ASSIGNMENT ON

E-COMMERCE IN BANGLADESH

Submitted To:

Submitted by:

Table of Contents
Ecommerce .....................................................................................3
History of E-Commerce....................................................................3
Why e-Commerce for Bangladesh.4
Traditional and Electronics Business Transaction ............................5
Traditional Commerce vs e-Commerce............................................3
Dimensions of E-Commerce .............................................................6
Business to consumer(B2C) ..................................................7
Business to Business (B2B) ...................................................7
Business to Government(B2G) ..............................................7
Benefits of E-Commerce ...................................................................7
e-Commerce in Different Sector in Bangladesh ................................8
Overview of implementation stage of e-Commerce in Bangladesh 8
Some e-Commerce shop in Bangladesh ............................................9
The impact of e-Commerce ...............................................................9
Constraints to E-Commerce in Bangladesh......................................10
Challenges of E-commerce for Bangladesh......................................11
Recommendations11
Conclusion........................................................................................12
References.13

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Ecommerce refers to the buying and selling of products or services over

electronic systems through Internet and other computer networks.
The most popular medium in which e-Commerce is conducted is the
internet. It combines a range of process such as:
Electronic Data Interchange (EDI)
Electronic mail (E-mail)
World Wide Web (WWW)
Internet Applications
Network Applications

It does not include transactions over telephone, fax or any payments made
online for transactions whose terms were negotiated offline or by physical
means.
Some common applications related to electronic commerce are the following:

Email
Enterprise content management
Instant messaging
Newsgroups
Online shopping and order tracking
Online banking
Online office suites
Domestic and international payment systems
Shopping cart software
Teleconferencing
Electronic tickets

History of E-Commerce
In 1950s companies began to use computers to store and process
internal transaction records.
By 1960s businesses that engaged large volume of transaction had
began exchanging transaction information on punched card.
In 1968 Transportation Data Co-ordination Committee (TDCC ) was
formed by some companies.
In 1979 ANSI (American National Standards Institute) chattered a new
committee to develop uniform EDI (Electron Data Interchange).

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 In 1979: Online shopping was invented in the UK by Michael Aldrich.

In 1982: Minitel was introduced nationwide in France by France
Telecom and used for online ordering.
In 1984: World's first recorded B2C online home shopper. Mrs Jane
Snowball uses the Gateshead SIS/Tesco system to buy groceries.
In 1987: Swreg begins to provide software and shareware authors
means to sell their products online through an electronic Merchant
account.
In 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb,
using a NeXT computer.
In 1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New
Technologies Will Change the Way We Shop and What We Buy. St.
Martin's Press. ISBN 0312063598.
In 1994: Netscape releases the Navigator browser in October under the
code name Mozilla. Pizza Hut offers pizza ordering on its Web page.
The first online bank opens. Attempts to offer flower delivery and
magazine

subscriptions

online.

Adult

materials

also

become

commercially available, as do cars and bikes. Netscape 1.0 is

introduced in late 1994 SSL encryption that made transactions secure.
In 1995: Jeff Bezos launches Amazon.com and the first commercial-free
24 hour, internet-only radio stations, Radio HK and NetRadio start
broadcasting. Dell and Cisco begin to aggressively use Internet for
commercial transactions. eBay is founded by computer programmer
Pierre Omidyar as AuctionWeb.

Why e-Commerce for Bangladesh

With the increasing diffusion of ICTs, more specifically the Internet, the global
business community is rapidly moving towards Business-to-Business (B2B) e-

