Burgeoning Bangladeshi F-commerce – Any challenges for old players?

| Updated: December 03, 2020 13:30:11

An illustrative image — FE An illustrative image — FE

A second-year student of journalism at Dhaka University, Lameesha (single name), had a knack for baking. Her cousins and peers appreciated her skills, sometimes even telling her that she could open a bakery. When the quarantine began, she opened a Facebook page named ‘Frozen’ and started delivering desserts. She didn’t think much of the market she entered, but, through her venture she joined the rapidly growing world of what is now called F-commerce.

Lameesha’s initial goal was to bring something useful out of her hobby. And now her story is familiar with many either through themselves or their friends, relatives, and acquaintances.

Facebook-based businesses are inspiring many to start their venture also in Bangladesh. The ease of purchasing and communicating while scrolling the social media network is creating an increasing customer base and thus expanding market.

When people spend a lot of free time at home during the pandemic, women and students are bringing interesting businesses by using their skills of baking, cooking, painting, making handicrafts, and bringing imported or local goods – all operating from home.

However, while online businesses are sprouting, some drawbacks are being visible – perhaps threatening the potential future of some of the F-commerce ventures in the country.

There were already around 50,000 Facebook-based businesses in the country at the end of 2019, according to e-commerce Association of Bangladesh (e-CAB). The trend suggests a boom this year. This sudden growth raises some burning questions.

Deficiency in regulation

As this kind of business does not require any guideline or regulation proper, fraudulent activities, customer harassment, a gap in quality control, inconsistency in business operations, and the like are increasing. These events are making both customers and entrepreneurs vulnerable. Also, the entrepreneurs and suppliers who entered the F-commerce market a few years earlier are being demotivated as there is no particular recognition for running a business successfully for years.

Threat to existing entities?

Ms Athena Halder, owner of Sutri, a Facebook-based business that started in early 2018, shared her concern: “Many people are entering the market out of curiosity or due to abundance of time during the pandemic. This is actually affecting the F-commerce market because new suppliers are pricing many products to a low bar for market penetration, causing serious loss to previous suppliers.” She welcomes the spontaneous participation of new entrants but is frustrated by the fact that many are imitating existing enterprises instead of taking inspiration for innovation.

Mrs Rehnuma Farah Sifat set up a bakery shop Twasty in 2017 and found a notable customer base, but gave a pause to her operations due to the pandemic and is unable to restart due to the market saturation and lack of credibility. “A lot of people requested me to resume my deliveries. But the market has become such that almost everyone is setting up foodservice, and there is no quality control or recognition of what is good or bad.”

When asked what would make her return to business, Rehnuma said, “I would be more than happy to start if I get recognition and my competitors also comply with a standard guideline.”

A first-year IBA student at Dhaka University, Bornita (single name), who is a regular F-commerce customer, said, “New entrants are a positive sign, but after I have faced deception even from pages with many likes, trust becomes an issue to me. Like e-commerce platforms, if there were a consumer rights law for F-commerce, many customers would be able to rest assured.”

A way out

Stakeholders say rising F-commerce in Bangladesh now needs proper economic definition with guidelines for both entrepreneurs and consumers. Regulation, they suggest, should not hamper the spontaneous growth of start-ups and a system of certification.

Only 100 Facebook businesses had an association with e-CAB until the end of 2019. e-CAB and several other organisations are said to have been monitoring the current situation of F-commerce.

The market size of Bangladesh’s F-commerce was approximately Tk 3.12 billion, according to the IDLC business review 2019. It must have grown enormously by this time. This sector is growing at a time when many other sectors are suffering due to the pandemic.

In this market, the new players have their issues. Sanjida Akter Samiha, an economics student at Dhaka University, who started a hand-stitched clothing line named Shabana this September, said, “I would appreciate it if there is a regulation for F-commerce because that would even motivate newcomers like me who are willing to be favourite through quality,” she said.

Thanks to its broader reach, F-commerce is contributing more to rapid growth of the digital market in this country. These entrepreneurs feel that F-commerce needs to be supported the way cottage, small, and medium enterprises and e-commerce receive stimulus support. The e-CAB has the scope to work with the commerce ministry to see solution to problems in the sector and its fair practice and healthy regulation.

Fabiha Maimuna is a student at IBA, University of Dhaka.

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