E-commerce has brought unprecedented changes to people’s lives globally, continuously solving new problems. However, the situation in Bangladesh paints a different picture. The e-commerce sector in Bangladesh is plagued by various types of fraud and customer service issues. From the leading e-commerce platform Daraz to smaller platforms, almost every company faces a slew of customer complaints, as evident in various e-commerce-related Facebook groups in the country. Although e-commerce sales and expansion continue to grow yearly, companies are consistently struggling with customer service. But why are e-commerce companies in Bangladesh facing such struggles?
Overview
Bangladesh’s first e-commerce platform was Munshiji.com, which launched in January 2000, initially aimed at selling gifts online. Following that, platforms like ClickBD.com in 2005 and CellBazaar in 2006 started to facilitate buying and selling between users. According to e-CAB, although some e-commerce platforms were operational until 2008, they lacked the necessary online transaction gateways. Additionally, with internet being expensive during that time, the penetration rate was quite low, meaning most of the population was unfamiliar with these e-commerce sites. In 2009, Bangladesh Bank began allowing online transactions, and for the first time, high-speed WiMAX internet was introduced in the country. The establishment of ‘SSLCOMMERZ’ in 2010 developed the first payment gateway infrastructure in Bangladesh. Initially, the platform operated in coordination with DBBL and Brac Bank, but it has now become the largest payment gateway in the country. With the launch of 3G services in 2012, internet penetration grew, and e-commerce platforms operating in the country started gaining traction.
In the past decade, countless e-commerce platforms like AjkerDeal, Rokomari, Bikroy, Chaldal, Daraz, Evaly, Othoba, and Aroggo were launched. Alongside the emergence of new e-commerce businesses, superstores like Shwapno, Meena Bazar, Agora, and Unimart also launched their own e-commerce platforms. Additionally, several large conglomerates like Akij Group, Walton, and Kallol Group launched their own e-commerce sites to deliver their products directly to customers. The growth of e-commerce was further supported by the introduction of parcel delivery services like eCourier in 2014 and Pathao Courier in 2015, which played a vital role in expanding the sector.
Although e-commerce has expanded significantly in Bangladesh, customer complaints about service quality have persisted since the beginning. The year 2021 was particularly challenging for the country’s e-commerce sector. That year, allegations of fraud, embezzlement, and money laundering were brought against more than 50 e-commerce platforms, including Evaly, Alesha Mart, eOrange, Qcoom, Dalal Plus, Dhamaka Shopping, and Sirajganj Shop. As a result, most e-commerce platforms operating in the same manner shut down their operations. To protect customer rights, Bangladesh Bank introduced the ‘escrow service’ for e-commerce in June 2021. Many involved in the e-commerce industry believed that this type of government intervention would accelerate the growth of the sector. However, in terms of customer service, e-commerce platforms in Bangladesh have not seen much improvement. Posts and comments in various e-commerce-related groups reveal numerous instances of fraud and customer dissatisfaction. Excluding MLM and scam companies, customers have lodged significant complaints about the services of major e-commerce platforms like Daraz, Chaldal, Evaly, Aroggo, and quick commerce platforms like Pandamart.
Furthermore, there are questions about how well Bangladesh’s e-commerce businesses are doing financially. Since all e-commerce companies in Bangladesh are private, it’s difficult to comment on their financial health. However, Daraz laid off employees twice in 2023 and again in February 2024, cutting more than 500 jobs. In February 2023, grocery e-commerce platform Chaldal shut down its operations in Gazipur, Rajshahi, and Sylhet, leading to further job losses. Additionally, food delivery and quick commerce service provider Foodpanda laid off about 100 employees in 2023. Service marketplace Sheba.xyz also reduced its workforce by more than half in 2023. These signs indicate that Bangladesh’s e-commerce businesses are under significant pressure, both in terms of customer service and business operations.
Why Bangladesh’s E-commerce Struggles
E-commerce is typically a long-term business. It can take several years, even up to a decade, to see a profit. For example, global e-commerce giant Amazon took nine years to generate its first profit, and even then, the company didn’t consistently make profits every quarter. It took several more years for Amazon to become a truly profitable company. Similarly, India’s Flipkart, which began operations in 2007, is still not profitable even after 17 years. However, in 2018, Walmart purchased a 77% stake in Flipkart for $16 billion. There’s no guarantee of when an e-commerce company will start making a profit. For instance, another global giant, Alibaba, turned a profit within just 3 years. In other words, achieving profitability in e-commerce can take a long time, and investors need to be aware of this. In Bangladesh, many investors are not interested in committing to a company for such a long time. Additionally, individual investors are relatively rare in this sector.
