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The rise of E-commerce in Bangladesh

Experiment Findings · September 2020

DOI: 10.13140/RG.2.2.28861.44003

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The rise of E-commerce in Bangladesh
S M Maisoon Ul Amin
ID # 19204037
BRAC Business School
BRAC University, Dhaka, Bangladesh
s.m.maisoon.ul.amin@g.bracu.ac.bd

Submitted to:
Atiqul Basher
Lecturer,
BRAC Business School, Dhaka
Submitted by:
● S M Maisoon Ul Amin (19204037)
● Saydur Rhaman Faraji (17104169)
● Samantha Kabir (18104145)
● Sumaya Muntahina Safra (18101001)
● Anirban Sen (18204029)
Date of submission:
21/ 09/ 2020
Letter of transmittal

21/ 09/ 2020

Atiqul Basher,
Lecturer,
BRAC Business School
BRAC University

Subject: Submission of Term paper.

Sir,
Here is the report that we were assigned on the topic as per your request. Our topic was the rise
of e-commerce in Bangladesh. The report has been completed by the knowledge that we have
gathered from the course BUS203(Business Environment). We would be happy if you read the
report and we will be trying to answer all the questions that you have about the report.

We have tried our level best to complete this report meaningfully and correctly, as much as
possible. We do believe that our tiresome effort in this quarantine will be visible to you after
reading the report.

However, if you need any assistance in interpreting this report please contact us.
Thank you.

Best Regards,
S M Maisoon Ul Amin (19204037)
Saydur Rhaman Faraji (17104169)
Samantha Kabir (18104145)
Sumaya Muntahina Safra (18101001)
Anirban Sen (18204029)

2
Table of contents

Details about the industry 5

An overview of the industry 5
The market size of the industry 6
The business model canvas of this business 6
Current opportunities in the e-commerce industry: 8
Future opportunities of the E-Commerce industry: 9

Challenges during COVID-19 10

Information on financial losses that occurred in that industry 10
Job losses that occurred in the industry 10
Effects on the future business opportunity 11
Representatives’ prediction about the next 3 years 12

Strategy for industry 13

Propose a short-term action plan 13
Propose a long-term action plan 13

Limitation of the study 14

Recommendation 14

Conclusion 15

Bibliography 16

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Details about the industry

An overview of the industry

Over the years online businesses in Bangladesh have grown. Changes in living standards along
with livelihood advancement, buying behavior has undergone a major change. The e-commerce
trade in Bangladesh set sail in the late 1990s, but it was powerless to expand rapidly. Over the
years, banking, logistics deliveries and payment methods have been gradually generating
opportunities to boost the e-business market. A number of quarters now use the Internet
payment system including the banking sector. As credit or debit card services can not be used
by most customers, digital wallets and the cash-on - delivery system are now more available.
Bangladesh's restrained e-commerce sector began to evolve as a proper ecosystem in 2012.
This has been supported by expanded internet links, along with the Bangladesh Bank's
incremental legalization and acceptance of online payment. The online payment gateway
system was initially not funded by multiple banks. In most cases, upon delivery, payment is
made. Through the cash-on - delivery system, 80% of payments are made, while only 15-20%
are made through mobile payment gateways. Cash-on-delivery leads to the risk of tax
avoidance and therefore results in a lack of transaction transparency. This is primarily attributed
to a lack of faith and the absence of a stable and reliable payment mechanism. Moreover, the
number of users of credit and debit cards in the country is poor, and many consumers are
unable to make online payments as a result. The e-wallet system is supposed to some extent
surmount this obstacle. Bkash has collaborated with the country's e-commerce firms and, in
extension, it would be advantageous if banks follow suit as well. An emerging sector is the
e-commerce industry in Bangladesh. This industry is increasingly rising and gaining
sustainability. Security should be provided to the local e-commerce firms which have been on
the market since the start of the e-commerce industry.The e-commerce market needs to
concentrate more on distribution logistics and customer support. It is important to take urgent
measures to ensure consumer rights, as there is no regulatory authority present to prevent
consumers from being deceived and low-quality or expired goods are provided to them.
Despite the challenges, the quarter has a lot of potential and the contribution of e-commerce to
the country's GDP is likely to be substantial in the next few years. As part of its Digital
Bangladesh initiative , the government should be more forthcoming in strengthening this sector.