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Commerce. The buyers/ importers gain a clear advantage when the Internet
gives them access to the global market, by which they can compare prices
across regions, find out whether prices vary by order fragmentation, get
awareness about substitute/ alternative products. Consequently, the sellers/
exporters make sure that they are well portrayed in the cyber world through
websites and portals. Like buyers, sellers also benefit from increased and
more efficient access to the global market through the Internet. Bangladesh
is pursuing an economic policy of export-led growth. With the rising forces of
globalization, it is becoming increasingly important that the private sector,
particularly the export sectors are well prepared to meet the requirements
and expectations of the importers and also stand out in the competition
against exporters in other countries. In such a scenario, two issues are
becoming particularly important for Bangladeshi export sectors one,
whether businesses are automating their internal processes with the use of
ICTs to become increasingly efficient and competitive in a global context, and
two, whether businesses have effective presence and participation in the
cyber world. International organizations such as UNCTAD (United Nations
Center for Trade and Development) and WTO (World Trade Organization)
have, over the last several years, put much emphasis on the importance of
e-Commerce for developing countries. UNCTAD has special programs to
facilitate developing countries to transition into e-Commerce. The WTO has
also developed rules and guidelines for global e-Commerce transactions.

Traditional and Electronics Business Transaction

The business processes are broadly divided into five main categories namely:
Market product and services
Sell and deliver products and services
Process payments
Manage relationship
Manage the enterprise
Traditional

e-Commerce

Traditional Commerce
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Commerce vs. eCommerce Items

Sales Channel

Enterprise Internet

Consumer

Wholesaler

Manufacturer

RetailerConsumer

Sales

Hour

/Region

Entire world

Restricted area

24x7

Restricted

sales

Sales

Market space (Network)

hour
Market space (store)

place/method

Sale based on

Sale

display
Market survey and

Customer

information
acquisition

Any

time

acquisition

through internet

Digital Data without no

activity

1:1

Marketing

on

salesman

re-entry
Marketing

based

Require information
re-entry

via

bi-

directional

One way marketing

to consumer

communication
Customer

support

Real time support for

Delayed support for

customer Dissatisfaction

customer

Real time acquisition of

Dissatisfaction

customer needs

Time

different

catching

for

customer

needs

Capital

small

large

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Dimensions of E-Commerce
The three dimensions of e-commerce are:
Business-to-Consumers (B2C)
Business-to-Business (B2B)
Business-to-Government (B2G)
B2C e-commerce is unlikely to be of much use in the near future in
Bangladesh because of low per capita income, a weak infrastructural and
legal environment, lack of trust between business and consumers. B2C for
cross border trade is also limited by the factors suggested for the domestic
front. In addition, non-availability of international credit cards, foreign
currency remittance restrictions, delays and informal payments at customs
clearance even for small value and quantity items will discourage B2C.

Business to Consumer (B2C)

Where enterprises sell directly to the customer, often cutting out wholesalers
or retail outlets. B2C is the most commonly understood form of internet
business www.muktobazaar.com most successful trading has been with
standard products such as CDs, Books, Software, downloadable music etc.
Business to Business (B2B)
It is larger, growing faster. This includes procurements of raw materials and
supplies, liaison with contractors, sales channels, servicing customers,
collaborating with partners, integrated management with data and
knowledge.
Business to Government (B2G)
Here business trade directly with government offices and agencies for public
procurement (e.g. supplies for hospitals, school and other government
contracts.
Consumer to consumer (C2C)
Online transaction between private individuals. There are many sites offering
free classifieds, auctions, and forums where individuals can buy and sell
thanks to online payment systems like PayPal where people can send and
receive money online with ease. eBay's auction service is a great example of
where person-to-person transactions take place everyday since 1995.

Benefits of E-Commerce
The benefits of e-Commerce are many and many. Some of them include:

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 24X7 operation: Round the clock operation is an expensive proposition

