Bangladesh - eCommerceBangladesh - eCommerce
Overview
The e-Commerce sector has seen dramatic growth since the early 2000’s when Bangladesh lacked widespread internet access or a reliable online transaction system. In 2009, the Bangladesh Bank, the country’s central bank authority, began permitting online transactions. In 2013, the Bangladesh Bank also permitted the purchase and sale of goods and services online using international credit cards. According to the International Telecommunication Union (ITU), the number of internet users has nearly tripled from 6.5 percent of the population in 2013 to 18.2 percent in 2017 and continues to grow. While only 2 percent of the population has a fixed-broad band connection, 30 percent of the population has a mobile-broad band subscription. Nonetheless, Bangladesh still ranks 147 out of 176 on the ITU’s ICT Development Index 2017, an annual report that captures the level of ICT development.
The eCommerce Association of Bangladesh (e-Cab), the trade body for eCommerce in Bangladesh, estimates there are 700 eCommerce sites and around 8,000 eCommerce pages on Facebook. Facebook remains a popular method for advertising and selling products, to a point that many businesses forgo creating websites. Ten billion taka in transactions take place on eCommerce sites per year according to a 2017 e-Cab report.
Current Market Trends
Currently, the following four types of eCommerce are popular in Bangladesh:
- Business-to-Business (B2B)
- Business-to-Consumer (B2C)
- Consumer-to-Consumer (C2C)
- Business-to-Employees (B2E)
The growth of the industry has been inhibited by low usage of credit and debit cards (cash remains the major payment method) and the unavailability or restrictions on major online transaction sites like PayPal. In March 2017, Bangladesh’s central bank gave permission to state-owned Sonali Bank to launch online money-transfer services with PayPal in the country.
Additional challenges to eCommerce in Bangladesh include:
- Inadequate delivery mechanisms
- A relatively low internet penetration rate
- The lack of a robust online transaction system
- Prevalence of online fraud
- Undeveloped online marketing practices
- The lack of a robust privacy policy
B2C websites have become popular in large urban areas, as evidenced by the growth of online food delivery sites like HungryNaki and FoodPanda. Highly congested roads and poor driving conditions have also helped drive demand for home delivery services. Other examples of B2C initiatives include Facebook-based commerce platforms such as Shopr.bd and ShoptoBd which allow Bangladeshi customers to purchase products from leading online shopping sites in the United States, UK, India and China, e.g., Amazon.com, ebay.co.uk, Amazon.in, and Alibaba.
C2C businesses are also growing. The leading players in this category include Bikroy, Ekhanei, and ClickBd. These sites are individual and auction-based online marketplaces similar to eBay. More recently, the C2C sector has seen some consolidation with Telenor Group purchasing CellBazar and Ekhanei.com purchasing playeOLX. Online employee recruitment is also growing, largely in the private sector. Leading online job advertisers and recruiters include: bdjobs.com, prothom-alojobs.com, and jobsA1.com.
Cross-Border eCommerce
Cross-border eCommerce remains largely inhibited by a viable online transaction system and capital controls that prevent most outward flows of foreign currency for consumer purposes. In addition, weak logistics infrastructure and irregular customs practices hinder the growth of cross-border eCommerce. However, leading logistics provider DHL publicly announced plans to invest in cross-border eCommerce in the future.
B2B eCommerce
Several B2B websites in Bangladesh are engaged in providing manufacturing and supply-chain solutions. For instance, the Bangladesh Garment Manufacturers Employee Association (BGMEA) has deployed B2B e-commerce solutions for international RMG orders and procurement, as have several large ready-made garment companies. There are also B2B websites that feature business directories, trade deals and information about suppliers such as Bangladesh Business Guide, Address Bazar, and Bizbangladesh.
eCommerce Services
There are many Bangladeshi companies engaged in eCommerce services, including web design, domain name purchasing, secure hosting, digital marketing and advertising, app development, and payment gateways, among others. Many of these companies provide services to clients abroad, especially in North America. e-Cab estimates there are approximately 550,000 freelancers in Bangladesh providing eCommerce or related services. Remitting payments from abroad into Bangladesh is generally not an issue. U.S-based Payoneer is a leading site for processing online payments among freelancers in Bangladesh.
eCommerce Intellectual Property Rights
The present system of trademark protection lacks sufficient legal framework to protect intellectual property rights. The absence of a legal framework has created opportunities for unscrupulous business practices.
