Addressing E-Commerce Accountability Challenges in Bangladesh
As a fast growing economy with favorable demographics and high domestic consumption, Bangladesh has witnessed significant growth in the e-commerce sector. Government resources to digitally empower the country, along with the Covid-19 pandemic which forced many brick-and-mortar stores and their consumers to go online, boosted business. However, due to some unscrupulous e-commerce organizations, the industry is struggling to regain consumer trust and calls for the implementation of strong policy support.
The sector is still in its growth phase, at around BDT 22,000 crore. It is expected to be worth almost BDT 26,000 crore over the next two years. Since 2015, the growth of this sector was 25%; in 2020 growth was 70% and in 2021 growth slowed to 40%.
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Aside from frauds trapping consumers with big discounts and delivering substandard or non-existent products, poor management and a faulty ecosystem are also causing consumers to mistrust the industry. With ineffective digital and financial literacy, sellers enter the market without proper development and struggle with the incompetent logistics management system. At the same time, traders deceive sellers by exaggerating product stocks. Ultimately, consumers are faced with delayed delivery of products.
On July 4, 2021, the Ministry of Commerce released the Guidelines on Digital Commerce Operations and Enhanced Law Enforcement Oversight to restore stability in the sector. If the guidelines are not followed, the government can shut down the business. Consumers can also lodge complaints with the Consumer Rights Protection Service and the competent courts.
The Bangladesh Bank has also mandated the escrow system to prevent embezzlement and e-commerce fraud. The system acts as a third party that receives money from the customer, holds it and pays it to the seller once the delivery is confirmed. If the delivery fails, the system refunds the deposit paid by the customers.
Along with this, the Ministry of Commerce subjects e-commerce businesses that use social media, including Facebook, to registering a unique business identifier. This step will boost consumer confidence and make entrepreneurs benefit from various financial aids provided by the government and private business organizations. These benefits were previously inaccessible as many businesses were not registered.
However, this does not eliminate all problems in the sector since many companies have not yet adhered to the guidelines. The entire business ecosystem still needs interoperability and atomization, such as a Central Logistics Tracking Platform (CLTP) and a Central Complaint Management System (CCMS). Both systems are being developed with the help of the ICT Division’s Aspire to Innovate (a2i) program, which can empower the ecosystem with accountability and help the government track revenue.
CCMS will receive complaints from customers and settle them through the relevant e-commerce platform, with the assistance of the Bangladesh E-Commerce Association and the World Trade Organization (WTO) Unit of the Ministry of Trade. Alternatively, the complaint will automatically be forwarded to the relevant government agencies to take appropriate action with the consumer’s consent. The process could significantly reduce false complaints, increase complaint handling, allow everyone to easily verify the value chain, increase transparency and significantly reduce the risk of fraud.
The barrier to cheap internet access remains, although the country has seen a boom in digital and network connectivity over the past decade. As long as there is a lack of cheap internet availability and speed in our remote areas, the growth of our e-commerce industry will continue to be hampered.
Another critical factor in developing and maintaining the e-commerce ecosystem is the education of all stakeholders. Consumers, not just sellers and traders, need to be aware of specific issues. Before purchasing a product, they should know details such as return policy and delivery and payment methods. Glamorous advertisements or skyrocketing discounts should not deceive them. In most cases, these can lead to fraud.
Rezwanul Haque Jami is Team Leader – Rural E-Commerce and Marketing Manager at a2i, ICT Division, Bangladesh.