![](https://selopia.com/wp-content/uploads/2023/07/blog-post-img-2-650x650-1.jpg)
E-commerce in Bangladesh: What potential does it hold?
E-commerce uses a variety of technologies, such as electronic data interchange (EDI), electronic mail (e-mail), and electronic funds transfer (EFT). In the case of Electronic Data Interchange (EDI), trading partners must come to an agreement. A common technique for transmitting company data is EDI. Fax and email are additional examples of EDI. Small, medium and large businesses in Bangladesh have used e-business platforms. When compared to established nations, developing nations have a better potential for utilizing e-commerce as a medium to enhance the corporate structure and increase productivity. In today’s e-business environment, M-Commerce (Mobile Commerce) and F-Commerce (Facebook Commerce) are quite popular. The quantity of online transactions has increased over time. The number of internet customers in Bangladesh surpassed 80 million in 2017, according to BTRC authorities. Currently, there are 2,000 e-commerce websites and 50,000 Facebook-based businesses that ship close to 30,000 items daily. Currently, Dhaka, Chattogram, and Gazipur account for 80% of most online sales.
Over time, Bangladesh has seen a rapid increase in online transactions. Due to various advancements in living standards and improved employment opportunities, purchasing habits have changed significantly. The e-commerce sector was launched in Bangladesh in the late 1990s, but it was unable to grow right away. Banking, logistics, communications, and payment systems have gradually improved over time, opening up prospects for the e-business industry to grow. The online payment system is currently used by many industries, including the banking industry. The cash-on-delivery mechanism is now more accessible as customers may use credit, debit card, and digital wallet services upon receiving their ordered product.
From the year 2012, the local e-commerce market in Bangladesh started to develop into a robust ecosystem. Expanded internet access and the Bangladesh Bank’s eventual legalization and endorsement of an online payment made this possible. Initially, several banks did not support the online payment gateway system.
<blockquote>The number of internet users in 2016 was 66.6 million, and the internet penetration rate was 13.2%, according to the Bangladesh Telecommunication Regulatory Commission (BTRC).</blockquote>
The growth of e-commerce has been facilitated by better internet connections and a rise in the number of individuals with access to the internet during the past few years. In 2016, $50 million was spent in Bangladesh’s e-commerce market. $10 million of that total came from foreign direct investment. In 2017, the retail market generated BDT 1335.71 billion, while the B2C e-commerce business market was USD 110–115 million (about BDT 9.0 billion). According to the e-Commerce Association of Bangladesh’s (e-CAB) estimation, the e-commerce industry market’s reach increased to Tk17.0 billion in 2017 from Tk4.0 billion in 2016. By 2023, it is anticipated that the e-commerce sector would be worth Tk70 billion.
Retail e-commerce in Bangladesh is expanding at a rate of 72% each month. Currently, this industry includes about 35,000 people and over 25,000 small and medium-sized businesses (SMEs). Up till 2018, there were 2,500 corporate e-commerce websites and 150,000 e-commerce pages. At the retail level, it was anticipated that there were between 15,000 and 20,000 deliveries made each day.
Prior to 2013, the government imposed limitations on transactions involving international credit cards for the purchase and selling of products and online services (export.gov, 2017). The e-commerce sector expanded by 67% in the first three quarters of 2016, while e-commerce transactions in the nation totaled BDT 3.59bn (Xinhua, 2016).
The number of internet users in 2016 was 66.6 million, and the internet penetration rate was 13.2%, according to the Bangladesh Telecommunication Regulatory Commission (BTRC). With an increase in penetration to 48.4%, there were 80.6 million internet users worldwide in 2017. With a penetration rate of 52.77 percent in 2018, there were 91.3 million more internet users than in 2017. There are now 96.199 million internet users worldwide (June 2019). Sector researchers predict that by 2020, the Bangladeshi e-commerce market would be worth USD 20 billion. According to BRTC figures from June 2019, 5.73 million people have ISP + PSTN connections, 0.06 million have WiMAX subscriptions, and 90.4 million have mobile internet subscriptions.
Even though the e-commerce industry has expanded over the years, there are still many challenges. Net neutrality, high-speed internet, logistics for package delivery, and the guarantee of high-quality items are a few of the major difficulties. Local start-ups are also in rivalry with and in danger from foreign players. The lack of reliable transportation and logistic systems harms the industry and limits e-commerce trading’s ability to grow. A transportation system’s impact on product delivery is evident. The logistics industry is still facing difficulties. The capital and Chattogram account for a sizable portion of over 65% of the e-commerce enterprises’ activities. The e-commerce companies fail to reach all parts of the country, including of course the rural areas, due to poor infrastructure and inability to access remote areas for lack of adequate transport facilities.
The majority of the time, payment is paid upon delivery in Bangladesh. Only 15-20% of payments are made via mobile payment channels; the majority (80%) are made using the cash-on-delivery method. Cash-on-delivery raises the possibility of tax avoidance and reduces transaction transparency. The lack of trust and the absence of a dependable and secure payment mechanism are the main causes of this. Additionally, few people in the nation utilize credit or debit cards, which prevents many consumers from making online payments. This issue should be somewhat solved by the e-wallet mechanism. bKash has partnered with the e-commerce ventures in the country and in addition, if banks also follow suit, it will be beneficial.
Bangladesh’s e-commerce market still has much depth that is yet to be explored. This industry is expanding steadily and becoming more competitive. The local e-commerce businesses that have been operating on the market since the e-commerce industry’s start should be protected. Foreign investments are also necessary for this industry at the same time. E-commerce websites need to increase the security of their payment methods. The availability of low-cost, fast internet in rural regions must be guaranteed. Customer service and delivery logistics need to be given more consideration in the e-commerce sector. Since there is no regulatory body to guard against customers being duped or provided subpar or outdated goods, immediate action is required to protect their rights.
Despite the challenges, the industry has a lot of possibilities, and in the coming years, it is expected to have a sizable impact on the GDP of the nation. When it comes to assisting this industry as part of its Digital Bangladesh agenda, the government has to be more supportive of it.