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 The market size of the industry

Internet links have strengthened over the last two years and the number of customers who have
access to the web has grown, making it easier for enterprises in e-commerce to thrive. In 2016,
it invested $50 million in Bangladesh's e-commerce market. $10 million of this came from
Foreign Direct Investment. In 2017, the calculation of the B2C e-commerce business sector
amounted to USD 110-115 million (around BDT 9.0 billion) compared to the retail market's BDT
1335.71 billion. The e-commerce industry market's outreach in 2017 surpassed Tk 17.0 billion
from Tk 4.0 billion in 2016, as e-Commerce Association of Bangladesh (e-CAB) findings
indicate.
Till 2018, the number of e-commerce business sites and e-commerce websites equaled 2,500
and 150,000 respectively. On retail stage, the number of deliveries per day was projected to add
up to about 15,000 to 20,000. In 2016, the Internet penetration rate was estimated at 13.2
percent, and the number of internet users was 66.6 million, according to Bangladesh
Telecommunication Regulatory Commission (BTRC). In 2017, along with a rise in the
penetration rate to 48.4 percent, the number of Internet users reached 80.6 million. The number
of internet users rose further to 91.3 million in 2018, and the penetration rate was 52.77 percent.
By June 2019, the number of internet users had reached 96.199 million. By 2020, the
Bangladesh e-commerce sector market had crossed USD 20 billion, according to market
analysts.
These are not composed. Although excluding all the micro-businesses that started within
Facebook groups, we're talking facts and never came to the real e-commerce business.

The business model canvas of this business

Online exchanges are associated with the term internet business or electronic commerce. By
and large, the innovation reflects online retail shopping or buying as well as selling products or
administrations over the internet. In Bangladesh, the growth of the internet business segment
has exceeded all desires and has had a dramatic impact on the total venture shift in the
economy. Bangladesh is one of the Planet's most heavily populated nations. Bangladesh has an
anticipated population of 163.05 million people live in a tiny region in 2019.

Key Partners ● Community and Business Alliances

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 ● Third-Party Developers
● Local organizations and businesses
● E-commerce Apps and Pickup Shops.

Key Activities ● Building the dedicated community.

● Platform development and creation of tools to
streamline the sales process.

Value Propositions
● Different kinds of local and international
● product sellers and shops.
● No sign-up fee, simple-to-setup e-commerce page for
small businesses
● The potential online community of goods in the
country.

Customer Relationships ● Online community building and support

● Seller management and support.
● Host events to share knowledge and increase local
shops and sellers.

Customer Segments ● Sellers

Small merchants and local shoppers who want to sell their
goods online
● Buyers
A local consumer base that wants cheap and good quality
products from a small/local merchant.

Key Resources ● Online community.

● A pipeline of high-quality affordable products.
● E-commerce platform.
● Apps and pickup shops.

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 Channels ● Social media and online community
● Online and Offline Events.
● Word of Mouth
● Local Community Events
● Print Media.

Cost Structure ● Platform development

● Seller grooming and helping initiatives.
● Staff salaries.
● Print media marketing.

Revenue Streams ● Sales commissions.

● Total sales revenues.
● Commission for every item listed.
● Ad revenue.

Current opportunities in the e-commerce industry:

The term internet business or electronic trade is identified with online exchanges. The
innovation by and large represents online retail shopping or purchasing as well as selling items
or administrations through the web. In Bangladesh, the internet business segment development
has surpassed all desires and has drastically affected changing the economy regarding the total
venture. Bangladesh is one of the most densely populated nations on the planet. Bangladesh
has an expected 2019 population of 163.05 million individuals living in a little territory.
Bangladesh has around 92.361 Million (as of September 2019;) Mobile web clients and the
absolute number of Internet Subscribers has arrived at 98.136 Million toward the finish of
August 2019 as indicated by BTRC. Along these lines, this is a Land of Opportunity for online
business. On the off chance that we see intently, online exchange in our nation has been
expanding slowly after some time with the difference in the business conditions. With the
improvement of expectation for everyday comforts and quick pace of bust metropolitan life
shopping conduct of the buyers has moved enormously. The E-business market in Bangladesh,
took a quantum leap in 2017; creating at an unfathomable 70% from 2016. In 2017, the B2C
E-trade business market measure indicates USD 110-115 million (around BDT 900 crore)

