E-commerce got a pandemic boost, still going strong

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As the Covid-19 pandemic-induced shutdowns from March 2020 brought the economy to a halt, they breathed new life into a slowly growing e-commerce market.

Consumers learned that shopping no longer necessarily meant going to physical stores. Almost everything was now at hand.

Even after the virus scare subsided and roaming platforms like Evaly, Dhamaka Shopping, Eorange crashed, online orders are on the rise as more and more sellers from diverse backgrounds go online to don’t miss the train to the future of retail.

Now, despite the reopening of the economy, the luxury of shopping from the comfort of your own home is still a preferred option for many. The online experience is a lesson that won’t be unlearned anytime soon.

The growing number of e-commerce companies, their virtual shelf options and online buyer base have caused the market to nearly double in two years since the pandemic, according to the Bangladesh E-Commerce Association (e -CAB).

Capitalizing on the spread of smartphones and strong internet penetration across the country, companies bet that the land was ripe for investment.

The shutdown from March to May 2020 during the first wave of the pandemic triggered online ordering.

And the e-commerce market hasn’t looked back since then.

From dried fish to cars, from fashion products to medicines, from hotel reservations to plane tickets, everything is now available for online ordering.

Amid government restrictions and coronavirus fears, people have opted for essential sellers like e-commerce giant Chaldal and omnichannel retail chains like Shwapno and Meenabazar, all of which have been inundated with orders for home delivery.

Since the pre-pandemic level, daily orders have already increased sixfold for Chaldal, the first online grocery store, and more than tripled for Daraz, the country’s largest e-commerce platform.

Chaldal, the first online grocer, saw its orders soar to 16,000 a day in March 2020 from 2,000 orders a day before the pandemic.

Since then, Chaldal has consistently managed to maintain orders of 12,000 a day and is expanding its network to other major cities in Bangladesh, according to its co-founder and managing director Zia Ashraf.

“The pandemic has literally blessed e-commerce as it has unlocked its momentum,” said e-Cab managing director Jahangir Alam Shovon.

Similarly, e-commerce market leader Daraz, the Alibaba Group company in Bangladesh, has seen much higher growth from the pandemic, reflecting the influx of consumers going online for needed products.

Its average daily orders doubled to around 40,000 in the first year of the pandemic despite some weeks lost due to the inability to make deliveries during the national shutdown.

Today, the company delivers 90,000 orders a day, according to Tajdin Hassan, Marketing Director of Daraz.

A total of 40,000 sellers have already joined the giant platform – a tenfold increase from its base in 2018. Meanwhile, the number of products it sells has dropped from 10.4 lakh to 2, 5 crores over the same period.

The platform, once focused on non-essentials, added groceries and medicines to its virtual shelves after the pandemic, alongside the acquisition of local food delivery pioneer Hungrynaki.

The majority of e-commerce businesses not delivering essential products had to remain closed in the first weeks of the first wave, reopening after the closure to enjoy fantastic annual growth in 2020.

Rokomari.com, the top online bookstore, currently ships around 5,000 books a day, up from around 2,000 before the pandemic.

Consumer confidence remains strong

Despite fears that the virus is waning and brick-and-mortar stores are going full steam ahead, the e-commerce boom continues.

Surpassing the global market in the two-year pandemic, the country’s e-commerce market is heading for a much bigger jump as the ecosystem here develops in line with the growing online push of consumers and sellers, according to the industry people.

Even the rise of Ponzi schemes like Evaly, Dhaka, Eorange and many others have not been able to harm the growth momentum of the market.

AKM tech entrepreneur Fahim Mashroor, who founded leading job portal Bdjobs, early e-commerce entrant AjkerDeal and smart logistics firm Delivery Tiger, told The Business Standard that a significant portion of e-commerce revenue in the first half of 2021 came from Ponzi schemes posing as e-commerce.

What they added has literally been erased after their collapse since the government made it difficult for them to ‘pay less now and get more much later’ in July last year.

Jahangir Alam Shovon, managing director of e-CAB, said that less than a quarter of online sales in 2021 could have been made by the fallen platforms which adopted a very risky business model.