Popular eCommerce Sites
Popular eCommerce websites in Bangladesh include:
Online Payment
Cash transactions are still the predominant financial transaction method for the majority of the population. According to research by e-Cab, more than 90 percent of eCommerce users in Bangladesh prefer the cash-on-delivery payment model. Most eCommerce business portals in Bangladesh have integrated merchant accounts to facilitate credit card transactions. However, almost all eCommerce websites also offer multiple other payment methods and still cater to the consumer preferred cash-on-delivery system. Very few eCommerce businesses operate on the system of only delivering the product after receiving payment through a wire/bank transfer.
Online payment remains limited but is growing in Bangladesh as a result of an increase in internet/mobile cell phone penetration, gridlocked traffic which discourages in-person shopping, and growing per-capita income levels. In 2009, the Bangladesh Bank introduced an online payment system facilitating fund transfers and online payments of utility bills by credit card. Since 2011, there have been important developments in financial transaction regulation (mobile payments, digital wallets, and smart cards) as well as transaction infrastructure (e.g., electronic funds transfer payment gateways). The creation of the Bangladesh Electronic Funds Transfer Network is a step towards developing a modern payment system infrastructure. This has created expanded business avenues for financial institutions as well as entrepreneurs to offer electronic or mobile payment processing services to the unbanked population. This area of electronic payment processing services has already attracted local and foreign investment. Investment areas for non-bank entrepreneurs cluster in the areas of solution development and operations for payment intermediary services, direct service delivery models in partnership with banks, and the development of value-added financial applications.
Mobile eCommerce
The ITU’s latest Bangladesh profile states that 88.1 percent of inhabitants have a mobile phone subscription while 30 percent of inhabitants have a mobile broadband subscription. e-Cab’s 2017 report states that Bangladesh has 99 percent geographical coverage in voice and data connectivity.
Utility bill payment and remittance transfers via mobile phone were introduced in Bangladesh in 2006 and 2010 respectively through the country’s leading mobile operators and banks, and have become very popular with the masses. The government also authorized mobile operators to sell railway and bus tickets, and tickets to cricket matches organized by the Bangladesh Cricket Board using mobile phones, which have gained popularity.
Currently, 28 banks have approvals to offer mobile financial services, with 20 already launching services. Mobile banking services in Bangladesh include cash-in, cash-out, merchant payments, utility payments, salary disbursement, foreign remittances, and fund transfers.
Digital Marketing
With strong growth in the number of mobile internet subscribers and growing digital infrastructure, more companies in Bangladesh are investing in digital marketing. While traditional media remains strong among older demographics, digital media is more popular among younger segments of the population. Fund allocation toward digital marketing remains modest at 5 to 10 percent across companies, but as conversion continues, this statistic is set to change drastically. Digital media has specifically become a strong tool for small and medium enterprises to strengthen their brand recognition. Restaurants, fashion stores, gadget shops, and lifestyle pages increasingly use digital marketing.
Content development and digital media marketing are the most popular services that digital agencies currently offer. Online advertising is also slowly expanding as video platforms mature. Digital analytics is still in the development stages in Bangladesh and not yet widely used by businesses.
Major Buying Holidays
The major buying holidays in Bangladesh include the major Muslim holidays of Ramadan, Eid ul-Fitr, and Eid-ul-Adha. Hindu, Buddhist and Christian Holidays, including Buddhist New Year, Durga Puja and Christmas, respectively, are also observed by segments of the population. Other major Bangladeshi holidays include: Bengali New Year (April 14), Independence Day (March 26), and Victory Day (December 26). Some of these holidays are based on religious calendar and depend on lunar sightings.
Social Media
Social media is widely used in Bangladesh. Facebook is the most prevalent of social media platforms with more than 29 million users in Bangladesh. Facebook is used to engage consumers and is also a major e-Commerce platform. There are over 8,000 e-commerce Facebook pages in Bangladesh, many of which are small businesses using solely Facebook to advertise and sell their products, ranging from clothes, beauty products to food. With faster internet connections, Google cache servers, and better streaming, YouTube is also gaining popularity in Bangladesh.