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E-commerce and its growth in Bangladesh

The term e-Commerce or electronic commerce is related to online transactions. The technology generally stands for online retail shopping or buying and/or selling products or services through internet.Currently the successful use of e-Commercetechnology is one of the most important factors for the sustainability of a business. The worldwide expansion of the internet has considerably contributed to the transformation and expansion of trade and retail transactions.e-Commerce is one of the much-talked about economic issues of recent times.In this era of information and communication technology,e-Commercehas become a slogan of businesses. It is the process of conducting all forms of business through computer network and digital communication.

In Bangladesh, the e-Commerce sector growth has exceeded all expectations and has had a drastic impact on changing the economy in terms of aggregate investment. Bangladesh is one of the most densely populated country in the world with around 160 millionpeople living in a small area. Bangladesh has around 90.501 Million (as of August, 2018) internet users. So, this is a Land of Opportunity for e-Commerce. If we see closely, online transaction in our country has been increasing gradually over time with the change of business environment. With the improvement of living standard and fast-pace of bust urban life shopping behavior of the consumers have shifted greatly.

Bangladesh is on her quest to become a Digital Nation. The “Vision 2021” of the present Government aims at developing Bangladesh into a resourceful and modern economy through efficient use of information and communication technology. Along with rapid internet adoption, tech savvy young generation, the commitment from the leaders is the most positive sign to build up a successful e-Commerce economy. However, our country is yet to realize its untapped potential in the e-Commerce industry. Unlike the past technology innovations, developing countries has much better opportunities to gain the benefit from internet technologies at an earlier stage. e-Commerce can help boost every industry and can thus contribute significantly towards country’s GDP.

Modules of e-Commerce

There are several modules of e-Commerce. The most prevalent are

B2C (Business-to-Consumer): The business model where business sells products or service directly to consumers.B2C e-Commerce includes retail sales often called e-retail (or e-tail).

B2B (Business-to-Business): The model whereby a company conducts its trading and other commercial activity through the net and the customer is the business itself. This essentially means commercial activity between companies through the internet as a medium.

C2C (Consumer-to-Consumer): Thisis a business model that facilitates the transaction of products or services between customers.In these cases, a customer, not a business, sells goods or services to another customer.

B2G and G2B (Business to Govt. and Govt. to Business): When a business sells its products or services to the government using computer network, it falls into B2G e-Commerce category and the vice versa is G2B.

M-Commerce (Mobile Commerce): This is the commercial transactions that are conducted electronically by mobile phones.Known as next-generation e-Commerce, m-commerce enables users to access the Internet without needing to find a place to plug in.

F-Commerce (Facebook Commerce): This refers to e-Commerce that is facilitated by the Facebook social media platform. Facebook is a major enterprise, with hundreds of millions of users and near-constant media exposure. Benefits of e-Commerce The benefits of e-Commercecome as enhanced participation in international value chains, greater market access and reach, and improved efficiency in internalmarket. It may spur job creation in the ICT sector and in enterprises that become more competitive due to online procurement and sales. Some primary advantages of e-Commerce are:

1. Greater pace in the buying/selling process, as well as convenience of finding desired products

2. Transaction and communication can be done 24/7

3. Unlimited customer reach with no theoretical geographic limitations

4. Low operational transactional costs and better quality of services

5. Almost zero requirement of physical infrastructure for company set-up

6. Easy to start and manage a business

7. Customers can make payment using their chosen payment method,from anywhere, at anytime

Payment Scenario of e-Commerce in Bangladesh

Secured payment technologies are so much important to create trust among the consumers. Itis most crucial for creating a positive mindset amongst the people towards e-Commerce. In our country, almost 80% of the customers prefer to make payment in Cash on Delivery (COD) model, rather than paying online, since they are usually scared to complete their transactions by using Digital Payment methods.Currently in Bangladesh, the volume of e-Commercetransaction is about Taka 1700 Crore per year. Still around 90% of e-Commercetransactions are done in COD basis. To get the most out of e-Commerce, the amount of online payment should be increased.

At present 5 banks have got Payment Gateway of their own to act as an acquirer of online payments. Those are Dutch-Bangla Bank, BRAC Bank, The City Bank, Eastern Bank and Southeast Bank. There are also some well-known Payment Gateway Platforms/ Payment System Processors in Bangladesh, such as SSLCOMMERZ, the first and largest Payment Gateway platform of in the country, through which customers are able to buy products and services from the merchants conveniently by paying online,using their preferred payment method, such as Credit & Debit Cards, Net Banking and Mobile Banking (MFS/Wallet).

