Online Business Models

in Bangladesh

Page | 0
Online Business Models in
Bangladesh

Submitted to
Department of Management
University of Dhaka

Submitted by
Jarifa Khatun Moitry 3-23-02-026
Nadia Kabir 3-23-02-042
Efat Md. Minhaz Siddiquee 3-23-02-033

November 18, 2023

 Letter of Transmission
18 November 2023
Md. Kazi Raihan Uddin
Assistant Professor
Department of Management, University of Dhaka
Subject: Submission of report on “Online Business Models in Bangladesh”.

Dear Sir,
With due respect, we are pleased to submit the final report on Online Business Models in
Bangladesh that you asked for. Although this report may have shortcomings, we did try our level
best to produce an acceptable report. We would be highly obliged if you overlooked our mistakes
and accepted the effort we put into this report.
Sincerely yours,

Jarifa Khatun Moitry 3-23-02-026

Nadia Kabir 3-23-02-042

Efat Md. Minhaz Siddiquee 3-23-02-033

Executive MBA Program

Faculty of Business Studies
University of Dhaka
 Acknowledgment
We are heartily thankful and like to acknowledge our instructor, Md. Kazi Raihan Uddin, Assistant
Professor, Department of Management, University of Dhaka, whose encouragement, guidance,
and support from the initial to the final level enabled us to develop an awe-inspiring research report
on “Online Business Models in Bangladesh.”
We also offer our regards and blessings to all of those who supported us in providing data and
participating in the research in any respect during the completion of the report.
Table of Contents
Chapter 1: Introduction ................................................................................................................................. 1
1.1. Origin of the report ....................................................................................................................... 1
1.2. Objectives ..................................................................................................................................... 1
1.2.1. Broad Objectives ................................................................................................................... 1
1.2.2. Specific Objectives ............................................................................................................... 1
1.3. Scope of the report ........................................................................................................................ 1
1.4. Limitations of the report ............................................................................................................... 2
1.5. Methodology ................................................................................................................................. 2
1.5.1. Unit Analysis ........................................................................................................................ 2
1.5.2. Data Collection ..................................................................................................................... 2
1.5.3. Research Area ....................................................................................................................... 3
1.5.4. Data Analysis ........................................................................................................................ 3
Chapter 2: Background Study ....................................................................................................................... 4
2.1. Business ........................................................................................................................................ 4
2.2. Online Business ............................................................................................................................ 4
2.3. Business Model ............................................................................................................................. 4
2.4. Online Business Model ................................................................................................................. 5
Chapter 3: Findings of the Report ................................................................................................................. 7
3.1. Meetings........................................................................................................................................ 7
3.1. Types of Online Business Model .................................................................................................. 7
3.1.1. Business to Business ............................................................................................................. 7
3.1.2. Business to Consumer ........................................................................................................... 9
3.1.3. Consumer to Consumer ....................................................................................................... 12
3.2. Revenue Earning Process of the Online Business Models.......................................................... 12
3.2.1. Business to Business ........................................................................................................... 13
3.2.2. Business to Consumer ......................................................................................................... 13
3.2.3. Consumer to Consumer ....................................................................................................... 14
References ..................................................................................................................................................... 1
Table of Figures
Figure 1: Business to Business Model Process ............................................................................................. 8
Figure 2: Business to Customer Model Process (kinbokoi.com) .................................................................. 9
Figure 3: Business to Customer Model Process (daaraz.com.bd) ............................................................... 12
Figure 4: Customer to Customer Model Process. ....................................................................................... 12
 Executive Summary
There are three types of online business models in Bangladesh. B2B, B2C and C2C business
model.
In B2B business model one business can produce some products or can buy products from
producers to sell them. To sell their products they maintain a vendor relation with other businesses.
The seller delivers the products periodically. There is a quality control unit to check the quality of
the products. The earning process of B2B business model is very simple. The seller business makes
the price of the products according to their production cost or their buying cost so that they can get
some profit. This profit is the earnings of this business model.
In B2C business model one business sells its products to the end users. They buy the products from
other businesses. They provide online access to the customers. The customers can place their order
through the web interface. The businesses have a customer care unit which ensure the orders of
the customers. Customer satisfaction mainly depends on the delivery methods. Their profit is they
buy a lot of products. So, the producers give them a certain amount of commission of their total
money. Again, the businesses have a website so they can place a lot of ads to the website. These
advertisements and the commission are the earnings of this business model.
In C2C the buyer and seller both are end users. One customer can place ads to sell products and
other customers can buy the products. There are websites to place ads. The website is provided by
a business. The businesses do not get any profit from selling products through their websites. But
the businesses profit is they can place a lot of ads on the websites. This advertisement is the only
earnings of the businesses. The businesses provide facilities to customers to place ads on their
websites. There is a bidding system to decide on which website the ads will show. The businesses
get more priority if their customers are bigger than the other businesses. If a business has a bigger
number of customers, it can place more ads. So, it can get more profit. That is the reason why
businesses provide the facility to place ads to buy the customer's products without any cost.

