Bangladesh e-commerce booms beyond regulatory oversight

Lack of monitoring and transparency dog the booming e-commerce that has grown by leaps and bounds to Tk 10 billion in annual sales.

Customers prefer ‘cash-on-delivery’ over online payment which poses the risk of tax evasion and also causes lack of transparency in the transactions. It is sometimes hard to ensure consumers’ rights in cases of cheating, low quality or expired products as there is no regulatory authority to discipline the sector.

The online business in the country began in 2011. Bangladesh Bank initiated the National Payment Switch which opened the online payment system helping e-commerce operators and customers alike.

The overall online business has crossed Tk 10 billion in annual sales, Abdul Wahed Tamal, general secretary of the executive committee of e-Commerce Association of Bangladesh, told bdnews24.com.  

There are around 2,000 e-commerce sites and 50,000 Facebook-based outlets delivering almost 30,000 products a day. At present, Dhaka, Chattogram and Gazipur account for 80 percent of online sales. There is no regulatory oversight over most of the products sold via Facebook.

The government introduced the National Digital Commerce Policy to regulate the sector in 2018 but a regulatory structure for e-commerce is yet to be initiated.

“We need a monitoring authority for e-commerce to bring discipline to the sector,” Consumers Association of Bangladesh President Golam Rahman told bdnews24.com.

“We don’t have such regulatory authority at the moment but we’re contemplating the issue. We’ll do something soon,” said Commerce Minister Tipu Munshi.

Two students of Bangladesh University of Engineering and Technology conducted a survey on the online market in October last year where 80 percent of the respondents said online shopping saves their time. On the other hand, 60 percent said that online shopping takes more time and it is risky too.

Almost all of the respondents believed online trading is a new concept and the payment system should be upgraded for the convenience of the customers.

Online market sells a wide range of products starting from perishable goods like fish, meat, vegetable to grocery items, clothes, furniture, cosmetics, jewellery and even motorcar.

The top-selling goods are clothes, cosmetics and jewellery with the lowest sold being perishable goods, such as fish, meat and vegetables, the survey showed.

Mostly, young people aged between 25 and 34 are the customers in the online market. The surveyor students spoke to 81 companies selling goods online and found that those websites selling a single good had a 16.2 percent increase in sales from 2011 to 2017 while those selling multiple goods had an increase of 24.8 percent.

A large part of the online customers belong to the middle income group, according to the survey.

“I sell 40 dresses a day out of my two brick-and-mortar stores in the city, but I sell 160 dresses online a day,” a woman entrepreneur selling women’s garment told bdnews24.com.

“There is no trouble of VAT or tax in online sales. I can do it staying at home and make profit,” said another woman entrepreneur.

“Those who want to do business legally should be given the opportunity to do it. We should create interest in people to opt for entrepreneurship. But those who are running large stores and evading tax should be nabbed,” said Dr Nazneen Ahmed, senior research fellow in Bangladesh Institute of Development Studies.

Daraz, one of the leading online marketplace in the country, stressed the need for a regulatory authority for e-commerce to thrive.

“Operators of e-commerce face the dilemma whether they should listen to the commerce ministry or the ICT ministry,” said Sayantani Tisha, head of public relations in Daraz Online Shopping. “Both parties can maintain transparency if there’s a regulatory authority, which will strengthen the future of e-commerce.”