in the brick and mortar world while it is natural in the click and conquer
world
Global reach: The net being inherently global, reaching global
customers is relatively easy on the net compared to the world of bricks
Cost of acquiring serving and retaining customers: It is relatively
cheaper to acquire new customers over the net. Thanks to 24 X 7
operation and its goal reach. Through innovative tools of push
technology to retain customers, loyalty with minimal investments.
An extended enterprise is easy to build: In todays world every
enterprise is a part of the connected economy; as such you need to
extend your enterprise all the way to your suppliers and business
partners like distributers, retailers and ultimately you end customers.
Internet provides an effective (often less expensive) way to extend
your enterprise beyond the narrow confines of your own organization.
Tools like enterprize resource planning (ERP) ,supply chain
management (SCM) and customer relationship management (CRM),
can easily be deployed over the net permitting amazing efficiency in
time needed to market, customer loyalty, on time delivery and
eventually profitability.
Dis-intermediation: Using the net one can directly approach the
customers and suppliers, cutting down the number of level sand in the
process, cutting down the costs.
Improved customer service to your clients: It results in higher
satisfaction and more sales
Power to provide the best of both the worlds: It enhances traditional
along with internet tools.

E-Commerce in Different Sector in Bangladesh

Despite being a under developed country, selected segments of the
Bangladeshi business community has embraced technology with reasonable
success. The Facsimile in the 1980s and mobile telephones in the 1990s
popularized modern technology in the mass market. Personal computers and
the Internet are also emerging as day-to-day business tools. These positive
indicators are favoring the prospects of e-commerce in Bangladesh.

RMG Sector
Banking on the Web (Online Banking)
Online Shopping
Web Hosting, Domain

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Online cards, gifts

Pay Bill
Education
Etc.

Overview of implementation stage of e-Commerce in

Bangladesh
Ministry of Commerce, Ministry of Information and Communication and
Planning Commission jointly implementing the e-commerce in Bangladesh
There is e-Commerce committee headed by commerce secretary
Ministry of Information and Communication is working for enacting a
law regarding Electronic Transaction act
Online order from foreign buyer has started
www.registrarofcompniesbangladesh.com here registration of joint
stock company started as online
Online non-financial transaction has started by all bank from 31-7-2002
Intra-bank transaction started from 31-7-2003
Some bank already started credit card system in a limited way
About 2 months Bangladesh Bank give permission of Ecommerce in
local currency through banks within the country.

Some e-Commerce shop in Bangladesh

www.webbangladesh.com
www.haatbazar.com
www.number1shop.com
www.bdbazar.com
www.bengalcommerce.com
www.sonarmarketplace.com
www.upoharbd.com
www.bdgift.com
www.cellbazaar.com

The impact of e-Commerce

E-commerce can transform the way products and services are created,
sold and delivered to the customers. It can also change the way in
which the company works with its partners. The followings are well
established benefits of e-commerce:

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 Improved productivity: Using e-commerce, the time required to create,

transfer and process a business transaction between trading partners
is significantly reduced. Furthermore human errors like duplication of
records are largely eliminated with the reduction of data entry and reentry in the process. This improvement in speed and accuracy plus the
access to document and information will result in increase in
productivity.
Cost savings: The cost savings stem from efficient communication,
quicker turnaround and closer access to market.
Streamlined business process: Use of internet and with automation of
business process can make business more efficient
Better Customer service: Customer can enjoy the convenience of
shopping at any hour and anywhere in the world.
Opportunities for new business: Business over the internet have global
customer reach. There are endless possibilities for business to exploit
and expand their customer base.

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Constraints to E-Commerce in Bangladesh

Out of 64 districts, Internet services are available only in 6 major district
headquarters. BTTB is planning to gradually roll out an IP network up to the
64 district headquarters. In January 2002, the Internet facilities were
extended to 12 districts. The project is running on very fast and today almost
40 plus districts are getting Internet facilities. Followings are the barriers of
e-commerce in Bangladesh:
Very minimum number of users of web sites;
Poor telecommunication infrastructure with limited fixed-line
access, unreliable connectivity and low bandwidth (9K);
High price of computer and hardware: The per capita income of
our people is less than US$520. But in order to buy a computer it
is needed US$500 and for this reason, it is beyond the capacity
for a villagers to buy it.
Lack of technically efficient personnel;
Lack of investment in hardware and software;
The banking infrastructure in terms of electronic payments and
inter-bank connectivity is poor. As such, the customers of 5770
branches of the local banks are unable to operate their account
with the other branches of the same bank. Inter bank transaction
is more cumbersome as the clearing-house of the central bank is
not online. An inter-bank transaction may take even 2 weeks if
the branches are different cities. Only branches of the private
banks are interconnected with their respective head offices. They
are also satisfactorily computerized. This represents only 25% of
the entire banking sector.
Small number of Credit Card users;
Limitations of supportive legal system. Such as, exchange
controls, protection of telecommunication monopolies, restrictive
trade practice and prohibitions;
Absence of cyber law;
People's mindset and very slow and expensive Internet services;
Enterprise managers' lack of initiative and leadership in taking
advantage of ecommerce;