To gain customers’ trust and increase online transactions, an audit of existing payment platforms needs to be conducted regularly and they must conform to certain regulation and performance guidelines to operate. The Online Payment System Processors or Gateways need to be certified and recognized by international and national authorities, such as Payment Systems Operator (PSO) license by Bangladesh Bank, Payment Card Industry Data Security Standards (PCI DSS) version 3.2 ‘Level 1’ Service Provider certification. These compliance certifications are most essential to safeguard customers’ card data and other personal information. This will encourage the customers to input their confidential information while submitting an online payment request.

Challenges of e-Commerce in Bangladesh

Although this is a new sector in Bangladesh, it has observed tremendous growth within a short time. e-Commerce has a huge growth potential in Bangladesh,but it is not at all in a satisfactory condition. Challenging factors of e-Commerce includes technological factors, socio economic factors, political factors, etc. Some of the main challenges are mentioned below:

1. Lack of national policy on e-Commerce, proper business planning and forecasting

2. Poorly developed socio-economic and physical infrastructure

3. Inadequacy of skilled IT professionals

4. Lack of expertise in running ane-Commerceventure

5. Low number of customers who are ready to use debit/credit cards for payments

6. Low level of awareness about e-Commerce and lack of customer-friendly infrastructure

7. High rate of card processing fees and cost of POSfor merchants

8. Cross boundary regulations imposed by Government

9. The reluctance of banks to promote in-store and e-Commerce transactions

10. Lack of trust between buyers and sellers

11. Lack of adequate knowledge among government, judicial andlaw enforcing agencies’ officials regarding e-Commerce management and development

12. Insufficient e-Commerce delivery channels and poor logistical support

13. Poor standard of transportation and communication facility

14. Lack of effective promotional activitiesrelated to e-Commerce

15. Large variation of Tele-density

16. Unavailability of Network connectivity all over the country, especially in rural/remote areas

17. Low bandwidth and unreliable internet connection

18. High price of Internet data offered by telecom operators

19. Poor website and mobile app which are not capable to take huge amount of traffic

20. Inadequate implementation of IT/Cyber Security standards. As commonly observed, most of the times,our customers tend to avoid the risk of ending up buying a product that does not match with their level of expectation. This is one of the problem which is now pulling the entire industry backwards, as the number of transactions are not really increasing to the extent it was supposed to be. In spite of progressing over the last 5 years, our growth rate (when compared to our expectation), has not been up to the mark. Therefore, we can create a rating system for the merchants, to regain the faith of the customers.

Present Situation of e-Commerce in Bangladesh

The explosion in the use of e-Commerce by the business sector has been tremendous since its inception only a few years ago. From governments to multinational companies to one-person startups, e-Commerce is increasingly viewed as the key business modality of the future. Ease of transaction, widening markets, and decreased overheads are factors that make e-Commerce solutions more and more attractive, as evident with the growth of online sales. According to a report, there are 8,200 e-Commerce pages in Facebook alone.There are also 1,000+ e-Commerce entrepreneurs in the country, who are running their business through websites. In 2016 the government of Bangladesh opened e-Commerce sites for every district in the country. The same year, Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) recommended removal of tax on e-Commerce.Ten billion Taka worth of transactions take place through e-Commerce site per year according to a 2017 Daily Star report.

Opportunitiesof e-Commerce in Bangladesh

E-commerce sector brings enormous opportunities to the business sector as it makes 24/7 business possible. It makes the economic activities more dynamic. E-commerce can play important role in achieving expected economic growth and socio-economic development. E-commerce has been successful in increasing GDP. In order to obtain sustainable economic development as well as business growth Bangladesh government should flourish e-Commerce.

A tremendous growth from e-Commerceis predicted to happen in our country due to large percentage of young population. As study reveals, Bangladesh currently enters its own era of population dividend, which means the percentage of young people will be the highest in nation’s history in the next 25 years. This is a golden opportunity for Bangladesh to tap into e-Commerce potential by creating a helpful environment for e-Commerce, which will change the economic landscape of the country. Bangladesh has the prerequisites and potential to become one of the major economic players in the twenty-first century.Sixty-five percent of the total population,160 million, in Bangladesh is under the age of 35.

This does not only make the country one of the largest (8th based on population) but also one of the youngest in the world. Every year, an average GDP growth around 7% and increasing urbanization is contributing to a larger middle class with higher spending capacity– the ideal target group for e-commercial activities.

By exploiting the full potential of this flourishing sector,the whole country will be benefitted, and they experience a total transformation in their economic activities. To increase the participationin online shopping, the sources of consumer confusion, apprehension and risk need to be identified, understood and mitigated. It can be concluded that through adopting e-Commerce intensively and extensively,businessmen can improve their income level along with the improvement of customer experience and buyers can reduce their cost of living along with improvement of their standard of living.

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