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The Financial Express

E-commerce trade still poor in BD: WB report

Affordable internet, logistics vital for healthy ecosystem


Saif Uddin | Published: December 21, 2019 11:05:11 | Updated: December 25, 2019 10:46:04


E-commerce trade still poor in BD: WB report

The rate of online sales through different e-commerce platforms accounts for a very limited portion of the total retail sales in Bangladesh, according to a World Bank (WB) study.

"Global online purchases account for about 16 per cent of total purchases, and the figure is more than 60 per cent in developed markets like Korea and the United States."

"But South Asian countries like Bangladesh stand at only 1.0 per cent," revealed the study.

The WB report styled 'Unleashing E-Commerce for South Asian Integration' was launched last week.

South Asia lags behind the rest of the world in activating the potential benefits from e-commerce, it said.

In 2015, online sales as a percentage of total retail sales were more than 15 per cent in China and in the United Kingdom and more than 11 per cent in Korea.

But online sales were 1.6 per cent in India and around 0.7 per cent in Bangladesh, the report cited.

Highlighting the prospects of regional e-commerce, it said cross-border online trade faces obstacles like cross-border logistics, taxes and export barriers.

"Firms in Pakistan and Bangladesh cite connectivity and IT (information technology) backbone as significant hurdles for cross-border e-commerce."

Digital regulations appear to be a concern for firms in all countries, the report added.

A survey of more than 2,200 firms in Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka was conducted in 2018 to understand broad trends in and constraints on e-commerce.

It included nine major sectors along with several hundred e-commerce ecosystem firms like payment platforms, logistics, financial services and IT services.

In Bangladesh, the WB report said the slow pace of liberalisation and banking practices seem to be holding back a change in the e-commerce sector.

"For example, e-retailers are not keen on accepting even national payments through cards because of a 3.0-4.0 per cent commission to banks, relative to the cash-on-delivery mode," it stated.

Bangladesh Bank's two-factor authentication system works, but in practice most banks do not allow cardholders for online transactions unless they call the banks to open internet for a specific duration.

The report said regional businesses can expect substantial benefits in exports, employment and production growth if the key hindrances to e-commerce are resolved.

Bangladesh could have gained 20-per cent growth in employment generation, and nearly 23 per cent growth in export sales, it mentioned.

The report said $2.3 trillion was spent globally by retail consumers in 2017, which was almost 25 per cent higher than that in 2016.

This figure is expected to grow to over $4 trillion by 2020, reaching more than 15 per cent of total retail spending, from around 10 per cent in 2015.

When asked, entrepreneur AKM Fahim Mashroor said still a very insignificant portion of the country's total population use online purchasing platforms.

Prerequisites for a healthy e-commerce ecosystem like affordable internet in every part of the country and logistic infrastructure are yet to be established in Bangladesh, he added.

"Besides, a good number of people are still unaware of e-commerce facilities," said Mr Mashroor, who is the founder of ajkerdeal.com.

saif.febd@gmail.com

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