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Challenges of E-commerce for Bangladesh

Network Infrastructure
o Intra-bank and Inter-bank Connectivity
Local and Global
o Bank-Client Connectivity
o Security of transaction
Banking mechanism
o Automation
o Convertibility of the Bangladesh currency
o Retention quota
o International credit cards
Capacity Building: Human, Technical and Regulatory
o Quick Settlement, Online credit Information, Skilled e-Manpower,
Regulatory Framework
Investment
Legal Infrastructure
Currency Convertibility: Access to Global Finance
E- Culture

Recommendations
The assessment of the e-commerce environmental forces of Bangladesh
leave us some room to recommend some steps and measures, that should
be undertaken by the policy makers and business stake holders for the full
fledged implementation and development of e-commerce in Bangladesh. The
recommendations are:
There should be an EFT (Electronic Fund Transfer) Gateway, which will
connect all finance and banking institutions, ATMs, POS and related
websites. Such Gateway will speed up the transactions among banks,
commercial institutions. This sort of infrastructure needs to be
implemented on priority basis.
A CCG (Credit Card Gateway) should be established. A credit card
gateway is a server that makes online credit card transactions safe
(Skinner, 2005). The software protocols in the CCG use the information
provided to check for availability of funds and to make sure the credit
card is not expired, lost or stolen. This takes only seconds. When the

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transaction is approved a receipt is generated for the customer, and

the funds are transferred to the vendor's bank account through EFT.
Unlicensed radio frequencies should be made available on demand and
VSAT operating licenses should not limit the bandwidth.
To improve banking mechanism, Bangladesh government should
compel the banking sectors to automate their operation and going
online by a specific period. The control of foreign exchange should be
liberalized gradually, and easier issuance of International Credit Cards
should be allowed, banks should take effective steps here.
Business associations and organizations should be made aware of the
benefits of e-commerce. Business organizations like FBCCI, DCCI, MCCI,
and BGMEA can play a significant role in promoting e-commerce in
Bangladesh.
Political commitment to improve governance and institutional strength
is essential for successful application of e-commerce.
Last but not least, National ICT policy, 2002 and enactment of the ICT
Act, 2005 is required to enhance the implementation of e-commerce.

CONCLUSION
A key reason why e-commerce, especially the business-to-business segment,
is growing so quickly is its significant impact on costs associated with
inventories, sales execution, procurement, intangibles like banking, and
distribution costs. If these reductions become pervasive, e-commerce has
the potential to be the application that ushers in the large productivity gains.
Achieving these gains is therefore contingent on a number of factors,
including access to e-commerce systems and the needed skills. However,
what is unique about ecommerce over the Internet and the efficiency gains is
that it promises the premium placed on openness. To reap the potential cost
savings fully, firms must be willing to open up their internal systems to
suppliers and customers. This raises policy issues concerning security and
potential anti competitive effects as firms integrate their operations more
closely.

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REFERENCES
http://www.manufacturingnews.com/news/editorials/cohen.html
http://www.businessweek.com/the_thread/economicsunbound/archives/2008/
06/the_importance.html
http://www.med.govt.nz/templates/MultipageDocumentPage____16344.aspx
http://www.cid.harvard.edu/cidtrade/issues/ecommerce.html
http://en.wikipedia.org/wiki/Ecommerce
http://www.google.com.bd/

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