Page | vi
 Chapter 1: Introduction
In this chapter we will introduce the objectives, scope, and methodology of our project.
1.1. Origin of the report
Online business refers to the buying and selling of products or services over electronics systems
through the internet or others computer networks. Day by day online business model in Bangladesh
is growing gigantically. So, we wanted to gather information about online business sector in
Bangladesh. We were inspired by our course instructor Mr. MD. Kazi Raihan Uddin.

1.2. Objectives
The two types of objectives are mentioned below.
1.2.1. Broad Objectives
Analyze present state of online business models in Bangladesh.
1.2.2. Specific Objectives
The project is for giving answers to the following questions.
1. How many models exist in Bangladesh?
2. What is their working process?
3. How many types of products do they provide?
4. What is their revenue earning process?

1.3. Scope of the report

The scope of the report is given below.
1. Our research is based on only Bangladeshi online business companies. Other companies
implementing online business models are not included in our findings and considerations.
2. We will be exploring business to business, business to customer, customer to customer
models implemented by various online business companies of Bangladesh.
3. We will target to find out the income source of these companies.
4. We will also focus on how these companies implemented various types of online business
models.
5. We will try to find out how they adapted these models in context of our country.
6. We will try to find out the structures of these online business entities.
7. We will also focus on the success of these companies by their revenues and number of
clients.

1|Page
1.4. Limitations of the report
1. All the companies implementing online business models outside Bangladesh will be excluded
from our findings.
2. Our focus would be to find their structures, revenue process, and success. No other point of view.
3. We will not suggest or try to find any modifications for existing or already implemented online
business models.
4. Our main target would be to explore their earning process. How they attract their customers will
be focused less.

1.5. Methodology
In this section we will discuss the methodology of our project.
1.5.1. Unit Analysis
Some online companies will be selected as the unit of analysis. We will collect informed opinion
from all stakeholders (business personals and the owners of the companies) on the current state of
online business models that exist in our country. Finally, we will try to draw a conclusion over the
population. We will also discuss with professors on this topic. We will take interview from the
experts of Institute of Business Administration and Faculty of Business Administration, University
of Dhaka.
Primary source: Interview
Secondary source: websites
1.5.2. Data Collection
An interview is a research method in which subjects respond to a series of statements or questions
in an interview.
Interviews are particularly useful for getting the story behind a participant’s experiences. We have
decided to use the interview as data collection techniques for the study. We have made an interview
schedule for companies, took interviews from individuals in the company and found out their
opinions. Closed and open-ended questions have been asked during interviews.

The focused questions we will ask on our interview are-

● Why Business Model is important in industry?
● Which Business Model do they follow?
● Is their business process appropriate to achieve their goal?
● How do they earn profit by following the business model?
● Which problems do they face throughout their business?
Which Business Model can achieve the highest goal?

2|Page
1.5.3. Research Area
We have selected companies that are located at Dhaka city for our research. We have made our
research among the companies of Bangladesh. We have interviewed bagdum.com, daraz.com.bd
and kinbokoi.com e-commerce companies for our research.
After that, we processed and edited data among the samples, which we found from the interview.

1.5.4. Data Analysis

Finally, we will analysis the information. By this we will conclude a summary of our project. We
hope we can find answers to our questions and can find benefits and problems of online business
models.

