Decelerating e-commerce growth

The recent developments in the e-commerce sector in Bangladesh paints a worrying picture. According to a report published in The Business Post yesterday poor infrastructure is impeding e-commerce growth in this country.

In the past e-commerce in Bangladesh has often found people divided, which stemmed from the lack of trust the wide majority had in online shopping.

While a few tech players, particularly those in ride-hailing,  managed to truly make a behavioural change among the masses, others largely lagged behind with most of their takers from a certain social class or age group.

However, ironically during the height of the pandemic period there was a boom in the sector. The pandemic locked the entire world inside homes but that does not mean the demands were still there. The shoppers adapted to the situation and for that the e-commerce sector boomed around the world. The sector thrived in Bangladesh too.

The pandemic provided a shot in the arm for the e-commerce industry in Bangladesh. The industry experienced a huge growth during the pandemic as buyers from different sections of the society were more interested in buying essentials they need from online marketplaces, rather than going out and buy things from brick-and-mortar shops.

However things turned back to square one as the pandemic eased down. Things are not so rosy for the e-commerce industry these days. Experts say that the fast growing e-commerce sector is facing a bleak future at a time when the country is claiming to have achieved “Digital Bangladesh-Vision 2021” goal, and set to moving towards “Smart Bangladesh” with an aim to digitalise every possible sector

The TBP report, referring to industry insiders stated that lower-than-needed internet penetration, connectivity constraints, and poor logistic infrastructure are impeding the growth of digital commerce particularly in the remote areas.

They also claimed that post offices are not efficient enough to comply with online commerce as automation and IT-skilled resources are not available and commerce with perishable goods is not possible due to a lack of cold storage facilities and convenient transport system.

There is no denying that this is an age of fierce competition and aggressive marketing strategies. To survive in such an ecosystem, different online marketplaces come up with lucrative offers from time to time, some of which are largely impractical and unrealistic. Such offers create imbalance in the market and develop a sense of greed among the customers. To stop such trend, e-commerce industry will have to run awareness campaigns so that the customers understand the fact that more is not necessarily the better. It is very natural that the consumers will resort to different tactics like showrooming and webrooming to get the desired products at best prices.

But, it is also important to remember the incident of Evaly and other platforms that pulled the wool over buyers’ eyes by enticing them into buying things offered at very unreasonable prices. To keep people away from such marketing gambits, the industry will have to take steps to make them aware of the risk factors.

In the meantime, different platforms will have to be more careful and thoughtful while devising strategies for different campaigns. Everyone will have their own strategy to lure customers, but at the same time it is important that online marketplaces come up with offers that are reasonable and will, in no way, cause upheaval and imbalance in the market. For example – you cannot simply offer a car or bike at half its price because that’s not actually possible. In this case, the role of the regulators comes in. It is vital to ensure that everyone is following the Competition Act to maintain the balance. 

The ministry concerned must make sure that the e-commerce platforms are doing business following the recently introduced Digital Commerce Operation Guidelines, 2021. In order to protect the interests of the customers, online marketplaces need to follow the guidelines.