So we need to come up with a solution to do it in a proper way. Govt. can help us to get invoicing system with Google and Facebook and process to transfer money from our end to international end legally. The best solution could be allowing our own payment aggregator to process these payments.

his is what we have about e commerce in Bangladesh right now. As a whole I would say, ecom has a bright future. But we need patience and understanding of the best practices. Bangladesh is very new in this sector, so this gives us the opportunity to watch and learn from successful companies. Let’s do that and make ecom a viable industry for both merchants and customers… Post your comments and thoughts in the comment section. Good day and enjoy online shopping .

Data Source: From national dailies and primary research.

#ecommerce #startup #onlinebusiness #entrepreneurship

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Expert in Digital Distribution & Fintech| Entrepreneur | Mentor & Trainer | Digital Marketing & Growth Hack Expert

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