3|Page
 Chapter 2: Background Study
In this chapter, we will discuss about types of business model in Bangladesh.
2.1. Business
Business is the organized effort of individuals to produce and sell, for a profit, the goods and
services that satisfy society's needs. A business, then, is an organization which seeks to make a
profit through individuals working toward common goals. The goals of the business will vary
based on the type of business and the business strategy being used. Regardless of the preferred
strategy, businesses must provide a service, product, or good that meets a need of society in some
way.
There are three key characteristics that must be met to have a business. First, businesses must be
the result of individuals working together in an organized way. Second, businesses must satisfy a
societal need. Third, businesses must seek to make a profit.

2.2. Online Business

Online business - also referred to as e-business - is any kind of business activity that happens
online (over the internet). A business owner who does any, or all, of their business using the
internet, is running an online business. Running an online business can include buying and selling
online and providing an online service. A wide variety of businesses can be found online, in many
different industries. 2.4Anyone can start an online business. If you have a unique product or idea,
you can find a way to sell or trade it online. It's just like a traditional 'bricks-and-mortar' business,
except your office or shop is online, so you must decide how it will look and appeal to customers.

2.3. Business Model

A business model is the conceptual structure supporting the viability of a business, including its
purpose, its goals and its ongoing plans for achieving them. At its simplest, a business model is a
specification describing how an organization fulfills its purpose. All business processes and
policies are part of that model.
A business model is like a business plan in its makeup and content. However, a business plan
specifies all the elements required to demonstrate the feasibility of a prospective business, while a
business model demonstrates the elements that make an existing business work successfully.
Different types of business models suit different types of businesses. It describes how a business
creates, delivers, and captures value. There are four basic business models.
1. Manufacturer: takes raw materials and creates a product.
2. Distributor: purchases products directly from a manufacturer for resale.
3. Retailer: purchases products from a distributor or wholesaler and sells to the public.
4. Franchise: can be a manufacturer, distributor, or retailer.

4|Page
2.4. Online Business Model
Online business model is a categorized form of business model. It is categorized as-
1. Business-to-Consumer: Business to Consumer (B2C) is business or transactions conducted
directly between a company and consumers who are the end-users of its products or services.

2. Business-to-Business: business to business (B2B) is a type of transaction that exists between

businesses, such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer.
Business to business refers to business that is conducted between companies, rather than
between a company and individual consumers.

3. Consumer-to-Consumer: Customer-to-Customer (C2C), or Consumer-to-Consumer, is a

business model that facilitates the transaction of products or services between customers.

There are three basic business models for online businesses-

1. Sell your product: This is probably the first model that comes to mind. Create a shippable,
physical product and market it online. It could be sold via your own e-commerce storefront, an
auction site, or as a third-party seller in an online mall (like Amazon) that sells products from
different vendors.

2. Sell your service: Services are ideally suited for online sales. There are two basic ways
services are sold online.

3. Sell your information product: This is the business model of choice for lifestyle designers
and internet marketers. When you sell products or services a bottleneck often develops.
Business owners frequently hit a level of sales that they can’t grow beyond without changing
their business - hiring more staff, buying more equipment, etc. With information products, you
are limited only by the capacity of your web host’s server.

Brokerage
Brokers are market-makers: they bring buyers and sellers together and facilitate transactions.
Advertising
The web advertising model is an extension of the traditional media broadcast model. The
broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and
services (like email, IM, blogs) mixed with advertising messages in the form of banner ads.

5|Page
Infomediary
Independently collected data about producers and their products are useful to consumers when
considering a purchase. Some firms function as infomediaries (information intermediaries)
assisting buyers and/or sellers understand a given market.
Merchant
Wholesalers and retailers of goods and services. Sales may be made based on list prices or through
auction.
Manufacturer (Direct)
The manufacturer or “direct model”, is predicated on the power of the web to allow a manufacturer
(i.e., a company that creates a product or service) to reach buyers directly and thereby compress
the distribution channel.
Affiliate
In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the
affiliate model provides purchase opportunities wherever people may be surfing. It does this by
offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites.
(echinews24.com, n.d.)
Community
The viability of the community model is based on user loyalty. Users have a high investment in
both time and emotion. Revenue can be based on the sale of ancillary products and services or
voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for
premium services.
Subscription
Users are charged a periodic – daily, monthly, or annual – fee to subscribe to a service.
Utility
The utility or “on-demand” model is based on metering usage, or a “pay as you go” approach.

