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Introduction

Technological development facilitates people’s life to adopt it in every sphere of life.

Electronic commerce is one of them. Electronic commerce means business based on internet
which is usually known as E-Commerce. Figure 1 shows the generic E-Commerce model. It
comprises the approaches of business like buying and selling of products, services and
information fully based on internet. It basically uses communications based on digital
information technology in business. It provides a platform for sharing information related to
product and services among the buyers, sellers, and related stakeholders using
communication and information technology like EDI (Electronic Data Interchange). It also
connects different payment system through mobile banking, debit card, credit card of EFT
(Electronic fund transfer) payments, QR (quick response) payment system like bkash, and
Nexus pay payment system. It provides various benefits to the customers by making
availability of goods at lower price, broader choice and saving times. It is characterized by
technology driven, business model innovation and quick scale expansion [1]. It helps to
enhance operations efficiency and directed to the productivity growth.

It has a great potential to contribute to the mainstream economy. It saves time, cost and
distance for purchasing, exchanging and dealing products and services without major
challenges. In last few years, the growth rate of ecommerce is tremendously occupying the
business sector. According to Ecommerce Foundation, about $2671 bn global business
turnover by 2016 which mentioning a notable achievement for e-commerce sector [2].

Figure: Generic E-Commerce model

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E-Commerce can be categorized as follows:

i) Business-to-Business (B2B) Business-to-business e-commerce deals between the

businesses and businesses. Most of B2B applications are used in the area of
distribution management, inventory management, channel management, supplier
management and payment management. For instance, bgmea.com.bd,
bizbangladesh.com are B2B platforms in Bangladesh.
ii) Business to-Consumer (B2C): This type of e-commerce is involved between the
businesses and the consumers. We purchase most of physical goods like books or
any consumer product, information goods like software, e-book, games, song, etc.,
and personal finance management like e-banking. For instance, ajkerdeal.com,
daraz.com are B2C platforms in Bangladesh.
iii) Consumer-to-Consumer (C2C): Consumer-to-consumer e-commerce deals
between individual consumers. Online auction and peer-to-peer system for money
or file exchange could be the examples of C2C e-commerce. Business-to-
Government ecommerce is involved between the business organizations and the
government. For instance, bikroy.com, clickbd.com are C2C platforms in
Bangladesh.
iv) Business-to-Government (B2G): B2G is generally used for licensing process,
public purchasing and other government operations. Though this type of e-
commerce is insignificant compare to other kind of e-commerce, but it could be a
driving force for operating public sectors which is referred as e-governance.

The adoption of Information Communication Technology (ICT) is a timely demand to adopt

almost everyone in the society so it is necessary to develop a sustainable e-commerce
ecosystem [4]. Besides there is another challenge related to increasing fake products
gradually which reduces the trust of e-commerce business. Both consumers and traders are
suffering from this problem which affects the ecommerce ecosystem. Accordingly, the third
party of e-commerce have a significant role to overcome the situation as a mediator.

However, in developing countries poor access to correct market information, poor

infrastructure, sometimes absent infrastructure hampers to adopt e-commerce technology
properly. But adoption of e-commerce approach may be a good opportunity to develop a
nation. Because the producer easily represents their products to global market irrespective of
the language, culture, nation, and country. The internet provides this facility to bring the
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globe in hand and market their product worldwide. It provides a lot of benefits to individuals
and trader in developing as well as developed countries. Some developed countries smoothly
run worldwide brand E-commerce site like Amazon, eBay, Walmart.com, Alibaba.com etc.
whereas large number of firms from developing countries such as South Korea, Taiwan,
Brazil and Bangladesh have already become global players in many industries. This
developing countries firms can take advantages of ecommerce to market their product into
domestic and worldwide.

E-Commerce in Bangladesh

Bangladesh adopts the internet technology in 1996 and the internet users growing rapidly
now. BTRC [3] reports that 50% growth of internet user’s subscription and user number
around 60 million from 2013 to 2016. Internet users in Bangladesh crossed 77 million marks
as the first eight months of 2017. BTRC officials said the number of internet subscribers have
crossed 80 million in October 2017.

According to the latest statistics released by the Bangladesh Telecommunication Regulatory

Commission (BTRC), over 93.6 per cent or 68.6 million users browse the internet through a
mobile phone. Internet Service Provider (ISP) and Public Switched Telephone Network
(PSTN) users were increased to 4.62 million.

