As COVID-19 reshapes the world, more and more consumers are taking to shopping online. According to a report (IBM’s US Retail Index), the pandemic has accelerated the shift away from physical stores to digital shopping by roughly 5 years. Department stores, as a result, are seeing significant declines. In the first quarter of 2020, department store sales and those from other ‘non-essential’ retailers declined by 25 per cent, which grew to a 75 per cent decline in the second quarter.
The report indicates that department stores are expected to decline by over 60 per cent for the full year. Meanwhile, e-commerce is projected to grow by nearly 20 per cent in 2020.
Bangladesh, which has been under countrywide shut down for a substantial period to arrest the further growth of the pandemic, is not an exception. Since people were restricted within the confines of their homes, all activities including business operations went online. And quite naturally, at this stage, the shift is only going to continue even though the lockdown measures have been relaxed, but there are no signs of the pandemic loosening its stranglehold as yet with scores of fatalities and new cases being reported every day. So, with social distancing becoming the new normal, the rise of e-commerce is imminent.
“We will see a rise of e-commerce and online operation shift for the bricks-and-mortar-based businesses. As a result, there will be a rise of work in website design, e-commerce development and overall digital marketing activities for SMEs,” Mashfique Khalid, Managing Director, Lie to Eye (a leading advertising agency), told the media.
As the scope of growth on online platforms becomes more and more evident, many players (new and established) have been joining the bandwagon. One amongst them is TARZAAN Limited, which has recently entered the country’s e-commerce market with a handful of young entrepreneurs.
As per a press communique issued by the company, although TARZAAN Limited was officially launched on 15 July 2020, its entrepreneurs have long been successful in other sectors.
The company’s huge product collection on the e-market will include everything from daily necessities to gadgets, and to give a further fillip to this, the TARZAAN mobile application was also launched very recently.
“I’m very proud to be able to work for the needs of the people of the country. I want to say to everyone in the country, ‘TARZAAN will fulfil all your hopes and desires…’,” underlined Shahan Ara Haque, Chairman, TARZAAN Limited.
However, even as e-commerce is getting popular in the country, the so-called marketing gimmicks that border on the improbable and alleged unethical business practices by some players have emerged as a matter of grave concern. The popular online shopping mall of E-valy Limited has hit the headlines recently in this regard with some media reports claiming it to be offering all sorts of lucrative deals, with cashback offers going up to 100 to 150 per cent through which thousands of consumers are being lured in by these almost unbelievable deals, with only a few making a profit; most are still waiting to see the big bucks.
Not even 2 years into the business, E-valy is said to have already sold products worth Taka 10 billion (Taka 1,000 crore). Yet, the company’s paid-up capital is only Taka 50,000. As the business grows, a growing number of complaints have also been lodged against with various Government agencies with experts apprehending that this method of business is conducive to money laundering, claimed the reports.
According to E-valy – which sells motorcycles, refrigerators, cell phones, televisions and much more – the number of their registered clients exceeds 3.5 million with monthly transactions totalling Taka 3 billion (Taka 300 crore) in products.
As per the report, E-valy has reportedly paid Taka 15 million (Taka 1.5 crore) in taxes against Taka 15 billion (Taka 1500 crore) in sales. On average, it receives orders of around Taka 1 million (Taka 10 lakh) per month.
In the meantime, another 25,000 retail companies have become attached to E-valy, receiving commission on the sales of 4,000 types of products.
So, even as questions were being raised on E-valy’s business practices, the country’s central bank, the Bangladesh Bank, has now stepped in, asking all commercial banks to freeze the accounts maintained by top officials of e-commerce platform E-valy.
Bangladesh Financial Intelligence Unit (BFIU), on behalf of the central bank, issued a letter to banks recently instructing to freeze accounts of E-valy’s Chairman Shamima Nasrin, and Managing Director Md. Rasel.
E-valy has been the talk of the town since a mainstream Bangla newspaper published a report regarding its business model following which the Ministry of Commerce has opened an inquiry into the activities of the e-commerce platform.
Bangladesh Bank will now investigate the financial transactions and other e-commerce activities of E-valy. Head of the Bangladesh Financial Intelligence Unit (BFIU) Abu Hena Razee Hasan informed reporters about Bangladesh Bank’s move. He said the bank accounts of E-valy and its top executives were frozen after seeing media reports about the e-commerce firm’s “illegal activities.”
The letter mentioned both numbers – old NID and smart NID cards – and said the directives have been issued to suspend all transactions to and from the bank accounts of E-valy Chairman and MD for the next 30 days under the Money Laundering Prevention Act 2019.
The banks and financial institutions have also been further directed to send relevant documents of their opening of bank accounts like account opening form, KYC (know your customer), updated transactions statement, deposits and withdrawal receipts over Taka 5 million, pay order, bank cheques, the information about the payee and depositors, and their NIDs with images within 5 working days from date of the letter’s issuance.
Meanwhile, even though e-commerce in the country is emerging pretty strongly, it seems to have failed to help women entrepreneurs much with as many as 24 per cent of the online women entrepreneurs compelled to close their businesses in June, as their desperate efforts to stay afloat since the pandemic went in vain, a new study found.
Of the women entrepreneurs who tried hard to reduce the loss in revenue by cancelling orders and selling off stocks in April, a quarter closed their businesses finally in June, said the study by the Brac Institute of Governance and Development (BIGD) under the Brac University.
Mehnaz Rabbani, Programme Lead for Research, Policy, and Governance at the BIGD, presented the findings of the study titled ‘Knocked Down, but Up Again: The Case of Female Online Entrepreneurs in Bangladesh’ at a webinar recently.
The study selected small online businesses owned by women mostly in the informal sectors.
In the first round, 122 such entrepreneurs were interviewed through online questionnaires from 14 to 21 April. In the second round, 103 of them were interviewed over the phone from 31 May to 11 June.
Though online sales of health products and daily essentials flourished because of the pandemic, the crisis took a heavy toll on online retailers of fashion, cosmetics and other imported products.
According to the study, 27 per cent had resumed operations after the temporary closure at the beginning of the pandemic. Nearly half of the respondents said they had been able to continue their businesses despite the crisis.
16 per cent of those who closed businesses were homemakers. Of the entrepreneurs who are still running businesses, they had to spend an average 7.5 hours on unpaid care and household chores every day – way higher than 5.4 hours before the pandemic hit, the study showed.
After the lockdown was eased in June, they could manage to dedicate 3.3 hours to their businesses, down from 5.5 hours previously.
As many as 79 per cent of the respondents reported lower sales compared with the pre-crisis level. In the first round, 84 per cent said they made lower sales compared with that during Boishakh last year.
To wind up on a positive note, despite some reported irregularities by some entities and the state of the online women entrepreneurs taking a hit due to the pandemic, the overall scenario still remains very dynamic and fluid with strong possibilities of further growth of the e-commerce in the country in the days to come with proper checks and balances in place to safeguard the interests of the end-consumers and some financial help and support to the budding e-commerce players and those who are under financial stress.