6|Page
 Chapter 3: Findings of the Report
The findings of the report are based on the objectives. The findings can be divided into two parts.
3.1. Meetings
We have visited three e-commerce organizations to find their business model process and their revenue
earning process. We interviewed them.
Mirajul Huq
CMO
bagdoom.com
Muksitul M Tanim Hasan
Co-founder
kinbokoi.com
Aflatun Kaisar
Manager
daraz.com.bd

3.1. Types of Online Business Model

There are three types of online business model in Bangladesh. The models are-
• Business to Business (B2B)
• Business to Customer (B2C)
• Customer to Customer (C2C)
3.1.1. Business to Business
In this business model the seller and the buyer both are business. One business organization
produces its products and sells to another business. It is not necessary that the sellers need to
produce the products. They can buy the products from other businesses which businesses produce
and sell to another business.

7|Page
 Figure 1: Business to Business Model Process

Products: The first step of the model is the products. The business can produce the products or
can buy from another producer business.
Vendor Relation: They maintain a vendor relation with other business like the e-commerce
companies, shops etc. These businesses have their own businesses model to sell the products.
There are key account managers to maintain the relationship. Sometimes the managers have
personal relations with the businesses.
Demand: The buyer businesses tell their demand to the seller businesses to buy. The demand
contains the product items and quantity of the items.
Advance Payment: After getting the demand the business takes advance payment. The advance
payment is likely to be 30% of the total cost.
Delivery: Then the seller business delivers the products periodically. The buyer businesses again
sell the products. As they cannot sell all the products within one day so, the seller businesses do
not need to deliver all the products at the same time. Again, there is an advance payment policy.
The seller businesses can utilize the payment money to produce the next delivery products. So, the
seller businesses do not need to invest all the cost of the ordered products.
Quality Control: The buyer businesses maintain a quality control process to ensure the quality of
the products.

8|Page
Refund/Replace: The business also has a refund and replacement policy which is written in their
memorandum. If the product is defective the seller businesses give new products to the buyers. It
is called the refund policy. Again, if the buyer business cannot sell all the products, it can give
back to the seller business according to their agreement. The seller business then replaces the
product by giving other products to the buyers. Usually, the seller businesses give an annual offer
to sell their products that remain in their warehouse. The offer can be discount of money, a gift
with all products etc. Seeing this the buyers become lucrative and buy the products.
Closing: There is a closing of business between two businesses. Usually, the businesses make an
agreement for one year. After that time, they can come to another agreement or give up.
3.1.2. Business to Consumer
In this business model, the buyers are the user of the products. So, in the business model the
businesses sell their products to the users. Usually, the businesses do not produce the products.
They buy the products from other businesses and sell them. Sometimes the businesses maintain a
warehouse to store their products. But as it is costly to maintain a warehouse some businesses
directly collect the products from the producers and deliver them to the customers.

Figure 2: Business to Consumer Model Process (kinbokoi.com)

9|Page
Products: The products can be available in the business warehouse, or they have an agreement
with producers for the products.
Customer Query: The customers can send their query through the websites the business provides.
This is the demand of the customers. They can mention the products models and quantity.
Customer Care: There is a customer care department to confirm the orders. They give a phone
call to the customers to confirm orders.
Key Account: The key account managers then update their strokes. If the product is in their
warehouse, then collect the product and send it for delivery. If they do not have a warehouse or
the product is not available in the warehouse, then collect the product from the producer.
Delivery: The businesses maintain two types of delivery methods. The home delivery and the
courier delivery. In home delivery, the payment method is Cash on Delivery (CoD) i.e., the
customers pay after getting their desired product at hand. It is much easier if the business and the
customer stay in the same city. If the business and the customer stay in different city, then the
business use courier delivery. The payment method can be different in courier delivery.
Conditional payment, bKash payment, card payment etc. are used in courier delivery. In
conditional delivery, the customer cannot get their product without paying.
Delivery is the most important phase to get the customers’ satisfaction. The customers want rapid
delivery. If one business can deliver more quickly than other businesses, then the customers will
become satisfied and there will be trust of the customers to that business. Again, it is common that
when the customers see a product on a website it looks so nice. But after delivery, they cannot find
a matching product that they saw on the website. This type of thing decreases customer
satisfaction. The original pictures can build trust in the customer. There is also another thing to
negotiate the risks. 21% of the orders are canceled at delivery time. The cause behind this can be
different.
• Do not have money.
• Address change
• Do not know the delivery time.
• Delay delivery
• Fake order
• Gift order
• Risk zone
• Confused after order etc.