E-commerce has been shaping the business process in Bangladesh. Bangladesh is a densely
populated country in the world with about 154.41 million people living in small area
including 77 million internet users. It can be concluded that without any doubt, economy of
Bangladesh is a growing economy; it is a developing country and business diversity in its
varied regions. Online transaction in our country has been increasing gradually over the time
with the changing of business environment. With the improvement of livelihood criteria and
fast pace of standard of living consumer’s shopping behavior has shifted greatly. In
Bangladesh ecommerce industry emerged in the 90s but could not be evolved as expected.
With the improvement of economic aspects, such as banking, the logistics, communications,
payment method, etc., there has an outstanding opportunity of e-business. Along with the
banking sector in Bangladesh, many other sectors have introduced a new era with the start of
internet payment system. A Wider range of technologies is used in Ecommerce. Some of
them are electronic data interchange (EDI), electronic mail (e-mail), electronic funds transfer
(EFT).
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The e-commerce is gradually taking place in Bangladesh though increasing of the internet
service provider, IT specialist, e-commerce websites and a sincere cooperation from the
government of Bangladesh and central bank. In future, online business strategy can bring
glorious opportunity to this developing country if it can be applied in proper business
purposes including all e-commerce business dimensions such as B2B, B2C, C2C and M-
commerce. Hence understanding all the challenges, opportunities, threats, strength, weakness
are indeed necessary now for successful ecommerce growing in Bangladesh. Hence
understanding all the challenges, opportunities, threats, strength, weakness are indeed
necessary now for successful ecommerce growing in Bangladesh.

Growth of E-Commerce in Bangladesh

In Bangladesh E-commerce sector growth has exceeded all expectations and has had a
leading impact on changing the economy in terms of aggregate investment. In Bangladesh e-
commerce started in the late 90s. During the period 2000-2008, the e-commerce sector
observed slow growth. Annual rate of growth in the ecommerce sector for the past three years
is trending above 200% year on year. According to Bangladesh bank, payments and
transactions by credit cards were nearly Tk11 billion in June 2018. Massive changes occurred
in the mentioned sector when Bangladesh Bank allowed online payment in the country, thus,
officially opening up the e-commerce sector. In the year 2013 Bangladesh Association of
Software and Information Services (BASIS) and Bangladesh Bank jointly observed “E-
Commerce Week” for the first time in the country.

B2C is the most popular form of e-commerce. It observed growth rate above 300% for the
last three years. Market share for ecommerce for B2B and B2C are 10% and 90%
respectively. Currently 18-23% of mobile phone users are using a smartphone with an annual
growth rate of 30%. There are 50,000 people actively engaged in e-commerce with
projections of 1,000,000 people being employed in the sector over the next 10 years.
Transaction sizes for ecommerce purchases are still relatively small. Average spending per
online shopper is BDT 9000-10000. About 70.5% of e-commerce users spend less than BDT
5,000 a month. About 29.3% buyers using a website directly as compared to 43.5% using
Facebook Page for purchasing products online.

Contribution of e-commerce as a percentage of GDP is less than 1%, if we take industries

connected with e-commerce under consideration it nears 2.5%. At present per day,
approximately 20 thousand & per month 5-6 lakh parcel was delivered all over the country.
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All commerce will become an e-commerce within the next few years and this process will
help the sector mature. Currently, there are 1,000 e-commerce entrepreneurs in the country,
who are running their business through websites. There are approximately 8,200 Facebook
pages also running this business.

The e-commerce scene in Bangladesh reported by Light Castle Partners is composed of

female consumers (55%), while half of them are aged 26-30 years. These consumers are
young professionals (44%) and students (33%), being almost entirely (90%) Dhaka based and
a third of them having over BDT 30,000. These middle and affluent consumers (MAC) are

 Technophiles (tech lovers) (32%),

 Sports fans (14%),
 Smart device lovers, Movie lovers (10%),
 Music listeners (11%), and
 TV show followers (9%)
 Others (24%)

They preferred e-commerce due to home delivery (22%), time and convenience (19%), price
and quality (14%), and choices available (12%); but not due to ease of purchase or payment
(3%). These are all low priced items; high value items require “feel” of the products and
thereby not favored over physical modes of shopping. The popular categories bought in
websites are revealed to be

 Fashion wear (22%)

 Accessories (18%)
 Electronics (15%)
 Footwear and Food (10%)
 Others (35%)

These products have been purchased from some of the popular websites in the country.
Respondents revealed that traffic came from Ekhanei (21%), Bikroy (17%), Priyoshop, and
Daraz (10%). Traffic and times varied but were prevalent all year round (37%), during
religious festivals (27%), and Pohela Boishakh (20%). Nowadays even deals and discount
“seasons” have appeared in the scene. Findings also showed payment methods to be ruled by
COD (68%), while the second preferred medium which was mobile banking (20%). These
findings were based on a sample of users who highly (39%) trusted (47%) this platform of
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doing business. The study found that the important models of e-commerce which are growing
with confidence are online retail (Daraz), food delivery (Foodpanda), grocery (Chaldal,
Meenabazar), E-ticketing (shohoz), and other forms.

