Jahangirnagar University

Institute of Information Technology (IIT)

Assignment-01

Course Code: PMIT-6109

Course Title: E-commerce & Web security
Name of Assignment: Impact of COVID-19 on E-commerce in Bangladesh.
Date of Submission: 20/05/2022

Submitted By: Submitted To:

Md. Hasanuzzaman Dr. Md. Sazzadur Rahman
ID: 213125 Institute of Information Technology (IIT)
PMIT Spring 2022 Jahangirnagar University
E-commerce:
E-commerce, in full electronic commerce, maintaining relationships and
conducting business transactions that include selling information, services, and
goods by means of computer telecommunications networks.
Impact of COVID-19 on E-commerce in Bangladesh:
Not only Bangladesh but almost all of the countries in the world is facing a
lockdown due to the outbreak of Coronavirus. Economies are falling down; people
are losing their job and a large number of poor people are going into extreme
poverty situations.
E-commerce businesses are also facing challenges due to restriction on
transportation and fear among some consumers of getting infected by the
delivery-men.
E-commerce sites also failed to source products initially as all the shops were
closed down abruptly. Especially, fashion, IT services, cosmetics, dairy products,
household stationery, cleaning material, sanitizers, health products, etc.
But eventually, in small cases, all the products become available to the e-
commerce sites but they still struggled as most of the delivery-men returned to
their native places. All these were initial problems but as time passed, traffic on
the e-commerce sites started to increase.
According to news reports, Bangladesh currently has 2,500 e-commerce sites
selling products worth over $2 billion, making it the 46th largest country globally
in terms of e-commerce revenue. Additionally, according to the monthly business
review (2019) of the Industrial Development Leasing Company of Bangladesh
Limited, more than 300,000 Bangladeshi stores are operating through Facebook.
Of these stores, women own 50%. Facebook has transformed Bangladesh’s online
business landscape. The social media platform boasts 30 million users and 50,000
business pages in the country.
During the initial stages of the pandemic, e-commerce almost halted in the
country, and the industry lost $78.64 million directly in revenues. But thanks to
burgeoning digital financial services and mobile financial services, e-commerce
and f-commerce started innovating, and soon these businesses began recovering
rapidly, with some even scaling to new heights.
According to the e-Commerce Association of Bangladesh (e-CAB), which serves as
a common platform for the industry, the country’s e-commerce sector has been
revolutionized during the COVID-19 pandemic. Online sales increased by 70–80%
in the last quarter (July-September 2020), and online shopping has generated
$708.46 million in revenues during these pandemic times. Not surprisingly, sales
of essentials and grocery products were the main contributors to this trend. To
cite one example, Chaldal.com, an established player in this market, saw daily
orders spike to 16,000 during the pandemic, compared to 2,500 before March
2020. Their average check-out size also increased by roughly three-fold, from $15
to $45, while their virtual medicine platform’s daily order numbers rose by almost
seven-fold.
Evolution of E-commerce in Bangladesh:
The history of E-Commerce in Bangladesh is not very primitive. In late 90s –
People used E-Comers to send gifts to other. This service was limited to some
area.
2000-2010: The E-Commerce started with payment gateway, deliver system and
customer education etc. The first payment system SSL COMMERCEZ was lunched
to support business. At the end of this period E-Commerce service like Ajkerdeal,
Rokomari, Akhoni, etc. was started their work which ECommerce became enrich.
2011-2015: During this period, tremendous development has been seen in
delivery industry like HUNGRYNAKI, Sheba.XYZ and Chaldal.com etc. providing
food, grocery, daily necessary product, fashion, jewelry, salon, travel, electronics
item etc. Creating online marketplace was taken place during this period like
bikroy.com.
2016-Present: The great change during this period some company has started
their E-Commerce ingenuity like, Pran, Edison group, BTI, Transcom, ACI, Epylion,
Meenabazar etc. Recently Facebook become a big market place for small to large
entrepreneur. Even, an individual can participate in this big place simply creating
a Facebook page instead of creating web page. Daraz, the todays ecommerce
giant in Bangladesh, also meeting shopping needs during this period.
Bangladesh E-Commerce Trends During COVID-19:
Based on secondary data and discussions with a few players, MSC has observed
some interesting market trends in Bangladesh’s growing e-commerce sectors.
 E-commerce shoppers are mainly urban. About 80% of e-commerce buyers live
in metropolitan centers like Dhaka, Gazipur and Chattogram. The other two
major cities for e-commerce are Narayanganj and Sylhet. Among e-commerce
users, 85% are between the ages of 18-34. Clearly the e-commerce industry
attracts young consumers living in urban areas, while leaving a large market
outside of major cities untapped. Logistics chains and the cost of serving far-
flung areas in a nascent industry are some of the reasons.
 Recognizing the needs of customers and the market potential, some players
have changed their business models. These changes have included adding
essential services such as medicines and groceries to their product offering,
 providing door delivery services, and integrating with other suppliers. For
instance, online players such as AjkerDeal.com and PriyoShop.com, which had
never sold any groceries or essentials, have joined this new segment of
essential goods. And Advanced Chemical Industries Limited’s Shwapno, a
market leader, has collaborated with the food delivery platform FoodPanda to
launch a delivery service online and through phone calls, in addition to its
mobile app. This collaboration is part of FoodPanda’s on-demand groceries
and medicine delivery service PandaMart.
 Lockdowns and panic buying have led to a surge in online sales of medicines,
safety products and sanitizing kits. Pharmacy.com, one of the few e-commerce
businesses to offer pharmacy products via a digital storefront, has seen a
substantial rise in sales. Many other pharmacies are expanding into online-
based sales during this pandemic period.
 Most of the f-commerce businesses in Bangladesh sell non-essential items
such as clothing, lifestyle products, baked goods, arts and crafts, and jewelry.
As consumers became more conscious of their expenses and prioritized
spending on essential items in the early days of the pandemic, non-essential
businesses took a massive hit in terms of sales. But after the first few weeks of
lockdown (from March to April of this year), these f-commerce platforms
started regaining traction, and their recovery during the country’s Eid
festivities helped to minimize their losses.
Case in point: ShopUp:
ShopUp, a startup in Bangladesh, illustrates how the country’s businesses have
leveraged e-commerce and f-commerce to adapt to the challenges and
opportunities of the pandemic. ShopUp is an online platform that hosts over
500,000 micro, small and medium enterprises (MSMEs). These MSMEs get easy
access to business-to-business procurement of goods, last-mile logistics for
delivery, digital credit and business management solutions through the ShopUp f-
commerce platform, where consumers can also buy their products.

