Bangladesh has one of the lowest rates of online purchases among internet users in the world. The ratio stood below 10% in the last year indicating the need for more progress in e-commerce in the country.
The UN Trade and Development's (UNCTAD) Digital Economy Report 2024, released on July 10, in Geneva, published the findings. The report found that the share remains below 10% in most Least Developed Countries (LDCs) around the globe.
The report highlighted that the rapid and fundamental transformation of business and trade practices has been driven by the proliferation of the internet.
But why don’t people of Bangladesh shy away from buying products and services online? What hinders Bangladeshi consumers from purchasing products and services online?
E-commerce industry in Bangladesh grew in the late 1990s and early 2000s. Even though, the lack of infrastructure, internet facilities and government policy, online purchasing received better apprehension from consumers. Initially, the growth was not significant but the industry was promising.
In 2016, the country’s internet penetration rate was 13.2% and the number of internet users was 21.39 million. The e-commerce industry saw a growth of 67% in the first three quarters of 2016 and the country’s e-commerce transactions reached Tk 3.59 billion in the year.
However, Bangladesh, like other countries, saw a huge number of online shoppers during the Covid-19 pandemic as lockdown was imposed then. But the number of online shoppers has gone down significantly after the Covid-19 pandemic. The reasons behind the fall of online purchasing are mainly opening of the conventional markets and scams done by online businesses.
Experts believe that the growth of e-commerce mainly based on the security of payment gateways and trust issues of the customers in the online businesses. Market insiders said the security of the payment gateways is in a good position in Bangladesh. However, the trust issues have become a new concern for the e-commerce business in the country.
According to the Bangladesh Telecommunication Regulatory Authority (BTRC), the number of internet users in the country stands at 14.12 crore in May 2024. Of them, 12.78 crore are mobile internet users and broadband internet users are 1.44 crore.
According to BBS’s Sample Vital Statistics Report-2023, some 45.7% of people of Bangladesh aged above 5 years use the internet.
Russell T Ahmed, president of Bangladesh Association of Software and Information Services (BASIS), said the countrymen do not have anything of entertainment. So, they find entertainment in shopping or eating out. And, they do not consider shopping as a task.
Another reason behind the low number of online purchase is breach of trust. The e-commerce industry in the country was seeing a positive trend but the fraudulent incident of Evaly spoiled the trust.
With the introduction of mobile financial services like bKash and Nagad and several others, the e-commerce industry was flourishing well. But the trust of the online customers in the e-commerce had fallen flat following the Evaly scam incident in June 2021.
“We all have to launch publicity activities to regain the consumers' trust to come out from the situation,” said Russell T Ahmed.
Payments gateway in good shape
BASIS President Russell T Ahmed said Bangladesh is still in a trustworthy position in terms of payment gateway security systems but customers do not know it well. Under the circumstances, the e-commerce businesses will have to let consumers know that the country’s payment gateways system is good enough.
“You have never heard of any fraud of the payment gateway system. We have two-factor authentication and we are heading to three-factor authentication,” said the software companies’ leader.
The industry sees cash on delivery because customers cannot put trust in the online businesses. They wanted to see the product and take them and then they will pay for the product or services.
Trust matters
There are serious trust issues over the purchase of products online in the country and some scams of e-commerce played a role in the breach of customers trust. Most of the customers in the country still buy products online using cash and it is because they want to see the product first and then make a payment.
Around 90% customers in the country use the method of cash on delivery and it is because the customers want to see the product first because there are allegations that the e-commerce companies display one thing and sell another thing.
“Most of the consumers show interest in buying products on cash on delivery,” said Russell T Ahmed, adding. “They showed a nice shirt but it is not fitting to me. How I will return it to you? Most of the trust issue happened because of the merchants.”
E-commerce is doing well
Shomi Kaiser, the president of e-Commerce Association of Bangladesh (e-CAB), said she had not yet seen the UN Trade and Development's (UNCTAD) Digital Economy Report 2024.
However, she said that she does not have data in comparison with other countries. But she asserted that Covid-19 and the post-Covid have boosted e-commerce to a large extent.
She also noted that the e-commerce association has not conducted any research in this regard till now.
“Now, every day the number of deliveries stands at more than 7 lakh. The current e-commerce market size is Tk40,000 crore,” said the e-CAB leader.
Last year, e-commerce related digital transactions stood at Tk16,000 crore and cash on delivery was between Tk13,000 and Tk16,000 crore, she cited, adding that e-commerce in Bangladesh is in a good position if the data is correct.
Shomi Kaiser went on saying that in Bangladesh, e-commerce is growing in terms of new entrants and policy development.