Key E-commerce platforms in Bangladesh:

Major e-commerce websites operating in Bangladesh are listed below:

 www.daraz.com
 www.ajkerdeal.com
 www.shohoz.com
 www.chaldal.com
 www.bagdoom.com
 www.rokomari.com
 www.sheba.xyz
 www.gozayan.com
 www.clickbd.com
 www.evaly.com
 www.othoba.com
 www.bproperty.com

Key logistic and distribution operators in the e-commerce market:

 Bangladesh Post office (BPO)

 Various Courier Service (Pathao, e-courier, SA Paribahan, Sundarban etc.)
 International courier and freight services: TNT, Fedex etc.

Key product categories in the E-commerce market:

The products and services that now dominate the country’s e-commerce are

 Tickets (railway, domestic air): esheba.cnsbd, gozayan.com

 Hotel booking: www.amy.com
 Electronic products: www.Pickaboo.com
 Books: www.rokomari.com
 Jobs: www.bdjobs.com
 Clothing: www.daraz.com
 Food items: www.Khaasfood.com
 Property: www.bproperty.com
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 Baby consumables and financial services etc.

Opportunities, Challenges and Risks of E-Commerce in Bangladesh

Although ecommerce sector have remarkable progress in Bangladesh due to high internet
speed and information technology advancement, but it is still far lagging behind the
developed countries like USA, China. Till now there are many challenges, risk and
opportunities for the merchants to smoothly operate their e-business in Bangladesh. Issues
like online money transaction, logistics, packaging etc. being the critical issues for
ecommerce operation in this country. Possible factors of challenges, threats and opportunities
are [6]:

 Poor Knowledge and Awareness: Comparing the ratio of internet users and
information technology revolution, majority of the population especially from rural
area people are not aware of ecommerce business and its benefit as well they are not
well known about internet uses and its application. Some of them yet afraid of online
security and fraud, hence ecommerce knowledge gap still exists. Reliable survey
shows that more than 50% of consumer in Bangladesh don’t have enough knowledge
about the online security solutions.

 Online Transaction: Internet banking, online transaction yet not popular in

Bangladesh and most of them unknown about the online transaction operation, hence
effecting the online shopping growth. However, some of the private banks started
their online banking operation such as Eastern bank Bangladesh limited, BRAC Bank
Limited, The City Bank Limited and even Bkash have agreement with Chinese wallet
Alipay which undoubtedly an improvement sign of ecommerce sector in Bangladesh.

 Cash on Delivery: People yet prefer cash on delivery (COD) for payment method
while shop online which replacing the online transaction barriers in ecommerce
sector. 30-50% consumers taking advantages of COD for their online shopping [4] as
they can ensure the product quality after delivery removing security issues. However
COD brings sales loss for merchants, some consumers denied to pay and unable to
contact at the delivery time of the goods. Proper online retailing law and judicial steps
taken by government can eliminate this problem and improving online shopping.
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 Online Security: Many firms using pirated software and application and not proper
aware of online security issues which is prone to leak out consumer’s personal
information and banking information resulting critical issues may happen. Yet some
of the online shopping website don’t have SSL certificates to ensure the online
security. All online shopping needed to use SSL certificate ensuring prevention of
hacking and loss of consumer’s sensitive information. Proper use of antivirus and
firewall protection also needed for successful secured online shopping and
counterattack of malwares and Trojan.

 Logistics and Shipment Services: Smooth and managed logistics and shipment
services is key factor for successful ecommerce. Bangladesh is still lagging behind
this improvement especially remote areas not covered for logistics and shipment
services. Developed countries like USA, China have proper and smooth logistics
services for ecommerce sector. Bangladesh online merchants and logistics companies
can follow their operation and management policy for goods shipping.

 Goods Packaging: Packaging technology still not developed in Bangladesh, and

many of the goods hampered during shipping without proper packaging bringing
negative thought of online shopping by the consumers. By using proper and safety
packaging many goods can be shipped smoothly, thus development of packaging
technology industry and packaging method need for one step more successful online
shopping in Bangladesh.