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against the 133,571 crores all-out retail market. Despite what might be expected, the proportion
of the Indian uber online business market stays at USD 17 billion. As demonstrated by the
masters, Bangladesh E-trade business is at a stage where the Indian market was no doubt 5-7
years earlier. The degree of the E-trade business market crossed the Tk 17.0 billion-stamp in
2017 from Tk 4.0 billion of every 2016, as shown by the data open with the web-based business
Association of Bangladesh (e-CAB). Making sure about installment advances is such a great
amount of imperative to make trust among the purchasers. In our nation, practically 80% of the
clients like to make an installment in the Cash on Delivery (COD) model, as opposed to paying.
As it is still growing there many kind methods are being introduced. Many E-commerce sites
introduced their own wallet. As a result, they are getting more traffic on their sites. On a different
Govt. still making rules and obligations on the E-Commerce industry.

Statista - The Statistics Portal (2020). Available at: https://www.statista.com/map/asia/bangladesh/e-commerce

(Accessed: 21 September 2020).

Future opportunities of the E-Commerce industry:

Web-based business innovation is relied upon to turn out to be more mainstream with the entry
of time since its notoriety is developing each day. With the uncommon increment in the use of
the web, online business is turning into a more full-grown division in the Asian nations as of late.
Developing economies like Bangladesh are relied upon to turn into a super part for internet
business in the not so distant future. As per the report of the World Bank, the monetary
development pace of Bangladesh in 2017 was 6.8 percent where a noteworthy commitment was
from online business. This number will increase significantly more in the near future as, by
2020, there will be 18.3 million web supporters in Bangladesh. Like other developing business
sectors, web-based business innovation is developing in Bangladesh exponentially. The
development is at a rate that may outperform the created nations inside a couple of years. As

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online business accomplishes higher infiltration rates in creating nations, that as well as it will
before long conquer snags to receive the rapid organizations for quicker cell phones and
transportation cost. It may very well be said undoubtedly that the Bangladeshi web-based
business market will see a colossal development in up and coming a long time with the
enormous change in the way of life of individuals and the presentation of new innovation. This
new era is called the “youth-driven market”.Here is a statistic of how Bangladesh’s e-commerce
market will grow in the future.

Challenges during COVID-19

Information on financial losses that occurred in that industry

The E-commerce sector is facing a huge financial loss of almost Tk666 crore per month for not
being able to run their activities due to Covid-19 and about 90% of e-commerce companies are
unable to operate their business due to this ongoing shutdown enforced to prevent the spread of
coronavirus. On the other hand, in this pandemic situation e-commerce sector is the only one
most dependent sector for financial growth. The physical business sector is not safe for us that’s
why most of the businesses are depending on online business day by day. Nowadays, online
businesses are more fruitful. So, more than financial losses, e-commerce helps to develop our
financial growth.

Job losses that occurred in the industry

In the E-commerce sector, very few people are suffering for their job losses. Online business is
one kind of sector, where job losses are very less. As it’s hard to continue smoothly in the
physical business most of the people are losing their job. Also, who is doing online business still
they are available to do their job kinda good way. Nowadays, the possibility of this sector's
growth, many local entrepreneurs are becoming interested in launching startup e-commerce
companies.E-Commerce can be defined as the buying and selling properties or services
through an electronic medium. A characteristic is sometimes made between e-commerce which
is done through business websites or mobile applications, which uses I as the platform to
facilitate sales. Moreover, Facilities in meeting orders in the time of the pandemic has become
paramount for online businesses as they experience rapid growth in the number of customers

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and orders. As all kinds of business can be done by online business. So, there isn’t a job losses
risk in this business.