10 | P a g e
Businesses need to negotiate with this type of risk. For example, daraz.com.bd has a B2C
business model. It has a business policy that the customer can return the products within one
week if they are not satisfied with the products. It has an agreement with its producer
businesses about this return policy. The business policy can build better trust to the customer
with daraz.com.bd.

So, the success parameter of this business model can be categorized-

• Delivery Process
• Customer Satisfaction
• Trust
• Risk Negotiation

11 | P a g e
 Figure 3: Business to Consumer Model Process (daaraz.com.bd)

3.1.3. Consumer to Consumer

It is a very simple business model. In this model both the buyer and the seller are customers. One
customer gives ads to sell her products and other customers can buy the product. The business gives the
space for the customers to upload their ads. Here the business is the platform for the customer to buy and
sell.

Figure 4: Consumer to Consumer Model Process.

The customer who wants to sell some products will place an advertisement on a website. The customer
who wants to buy the product can contact the seller customer. After negotiating the buyer customer will
receive the product and the seller customer will receive the desired money.

3.2. Revenue Earning Process of the Online Business Models

The revenue earning process of different business models are different. They use different
strategies to earn money.

12 | P a g e
3.2.1. Business to Business
Business to business companies solely focus on helping businesses buy and sell products or raw
materials from other businesses. Since the purchasing entity here is not an end user, the partial
payment for raw material or product is made in advance. Manufacturing businesses that sell goods
to wholesalers or partially completed goods to other manufacturers, maintain their profitability by
mainly cutting costs in the following sectors:
• Cutting cost of labor
• Cutting cost by scaling up and specialization
• Using cheaper raw materials

“kinbokoi.com” is a B2B organization, which operates by taking orders for products from business
and connects them to product manufacturers. Buyers partially pay in advance for the orders placed,
to help manufacturers and increase cooperation between buyers and sellers. At most 10% of a
product’s lot can be faulty. If more than 10% of a product lot is faulty, then the seller must refund
or replace the products.

B2B marketing techniques rely on the same basic principles as consumer marketing but are
executed in a unique way. While consumers choose products based not only on price but on
popularity, status, and other emotional triggers, B2B buyers make decisions on price and profit
potential alone.

B2B marketers generally focus on four large categories:

1. Companies that use their products, like construction companies, buy sheets of steel to use
in buildings.
2. Government agencies, the single largest target and consumer of B2B marketing.
3. Institutions like hospitals and schools.
4. Companies that turn around and resell the goods to consumers, like brokers and
wholesalers.

3.2.2. Business to Consumer

Business to consumer websites operate by selling products directly to end users or consumers.
Their primary source of revenue is from sales.

13 | P a g e
3.2.3. Consumer to Consumer
C2C e-commerce differs from a business-to-business model or a business-to-consumer model
because consumers interact directly with each other. However, a business does operate the online
platform on which C2C transactions take place. Typically, buyers can shop for free, but sellers
sometimes must pay a fee to list their products. Consumers often play an active role in monitoring
e-commerce sites for scams and other inappropriate content.
The C2C model entails lower costs and higher profits for buyers and sellers. Sellers can store
inventory in a home office, and it costs less to market and distribute products than in a traditional
business-to-consumer model. Both new and used goods are sold through C2C e-commerce, and
fewer middlemen are involved in the transactions. Advances in technology and ease of access to
the Internet have also made it possible for a growing number of individuals to launch C2C e-
commerce businesses.
At its most basic level, C2C represents a market environment where one customer purchases goods
from another customer using a third-party business or platform to help facilitate the deal. C2C
businesses are a new type of model that has arisen with e-commerce technology and the sharing
economy.

14 | P a g e
References
1. echinews24.com. (n.d.). e-Commerce business in Bangladesh. Retrieved 4 19,2023 from
echinews24.com: http://techinews24.com/e-commerce-business-bangladesh/
2. Bangladesh - eCommerce. (n.d.). International Trade Administration | Trade.gov.
https://www.trade.gov/country-commercial-guides/bangladesh-ecommerce

1|Page