 Fear and Fraud Factor: Majority of the consumer in Bangladesh not well known
about the online shopping process, payment dealings and its security. Hence they fear
to transact online, even they prefer pay on delivery while shopping. Another major
factors are credit card information loss. Some firms giving lucrative offers to collect
credit card information while online shopping and later they hack the consumer card
information and illegally punch to make money. Proper rules and authority action
required to remove this tricky.

 Physical Touch of Goods: Consumer in Bangladesh used to buy products after

touching it physically and even they like to bargain the price. Hence they are more
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likely to transacts C2C and O2O products/service and prefer pay on delivery in B2C
shopping. However, 7/30 days’ money back guarantee and some other similar policy
can reduce this consumer tendency and improve online shopping process.

 Product Quality: Quality is a universal and common issues for online shopping.
Some quality issues like product description mismatching, refurbished, fake products
annoying the trustworthy of online shopping. Proper rules and regulation can enhance
customer trust regarding product quality and merchants should go for original and
quality product for success in this sector.

 Tax Structure: Unlike developed countries tax rate varies sector by sector in
Bangladesh hindering the development of online shopping. A proper tax policy from
government for online shopping and circulation can eliminate this hindrance and
successfully grow of online shopping.

 Customer and Social Relationships: Face to face trading can enhance customer and
social relationship whereas online shopping fail to develop this relation. But
merchants in Bangladesh can improve the online consumer reviews (OCR) as
marketing tool to build up customer trust and relationships to improve online
shopping.

To further investigate the current status of the different aspects facing the e-commerce
industry, an FGD of local e-commerce entrepreneurs conducted by Center for Enterprise and
Society which revealed the following points:

 Facebook has been the base structure of e-commerce in Bangladesh.

 Third-party delivery services employed.
 Collection of payment from third-party delivery is slow.
 COD dominates payment; credit card use is apprehensive due to fraud.
 Inexperienced e-commerce entrepreneurs at large; inadequate marketing knowledge.
 Lacking skilled human resource.
 Lack of customer awareness about the sectors benefits. [5]
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Conclusion

E-commerce is actually involved in people’s daily life especially who are living in urban
areas. The assignment attempts to explore the scope, challenges and threats of e-commerce in
its development dimensions in Bangladesh. The assignment reveals that the trend of growing
the internet subscriber is increasing rapidly which indicates the people’s interest on internet
and related technology. The internet penetration rate is gradually increasing which means
people are feeling interest to adopt new technology. The trend of e-commerce site and
marketing over various social networking site indicates that the growth rate of e-commerce
market is increasing rapidly and people have interest on purchasing from various e-commerce
site.

The government is sincere to adopt ecommerce technology through engaging various

technical sectors. The central bank and ministry of finance and commerce are also working
on developing customer friendly and secure e-commerce platform in Bangladesh. The
assignment also reveals that there is a great prospect of e-commerce in Bangladesh with
growing trust, ecommerce facilities, security, people’s awareness and transformation from
traditional shopping to online shopping. The assignment depict the strength, weakness,
opportunities, and threats to provide clear and deep understanding about ecommerce sector in
Bangladesh to readers, practitioners, sellers, investors, and manufacturers. It further argues
that people like online shopping due to its convenience, product availability, price premium,
and time saving nature. The quality of the product, consumer dishonesty, lack of proper
online security in some ecommerce site, unavailable banking facility, shipping policy and
mandatory credit card requirement are the major challenges to the development of e-
commerce in Bangladesh. It suggests that a proper initiative should be taken by the
government to implement ICT policy properly for smooth running e-commerce business in
Bangladesh.
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2. Ecommerce Foundation, “Global B2C E-commerce Report 2016,” 2016.
3. BTRC, “Monthly BTRC reports on internet subscribers in Bangladesh (February
2012- January 2016),” 2016.
4. M. Mohiuddin, “Overview the E-Commerce in Bangladesh,” IOSR J. Bus. Manag.
Ver. II, vol. 16, no. 7, pp. 2319–7668, 2014.
5. A. Ishtiaque, A. Baten and A. Sarwar , “How E-commerce is Transforming in
Bangladesh Volume 3. Issue 4, October 2017
6. A. Hossim, N.I. Sarker, Y. Xiaohua, ANK. Frimpong (2018). “Development
dimensions of E-Commerce in Bangladesh: Scope, challenges and threats”