Fashion retail is gaining strong grounds in Bangladesh and so is e-commerce, or is it?
As per an earlier report by the United Nations Conference on Trade And Development (UNCTAD) titled Bangladesh Rapid eTrade Readiness Assessment, the country has laid down an exemplary digital foundation and is striving to prepare its citizens for the digital future, in accordance with the Digital Bangladesh initiative.
“Bangladesh is a fertile ground for e-commerce to take root and benefit companies and consumers alike,” stated Shamika N. Sirimanne, UNCTAD Director of Technology and Logistics then, indicating the enormous growth in the information and communications technology (ICT) sector in the country.
However, two recent reports, one from UNCTAD itself and another from German research firm Statista, have come up with their findings that portray very different pictures – one that projects a growing e-commerce industry and the other that underlines Bangladesh’s fall in the global e-commerce index, lately.
As per UNCTAD report, Bangladesh has slipped 15 notches to rank 103rd in global e-commerce index, lagging behind many Asian peers like Vietnam and Thailand. The report distinctly states Bangladesh is ranked 103rd out of 152 countries in the global E-commerce Index 2019, slipping by 15 notches from 88 in the previous year, according to the publication titled ‘UNCTAD Business-to-Consumer (B2C) E-commerce Index’.
Bangladesh scored 39 points in the list, in which Netherlands topped by scoring 96.4 points. The bottom 5 of the index includes Congo, Comoros, Burundi, Chad and Niger.
The index, which measures an economy’s preparedness to support online shopping, also ‘consists of four indicators that are highly related to online shopping and for which there is wide country coverage’.
The list is prepared based on four indicators, each carrying same value, including account ownership at a financial institution or with a mobile-money-service provider, internet penetration rate, Postal Reliability Index and extent of secure internet servers. And on those parameters, Bangladesh scored 50 points for account ownership with financial institution, 15 points for internet penetration, 47 for postal reliability and 44 for secure internet servers.
The data was collected from several international organisations including The World Bank (WB), International Telecommunication Union (ITU) and Universal Postal Union (UPU).
According to the UNCTAD, only 8.0 per cent of the total internet users aged 15+ in Bangladesh bought something from different e-commerce platforms in 2017. The rate of online buyers is only 1.0 per cent of the total population, it added.
“E-commerce business in Bangladesh has improved a great deal over the years, but the progress rate is not adequate enough comparing with some neighbours,” underlined Fahim Mashroor, Chief Executive Officer of AjkerDeal.com, one of the popular e-commerce sites of Bangladesh, who identified poor infrastructures related to delivery channels as one of the bottlenecks behind not getting the desired momentum.
Due to poor delivery channel, it often takes 5-7 days to deliver a product to the buyers, which is much faster in other countries, Fahim stated adding that in Bangladesh e-commerce businesses are mostly concentrated in urban areas and internet use is still limited in the rural area due to higher cost.
Meanwhile, as per the German research firm, Bangladesh’s e-commerce market currently stands at US $ 1.6 billion and will double to US $ 3 billion by 2023 on the back of a digital foundation laid down by the Government and a young and tech-savvy population.
In terms of e-commerce revenue, Bangladesh is ranked 46th in the global ranking, according to Statista. Further, as per the Statista report, the online fashion market in Bangladesh is currently worth US $ 598 million and has the prospect to reach up to US $ 1.24 billion by 2023.
If some agree with Statista findings, others beg to differ.
“Thanks to my connection to a large group of online businesses, I see that the market size has already crossed US $ 1 billion mark and this has now been acknowledged by an international agency,” underlined founding president of the e-Commerce Association of Bangladesh (e-CAB) interacting with the media.
Fahim, however, thinks differently! “Maybe, the market has the potential but right now this is an overestimation,” Fahim underlined.
There are also those who feel Statista finding may not be a case of overestimation as many try to hide the reality (actual earnings) in order to get tax benefit from the Government while many online shop owners only consider selling physical goods as e-commerce not taking into account services rendered online as part of the e-commerce industry.
However, e-CAB leaders say the e-commerce market is not more than Taka 3,000 crore (US $ 350 million), with 50,000 deliveries per day.