Figure 1: Development of E-Commerce-Based Online Web Application for COVID-19 Pandemic

After a month’s stoppage of operations due to the pandemic-induced lockdown,

ShopUp pivoted its model and improved revenues by selling essential items such
as medicine, food and groceries (where previously it had mostly hosted MSMEs
selling clothes, electronics, etc.) Thanks to this adaptability, the number of
neighborhood shops transacting weekly on the ShopUp platform grew by 8.5
times between April and August 2020. Additionally, to cope with the pandemic’s
impact, many smaller retail shops in Bangladesh have moved to online channels
such as Facebook to reach new customers. These online channels have created a
massive long-tail demand for last-mile logistics. ShopUp’s last-mile logistics team,
RedX, is partnering with these shops and is now the largest last-mile delivery
service provider in Bangladesh, processing 13 times more parcels daily than it did
in April.
Omidyar Network‘s 2018 infusion of seed funds provided a shot in the arm for
ShopUp, which has helped it navigate the current crisis. It has managed to retain
its entire workforce without pay cuts, despite a 50% decline in business during the
pandemic. With a relatively stable runway of 18 months, ShopUp has pledged to
raise funds for at least 1,000 MSMEs which have growth potential but require
support to survive amid the lockdown. Siffat Sarwar, ShopUp’s Chief Operating
Officer, aptly sums up the situation, saying, “COVID has significantly hampered
sales of all the entrepreneurs. But it has also brought in opportunities, because
customers are adopting online commerce rapidly. Every problem also brings with
it a set of options, if you can adapt.”

