Evaly is the most discussed and controversial e-commerce platform of Bangladesh. In just less than 3 years of its inception, they have ranked as the 2nd largest e-commerce platform of Bangladesh with its aggressive discounts and cashback offer. Even the so-called e-commerce giant had come up with such a pricing strategy that created disruption in various retail sectors. However, when RAB arrested Evaly’s MD and CEO, Mohammad Rassel, and Chairman, Shamima Nasrin, on September 16, Evaly was widely reported as one of Bangladesh’s greatest business scams in the media. About a month later, on 16 October 2021, Evaly announced to shut down their website and app through their Facebook page. What exactly is happening with the platform that has gained significant popularity in such a short period of time? And what will happen to the money of the customers stuck on the platform?
Overview of Evaly
Evaly started its journey in Bangladesh on 16 December 2018. Within just one and a half years, as of August 2020, Evaly registered 3.5 million customers and monthly transactions worth BDT 300 crore.
Evaly’s business was running alright till then. It introduced several new services to the market at the same time, of which, the food delivery service ‘e-food’ became so popular. However, in August 2020, when Bangladesh Bank ordered all commercial banks to freeze Evaly’s bank accounts due to anomalies in transactions and so many complaints about not delivering items on time. Although, a month later, Bangladesh Financial Intelligence Unit (BFIU) opened the seized bank accounts. This restores public confidence in ‘Evaly,’ and after a while, ‘Evaly’ restarts operations. In January 2021, the home ministry again found evidence in an investigation that Evaly was violating laws by doing at least 8 types of fraud and irregularities.
Some of the key charges brought against Evaly were “not delivering products on time,” “not keeping adequate contact with consumers,” “not refunding advance payments in the case of failure of delivery,” and “providing e-balance instead of cashback.” Despite these allegations, Mohammad Russell carried on with his business as usual. As a result, by June-July of that year, a large number of merchants who had previously done business with ‘Evaly’ had lost faith in the platform. There were many merchants who kept a significant credit line with ‘Evaly,’ and they were reluctant to provide new products since the company was unable to clear it. As a consequence, Evaly’s sales started to decline. Mohammed Russell realized that if sales dropped, the whole system would collapse, so he started pressurizing staff to add new merchants to the platform. Evaly’s main attraction was motorcycles, but motorcycle companies had been refusing to deliver bikes to Evaly for months. However, several small retailers continued to use the platform. Meanwhile, while knowing that they would not be able to deliver on time, ‘Evaly’ continued with their offer. Customers were aware that they would not receive the product but rather a cheque or a cashback within two to six months. In the midst of all of this, ‘Evaly’ also acquired a flight booking service company called ‘Flight Expert’.
TBS news reported on July 15, 2021 that the platform had assets of just BDT 121 crore, compared to BDT 543 crore due to customers and merchants. In September of the same year, ‘Evaly’ was again accused of submitting a fake audit report to the ‘Registrar of Joint Stock Companies and Firms (RJSC). At the same time, when the fraudulent activities of ‘e-Orange’ and ‘Dhamaka Shopping’ became public, the functioning of these two platforms also came to an end. The media has begun releasing many reports on e-commerce like ‘Evaly’. During this period, ‘Evaly’ encountered the biggest troubles with payment gateways. Several banks have banned their card transactions with ‘Evaly’. Even ‘bKash’ also halted their payment gateway for a while, and only ‘NAGAD’ was with them. Although ‘bKash’ re-launched their payment gateway later on. Even though, after hearing Russell’s multiple promises, buyers continued ordering products from ‘Evaly’. Meanwhile, ‘efood’, which performed well from the outset, began to lose restaurants and reached a point of shutdown. On the other hand, the company began laying off staff, and top-level personnel also started quitting their jobs. The quantity of cash flow on the platform is also drastically decreased, resulting in 2 to 3 months of salary being stuck for the employees. Mohammed Russell displayed a high level of faith in the survival of ‘Evaly’ at the time and claimed to receive investment from the Jamuna Group, which did not materialize. Despite the efforts made by Evely to retain customers, other e-commerce businesses such as Alesha Mart, who followed the same business model, were still able to provide faster refunds than Evely by providing products or checks. As a result, customers and resellers started to shift to these platforms.
A few days after the incident, on the night of September 15, a customer named Arif Baker filed a complaint at Gulshan police station against Mohammad Russell, CEO of Evaly, and Shamima Nasrin, chairman, on allegations of fraud and embezzlement.
