The e-commerce sector in Bangladesh has experienced an approximate 100 per cent growth in 2016-19, according to the E-Commerce Association of Bangladesh (e-CAB).
The fast rate of internet adoption, improvement in logistics communication, and continuous improvement in online banking and mobile financial services (MFS) have played a crucial role in the growth of the e-commerce sector.
Also, the rise in the tech-adaptable young population (over 50 per cent of the population are under 35 years) and the increasing rate of middle and affluent class (MAC) populations (10 per cent per year) has fueled the growth of this sector.
Covid-19 with a push
However, the Covid-19 breakout has dramatically paced the growth of this industry. According to the official reports of e-CAB and statements of industry insiders, sales in e-commerce platforms rose by about 70 per cent in 2020, and the market size of this industry stood at nearly US$2 billion as of August 2020, which was only US$0.654 billion in 2016.
Rise in number of complaints
With the steady growth of e-commerce platforms, we have seen the rise of complaints and irregularities against them. According to the reports of several law enforcement agencies, between January 2016 to August 2021, about 20,000 complaints have been lodged with the National Directorate of Consumer Protection.
There has been a common complaint of not delivering the products on time against various e-commerce platforms even after taking the money. These irregularities and complaints have called into question the progress of this sector. At the same time, questions can arise about the role and effectiveness of the relevant regulatory bodies.
There were different speculations over the business model, transparency, and suspicious way of doing business against various e-commerce companies for quite some time. We have seen the absence of a proactive role among the regulators.
The traditional role of concealing the faults by the concerned authorities has been seen in this e-commerce incident, as commonly observed among them after any occurrence.
Now, after various controversies related to this sector have come to the surface, regulators have become busy with catching flaws in the existing law and system.
No operating guidelines
There has also been observed a tendency to accuse victim customers and the media houses in this matter. Well, the consumers and media houses have enough responsibility for the recent scams. At the same time, the authorities can't also deny liability for their mismanagement and lack of collaboration among regulatory agencies.
It is surprising that a sector to achieve a market size of US$3 billion by 2023 had been operating without any specific operating guidelines for quite a long time.
Although there was a digital trade policy passed in 2018 by the National Assembly, there were no guidelines for e-commerce sites.
Last year, when complaints started to emerge against a number of e-commerce companies, the lack of proper e-commerce guidelines sparked much discussion. In July 2021, the authorities issued the Digital Commerce Operation Guidelines amidst the uproar of misconduct and consumer rights violations by several e-commerce sites.
Efforts have been made by adding numerous rules to the guidelines to stabilise the sector. Under the guidelines, there are proper instructions for the delivery, pricing, and showcasing of products.
Following the guidelines, Bangladesh Bank has already started applying the escrow service where Bangladesh Bank acts as a third party by receiving the payment against the transaction and transferring it to the selling party after the delivery of the product.
However, this service also has been blamed for the delay in clearing the payments due to the manual method to verify the receipts.
Damage is done
After embezzlement and irregularities against various e-commerce sites come out to the public, numerous cases have been filed for reimbursement by the aggrieved customers. We have heard of recommendations and amendments to numerous existing laws to bring discipline to the sector.
Authorities are carrying out investigations related to suspicious transactions and have formed a 16 member panel for proper recommendations of measures. Through well-thinking implementations, these recommendations may help to establish a properly regulated e-commerce sector.
E-commerce for employment
Alongside, there is a need to ensure that the growth of the e-commerce sector is not hampered by these regulations. Standing on the brink of LDC graduation and demographic dividend, Bangladesh is going through several problems of which unemployment is an important issue.
The e-commerce sector has the potential to create a significant number of jobs to overcome this challenge. E-Cab estimates the creation of 100,000 new jobs in the e-commerce sector during the lockdowns, and by the next 3-4 years, there will be 500,000 jobs in this sector.
Again, many women and young entrepreneurs are becoming self-reliant through trading their products on Facebook. There are around 0.1 million Facebook-based digital shops. However, the number will keep increasing in the coming days.
The blow was brewing
The recent turmoil in the e-commerce sector is not a sudden incident. Many experts were predicting this kind of consequence and had also warned general people regarding it. As no apparent measures were taken, the alleged companies exploited the loopholes of the system.
At the same time, the regulatory authorities have failed to take timely actions. Recent events have shaken the confidence of consumers in e-commerce companies. Hence, regaining the consumers’ confidence should be the topmost priority which requires ensuring a properly functioning e-commerce sector.
Passing new rules or forming a new authority is worthless unless they are implemented. Cooperation among different bodies such as the Ministry of Commerce, Bangladesh Bank, e-CAB, and the law enforcement agencies is a must for the implementation of guidelines and rules.
The authorities also need to focus on faster clearance of the payment through escrow service by incorporating advanced tools of checking invoices.
Finally, consumers, too, need to be more cautious about proceeding to unrealistic lucrative deals offered by any e-commerce company. Hopefully, collective efforts from all the stakeholders will not let the prospects of this burgeoning sector vanish.
Md Gias Uddin Khan is an Assistant Professor of Economics at Shahjalal University of Science and Technology.
Sayed Arafat Zubayer is a student of Economics at the same institution.