Effects on the future business opportunity

Because its use grows every day, e-commerce technology is expected to become
more popular over time. Recently e-commerce is becoming a more mature field in Asian
countries with a dramatic rise in internet use. The hope is that emerging economies like
Bangladesh will soon become a mega-sector for e-commerce.
Everything On Mobile
As the traffic on mobile websites is 10 times greater than that on desktops, e-commerce would
essentially move towards mobile devices. In the near future, e-commerce services will be used
by most e-shoppers in Bangladesh via mobile devices. This argument can be very easily
explained as the number of internet users in Bangladesh has already crossed the 90 million
mark. Most of them, according to the latest statistics released by the telecoms regulator, access
the web on mobile devices. The number of users of cell phones also rose to over 154million.
Wide e-commerce businesses are now moving towards an integrated e-shopping experience on
mobile devices. For example, Amazon’s shopping experience boasts of seamless, hassle-free,
and quick shopping options via mobile. Google is also working on the idea to make mobiles the
sole of their indexing services. Local e-commerce firms in Bangladesh will also soon follow
these principles and become more mobile-friendly. “NopStation” is one of Bangladesh’s top
mobile app development companies in e-commerce.
Consumers will be More Active in Social Media Shoppings
In Bangladesh shopping is increasing at an exponential rate through social mediaplatforms. In
the near future, these levels will be higher as more and more new business groups enter social
networking sites like the Facebook marketplace. People can have all of their required things in
there, and groups and social mediacan be another major e-commerce service channel.
Shopping on social media hasthe potential to gain more money than conventional e-commerce
sites.

Purchasing Through Online Payment System

Bangladesh’s online payment system is getting more and more improved every
day. On the other side, the online payment system really doesn't have much
confidence in people. But in the near future, the situation will change massively as

10
security in this sector has been rising increasingly day by day. Mobile banking
Companies like Bkash, Nagad, and DBBL Rocket with other online banking
systems are gaining the trust of people and encouraging them to do all their
transactions online. Once the technology is more mature and people feel more
comfortable about it, transactions online are going to increase in a big way. This
will have a very positive impact on Bangladesh’s e-commerce sector, as people will
be able to more easily buy and pay for goods.
Automatic Delivery
In the near future, the distribution process for goods purchased on e-commerce
sites will be automated in Bangladesh. This strategy enables logistics partners to
deliver parcels using delivery drones and automated transport trucks. This can
reduce fuel costs, save delivery time, and enhance the customer experience. It’s a
matter of time that we will see the same technologies in Bangladesh as well.

Representatives’ prediction about the next 3 years

Web based business innovation is turning out to be more mainstream with entry of time since its
notoriety is developing each day. Developing economies like Bangladesh are relied upon to turn
into a super part for internet business in the not so distant future. By 2020, there will be 18.3
million web supporters in Bangladesh. The development is at a rate that may outperform the
created nations inside a couple of years. It may very well be said undoubtedly that Bangladeshi
web based business market will see a colossal development in up and coming a long time with
the enormous change in the way of life.With a drastic growth in internet use, e-commerce is
becoming a more developed sector in Asian countries. Bangladesh's number of Internet users
has already reached the 90-million mark. Many are on mobile devices browsing the internet.
Shopping on social media sites such as Facebook will earn more cash than traditional
e-commerce platforms. In the near future, Bangladesh's e-shoppers will use drones and
automated delivery trucks to deliver the goods. Shopping is growing at an exponential rate in
Bangladesh through social media platforms.

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Strategy for industry

Propose a short-term action plan

As its notoriety grows every day, web-based business innovation is relied on to turn out to be
more popular with the advent of time. With the unusual rise in web usage, as of late, online
business is evolving into a more full-grown division in the Asian nations. In the not so distant
future, emerging economies such as Bangladesh will be reliant on being a superb part of
internet business. As per the World Bank report, Bangladesh's monetary growth rate in 2017
was 6.8 percent where online business was a noteworthy commitment. Short term plan to
recover sales losses, surplus labor force Management, and also product sales:
● Outline an action plan and establish a plan for the team and hold them accountable.
● Work on narrowing the revenue gap with cross-selling.
● Use the content and social media marketing to the company’s advantage so that there
are more channels to sell a product, more access to qualified leads.
● Analyze the sales process & also prepare daily tasks and stick to it.