A common question arises: how do e-commerce companies continue to operate despite incurring losses for years? These companies typically raise funds from venture capital firms to keep their operations running. Many start-ups, including e-commerce companies in Bangladesh, have raised funds from venture capitalists. With these funds, companies try to grow their market share. However, e-commerce companies in Bangladesh face several challenges, including issues with technology, human resources, and transportation infrastructure. To overcome these problems and grow, they require continuous fundraising, which is not always possible for many companies. Even companies like Daraz, which receives regular funding from its parent company, Alibaba, struggle to address the existing issues hindering the growth of e-commerce in Bangladesh. Whether funded by venture capital or parent companies, there are always certain targets attached to the funding, which can be difficult for Bangladeshi e-commerce companies to achieve due to the existing challenges.
Another reason for the struggle of Bangladesh’s e-commerce sector is the small size of the country. Although the population density is high, the number of tech-savvy individuals is relatively low. In other words, the e-commerce market in the country is still relatively small. E-commerce contributes to only about 5% of Bangladesh’s total retail market. Most people in the country still prefer shopping offline. One of the main reasons for the rapid growth of e-commerce in countries like the USA or Europe is that people often have to drive several miles to reach retail outlets like Walmart or Tesco to purchase everyday necessities. This makes e-commerce a time-saving option in developed countries. In Bangladesh, however, basic necessities like vegetables, groceries, and medicine can be found just steps away from home. Even in rural areas, people don’t need to travel several miles to obtain everyday items. The supply chain network in this small country is strong enough to ensure that locally produced goods are easily available in all regions. In cities like Dhaka and Chittagong, people are not as busy as in major metropolitan cities worldwide, meaning an e-commerce business cannot sustain itself solely on a high volume of orders. Additionally, outside Dhaka and Chittagong, luxurious products are not readily available, but there’s also little demand for them since many consumers outside these cities cannot afford them.
Moreover, there are over 500,000 Facebook-based business pages in Bangladesh, with around 200,000 of them actively operating. Since orders can be easily processed through these pages and products are often available at a lower price compared to e-commerce sites, the growth of F-commerce (Facebook commerce) has posed a significant threat to traditional e-commerce platforms in the country.
The key to any e-commerce business is gaining customer trust and providing quality service. However, in over two decades of operations, e-commerce companies in Bangladesh have failed to earn customers’ full trust when it comes to quality service. One of the most common complaints is the delivery of incorrect or inauthentic products. Many unscrupulous suppliers list a product with a certain image but send a replica or a completely different product. Due to a lack of proper monitoring, these suppliers deceive customers. When it comes to dealing with such issues, e-commerce companies in the country are usually not customer-friendly, causing inconvenience for customers. Additionally, fraud and MLM scams are prevalent in the e-commerce sector. As a result, many people in Bangladesh are hesitant to trust e-commerce for purchasing expensive or large items and usually opt for smaller, low-cost purchases instead.
Another major factor contributing to the struggles of e-commerce in Bangladesh is the delivery system. Despite significant improvements in the supply chain network across the country, this progress has not been mirrored in the e-commerce sector. Local producers can distribute their goods nationwide through their own or partner logistic systems and with the help of dealers and distributors. However, e-commerce companies typically collect a product from the seller, send it to a central hub, then transport it to regional hubs before delivering it to the customer’s doorstep. To do this, e-commerce companies rely on both their own delivery infrastructure and various courier partners. The infrastructure in every district of Bangladesh is not uniform. Some districts lack direct road or rail connections, making it difficult for courier companies to deliver to all areas effectively. Furthermore, traffic jams and other issues in urban areas also hamper delivery efficiency.
Another significant reason for the struggles of e-commerce delivery in Bangladesh is the lack of a skilled workforce and proper monitoring. Globally, e-commerce companies employ students or minimally educated but skilled workers. These companies also provide regular training on packaging, labeling, and delivery processes. In contrast, many of the employees involved in last-mile delivery, a critical part of Bangladesh’s e-commerce operations, are undereducated and unskilled. Companies do not provide adequate training to improve the efficiency of these workers, leading to issues with packaging, sorting, labeling, and even finding addresses. In major global e-commerce companies, workers are closely monitored. For instance, Amazon uses wristbands to track warehouse workers’ activities. According to CNBC, Amazon has also started using AI-monitored cameras in its delivery vans to monitor last-mile delivery workers. On the other hand, Bangladeshi e-commerce companies struggle to properly monitor even their own delivery fleets, and courier partners fail to monitor their employees effectively. This lack of professionalism leads to a tendency among workers to slack off or perform their duties poorly, ultimately harming customers.
All of these factors combined contribute to the ongoing struggles of e-commerce in Bangladesh.
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