On September 16, 2021, RAB arrested Evaly’s MD and CEO, Mohammad Rassel, and Chairman, Shamima Nasrin. According to a press briefing given by RAB on the day after the arrest, the total number of registered customers of Evaly at that time was 44 lakh, and the liability of the company stood at around BDT 1000 crore. Yet most of the customers demanded that Russell be set free so that he could run the business. However, Russell, CEO of ‘Evaly’, pleaded not guilty during the police interrogation. Even on a 3-day remand, Russell denies all charges of fraud and embezzlement. Russell wanted 6 months from the beginning, but he had no solid plan on how to pay off the debts or make the company profitable in such a short time.
Evaly’s case is currently under government supervision. Immediately after the arrest of Mohammed Russell and Shamima Nasrin, Evaly’s customers began protesting demanding their money back. At one point in the protest, these two were demanded to be released so that they could return the money to customers. One month later, on October 16, Evaly announced in a post on their Facebook page that the website and mobile app would be temporarily shut down, which is still closed. It’s worth noting that, later several other e-commerce companies closed down in the same manner. Lastly, Alesha Mart, which halted all operations by stating that all of their bank accounts had been blocked. Later, the platform requested a BDT 300 crore loan from the government in order to continue operations.
Meanwhile, on October 18, the High Court appointed Mahabub Kabir Milon, a former Additional Secretary in the Ministry of Railways, as the new MD of ‘Evaly’ and assigned a four-member board for Evaly. The board will be represented by former Appellate Division Judge, ‘AHM Shamsuddin Chowdhury Manik’, and other members are, former LGRD Secretary, ‘Mohammad Rezaul Ahsan,’ Chartered Accountant, ‘Fakhruddin Ahmmed,’ and Supreme Court Lawyer, ‘Barrister Khan Mohammad Shameem Aziz.
The board quickly took responsibility for the ‘Evaly’ platform, as well as all documentation and transaction records, as instructed by the court. The court also ordered that all the assets of the company will be handed over to the new board and operated in the same manner as any other corporate entity. However, because Evaly had a distinct business model, it needs to be seen how successfully the individuals in charge can handle the e-commerce company. Although journalists have visited the Evaly office a few times, the new board of directors was unable to provide a clear statement in this regard.
A.M. Masum, the prosecuting lawyer stated that “The board will first conduct an audit in ‘Evaly’, and create a ledger of all types of debts and assets. As soon as the company’s debt is assessed, the board will decide whether to liquidate its assets to repay the debt, or if the business can even be restarted after the debt is repaid. But if there is no possibility, the company will be shut down permanently.” Liquidation is basically the final stage of a company, meaning that it must go through liquidation if it is not possible to pay off the company’s liabilities in any way. With traditional and established companies, however, the story may be different since these companies have more physical assets than startups or e-commerce companies. Furthermore, Bangladeshi banks and even the government, do not consider intangible resources as assets at all. For example, despite the fact that Evaly has an intrinsic value of 44 lakh customers, apps, and system software, these will not be considered as assets under local legislation.
In addition to that, in June 2021, Bangladesh Bank introduced an ‘escrow service‘ for e-commerce platforms. As a consequence, after the shutdown of Evaly, some customers’ money got blocked in payment gateways and payment service providers, totaling roughly BDT 100 crore. Similarly, according to a report published in KalerKantho on 15 December 2021, BDT 214 crore of different e-commerce platforms’ payments were stuck in the payment gateways of Bangladesh. According to the report, customers of e-commerce companies that do not have an ongoing lawsuit would get a refund depending on whether or not the customer got the product. Customers who have not yet received product delivery after placing an order will be refunded as soon as possible. However, the government has not yet decided when and how the money would be refunded to customers of e-commerce platforms such as ‘Evaly’ or ‘E-Orange,’ which are being prosecuted. In this scenario, if the customer’s money that is blocked in the payment gateways is returned straight to the customer’s account, the problem may be resolved in less time. However, if the money is first deposited into Evaly’s account and subsequently given to the consumer through the liquidation procedure, the issue would take a long time to resolve.
Although the previous experience has shown that this legal procedure in such cases is highly complex and time-consuming. Evaly’s new MD, Mahbub Kabir Milon urged customers not to panic or despair about ‘Evaly’ in a post from his verified Facebook account on 26 October 2021. Several people asked in that post if the refund will be given or not. However, he noted in the comment that the chances of getting a refund are very low. Earlier, MLM companies like ‘Destiny’ and ‘Jubok’ were accused of embezzling people’s money. Later, efforts were made to return the money to the people by bringing those companies under government control, but the cases are still pending in court. Therefore, it remains to be seen whether ‘Evaly’ will be able to refund the customers or become a new Destiny 2000 chapter.