Propose a long-term action plan

With the advent of time, web-based business innovation is dependent on becoming more
popular as its credibility is rising every day. With the unusual increase in the use of the internet,
as of late, online business is evolving into a more complete division in the Asian countries. In
the not so distant future, emerging economies such as Bangladesh are dependent on being a
superb component for internet business. The monetary development rate of Bangladesh in 2017
was 6.8 percent, according to the World Bank survey, where online business was a notable
commitment.
● List barriers to success.
● Determine how the COVID-19 crisis is affecting the budget and business plan.
● Work on a long term investment in the business.
● Assesses financial & operational risks and respond quickly.
● Reshape strategy for business continuity.

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Limitation of the study
Covid-19 pandemic allowed a major influence on school systems around the globe. Worldwide
schools, colleges , and universities have been closed to prevent the virus from transmitting as
avoiding group meeting and preserving social isolation is important to prevent the disease from
spreading. This action was important for stay home approach to be enforced at all levels.
However due to this long-term closure, educational institutions and students face different types
of challenges. There are of course different temporal coping mechanisms that have been
implemented to counter the unexpected effects of the Covid-19 pandemic on the education
system.The educational institutions (EI) were started to close from March 2020 due to the
Covid-19 situation. At the onset of the pandemic, countries where Covid-19 has spread intended
to hold educational institutions closed until the end of March 2020, but now the period has been
extended to nearly all countries. Covid-19 pandemic allowed a major influence on school
systems around the globe. Worldwide schools, colleges , and universities have been closed to
prevent the virus from transmitting. Avoiding group meeting and preserving social isolation is
important to prevent disease from spreading. The educational institutions (EI) were started to
close from March 2020 due to the Covid- 19 situation.

Recommendation
E-commerce is becoming a more mature field in Asian countries with a dramatic rise in internet
use. The number of internet users in Bangladesh has already crossed the 90 million mark. Most
of them access the web on mobile devices. Shopping on social media platforms like Facebook
has the potential to gain more money than conventional e-commerce sites. In the near future,
e-shoppers in Bangladesh will be using drones and automated delivery trucks to deliver goods.
In Bangladesh shopping is increasing at an exponential rate through social media platforms.

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Conclusion
The outcome of an incident as hard to predict as a pandemic, reacting to a completely
unforeseen increase in orders, is virtually impossible, as the hundreds of thousands of people
who are attempting to make online transactions these days can testify. It's the same as if
thousands of customers were concurrently attempting to reach a supermarket: the distribution
windows are easily depleted, stock runs out, and the need to submit incomplete or replaced
orders emerges. Could anybody imagine more than 30,000 people trying to join a store in a
queue?In such circumstances it is important to show understanding, to be careful and to agree
that we are trying to ask systems designed for a limited number of regular orders to be able,
overnight and under lockdown, to handle an avalanche of orders that is impossible to handle,
that exceeds the normal load and the current sizing by several orders of magnitude. But that is
one thing, and seeking miracles is quite another, as if the resources needed could be created
overnight. It's not a matter of being up to the challenge or not, it's that the challenge for the
present actually goes beyond our means.
The e-commerce trade in Bangladesh set sail in the late 1990s, but it was powerless to expand
rapidly. A number of quarters now use the Internet payment system including the banking
sector. Bangladesh Bank's incremental legalization and acceptance of online payment has
helped the growth. The e- commerce market needs to concentrate more on distribution logistics
and customer support. There is no regulatory authority present to prevent consumers from
being deceived and low-quality or expired goods are provided to them. The contribution of e-
Commerce to the country's GDP is likely to be substantial in the next few years, writes
Shashank Joshi. Despite the challenges, the quarter has a lot of potential and the contribution
of E-commerce to the nation's GDP could be substantial. ShashankJoshi: Bangladesh's
e-Commerce sector is increasingly rising and gaining sustainability, but needs to be given more
protection. E-commerce in Bangladesh needs to ensure consumer rights, he says.

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View publication stats

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