The Challenges to E-Commerce:

As illustrated in the figure below, the e-commerce market in Bangladesh provides
an enormous opportunity for gig workers. But despite the millions of transactions
taking place daily through e-commerce and f-commerce platforms, there exist
two critical challenges.

 
 Fig
ure 2: Online commerce landscape in Bangladesh

First, most e-commerce and f-commerce platforms accept both digital payment
and cash on delivery (COD). Not surprisingly, COD, estimated at around 80%,
dominates the payment system. However, COD has its own challenges. They
include customers’ last-minute payment decline (in which customers change their
minds about their purchase after the product is delivered to their doorstep,
leaving the vendor or platform to accept the cost of transport as a loss),
additional time taken to complete the transaction as customers gather cash to
pay, and the risk of carrying cash from customers’ homes to the business hub.
COVID-19 adds another risk in terms of cash acting as a potential vector of
infection. These challenges impact delivery efficiency, and ultimately the overall
operation. If mobile and digital financial services providers can collaborate with
online commerce players to incentivize and nudge customers to pay digitally,
these businesses can grow faster. Based on the typical users’ profile in the e-
commerce sector, digital payment methods should be easier to adopt than cash
payments, and able to replace COD.
Second, there are regulatory gaps. With challenges in the existing National Digital
Commerce Policy of 2018, customers and entrepreneurs face challenges such as
fraudulent activities, fake products, uncompetitive pricing, customer harassment
and quality issues in the existing industry. These challenges make both the
customer and the entrepreneur vulnerable. Authorities such as e-CAB, the
Metropolitan Chamber of Commerce and Industry, and the Ministry of Commerce
should formulate and enforce regulatory actions. These regulatory measures
should include product quality, customer satisfaction, monitoring transactions,
pricing, competition and taxation. The Bangladesh Competition Commission,
under the Ministry of Commerce, can play a significant role in monitoring the
market for quality control and consumer rights protection.
Meanwhile, as per current practice, many e-commerce and f-commerce platforms
have been working on their consumer protection policies based on their internal
codes of conduct. One option could be for these platforms to explore an industry-
wide online/digital consumer protection framework as an intermediate step.
Nevertheless, unless there is a set of laws and regulatory frameworks, fraud and
mistrust in online purchases will grow.
The way forward:
COVID-19 has been a catastrophe for most businesses and segments of the global
economy, especially in developing countries. Bangladesh is no exception to that.
However, some sectors took this crisis as a “nudge” to go digital. The
unprecedented growth of e-commerce and f-commerce in Bangladesh, despite
the pandemic, illustrates the likelihood that various segments of users will
continue to seek opportunities to use online marketplaces. This growth creates an
excellent opportunity for the fintech industry to move even faster to enable
cashless transactions, provided the ecosystem players can work together and
build a value proposition for all stakeholders.
 Figure 3: E-commerce in Bangladesh is on the rise due to the fear of COVID-19

Moreover, financial institutions can also leverage the rise of e-commerce and f-
commerce. Banks and other financial service providers have the opportunity to
build digital credit products in this space, leveraging the data generated by both
suppliers and customers. Bangladesh stands at the cusp of more widespread
innovation in online commerce, and it can learn from relevant examples from
many countries, in both developed and developing economies. This opportunity
could enable it to accelerate the sector’s growth, both during the pandemic and
as the world transitions to the new normal.

Impression:
Under COVID-19 Situation in Bangladesh e-commerce produce a great effect in
our daily life. Because during COVID-19 situation everything were lock downed.
So, people could not move one place to another place. Almost full day people
stayed home. So, most of the people buy their daily necessary component from
online or e-commerce. Moreover, who are vendor they sell their product by e-
commerce site. As a result a online banking idea developed among many people,
who were not informed previously.