Even after dropping them, e-commerce has seen steady annual growth of more than 35% since the first wave, which was less than 25% before the pandemic.

Online orders per day are expected to hit 2.7 lakh, up from 2 lakh in 2020 and 1.5 lakh in 2019, the industry association official added.

This includes orders delivered by B2C platform companies like Daraz, Pikaboo, Othoba, Fair Mart, food delivery platforms like Foodpanda, Pathao, HungryNaki, B2B platforms like Sindabad, ShopUp, as well as the booming trade of social media by around 2 lakh small entrepreneurs out of the hundreds of successful offline brands and businesses setting up their own post-pandemic online stores.

Logistics a strength and a challenge

Mashroor said at least 25 lakh consumers across the country are accustomed to shopping online, be it for a meal, a lifestyle product or even consumer durables.

“Several million people across the country have learned the benefit of online shopping, but unlike India and some other peer countries, they have yet to fully embrace the e-commerce shopping wave, in especially outside metropolitan cities,” he said.

Currently, half of online orders come from Dhaka, which was around 70% before the pandemic.

After the pandemic, the biggest change has been in logistics, Mashroor said.

Seven dedicated companies deliver e-commerce orders across the country in three days, while in the same city companies compete for the fastest same-day delivery.

But the cost of delivery outside Dhaka is even higher – 120 Tk per parcel is charged by private logistics companies and this is one of the reasons why rural smartphone users still think twice before order something online.

Mashroor’s company, Delivery Tiger, has partnered with the state postal agency which uses thousands of post offices across rural Bangladesh to deliver parcels for just Tk 50 per delivery.

Such collaboration is needed within private sector delivery companies to reduce costs while post offices can be used to revolutionize delivery in the country.

Companies like Paperfly, Redex and E-courier can share their freight trips, he added.

In India, rural online orders overtook urban orders shortly after Reliance Jio drastically reduced the price of mobile phone internet data and Bangladesh must do the same to reach its true digitization destination, Mashroor said, emphasizing the need to reduce Internet costs.

The booming Facebook marketplace

After the pandemic, many struggling businesses connected through their free Facebook pages. Since then, this particular segment of e-commerce has seen robust growth.

Today, about 40% of e-commerce orders are delivered through structured e-commerce platforms and the rest through Facebook Commerce and various omnichannel retailers, Fahim Mashroor said.

About two lakh Facebook page-based retailers are engaged in Bangladesh, e-CAB’s Shovon said.

The segment grew 25% a year before the pandemic and it soared to over 50% in 2020 and over 35% in 2021, he added.

The potential impact

Due to a few hiccups in 2021 due to errant platforms defrauding or depriving large numbers of customers, e-commerce is now moving at full speed.

According to Statista, the global e-commerce market grew to $4.9 trillion in 2021 from $3.3 trillion in the pre-pandemic year of 2019, when it is expected to reach $7 trillion by 2025.

Despite very low e-commerce penetration, organic growth in the coming years should be higher than in the past two years.

The ecosystem that includes ordering, payment, delivery, return, dispute resolution and everything else is improving in Bangladesh and the market is expected to grow at a rate of nearly 50% in the next few years, said Mashroor.

Many offline stores are investing in their online presence instead of opening new stores in town. Almost all major consumer durables brands and lifestyle brands are selling online, SMEs are going online and the number of online shoppers is growing, he said.

Both local and global investors are eyeing big investments in the country’s e-commerce sector.

“The revolution is coming, we just need to address the issues cordially,” said e-CAB Vice President Shahab Uddin.

The e-commerce sector has suffered a crisis of confidence initially due to errant platforms, but disciplined e-commerce players have recovered everything.

“The growth of the organic e-commerce market is intact and Evaly’s huge customer base and other lead sites created are now the strengths of the industry.”

He predicts that the local e-commerce market will be a trillion Taka industry in the next five years.

“The biggest opportunity is cross-border e-commerce with a potential of $5 billion and our policies should be organized to seize it without delay,” Shahab Uddin added.

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