Over the last few years, ecommerce has been one of the most talked about sectors in the country. We have seen a disproportionate influx in the number of ecommerce companies and Facebook-based online shops. According to several reports, Bangladesh’s eCommerce is a 400 crore BDT market and growing. A total of 1.9% retail sales happened in this space in 2015, 51 percent of which are repeat customers. Given the incredible growth in mobile phone and internet penetration, digital has commerce has solid future. Despite the huge potentials, online shopping has not grown at the expected rate over the past years.
According to B2C UNCTAD eCommerce Index 2016, only a meager 2% of the entire population and 23% of internet users shop online in Bangladesh. Our internal data about the ecommerce companies also indicates a slow growth, in some cases stagnant, in the sector.
Trust is the most important metric
A recent report, conducted by Ipsos and the Centre for International Governance Innovation (CIGI), in collaboration with the United Nations Conference on Trade and Development (UNCTAD) and the Internet Society, reveals that 49 percent of users polled say lack of trust is their main reason for not shopping online.
Trust is an important factor when it comes to shopping online because in most instances you are shopping without seeing the product. In Bangladesh, online shopping experience is average for most users. Although there is no empirical data to support the claim, but the complaints against online sites including leading ones is rampant.
Top 08 reasons why people don’t shop online
As the graph above shows, trust easily the number one reasons why people don’t shop online. The survey was conducted among 24,225 Internet users in 24 countries including China, India among others. Bangladesh was not in the list.
25% respondents said that they heard bad things about online shopping and are influenced by the experience of their peers. And 23% said online shopping relatively expensive for them.
For 21% payment is a problem. In Bangladesh, over 85% ecommerce transaction are cash on delivery. While the country has a staggering MFS penetration and incredible growth in P2P mobile payment, other forms of mobile payment are yet to grow significantly.
Lack of technology education is also a barrier for online shopping. 19% participants reported that they find online shopping difficult. In Bangladesh, a majority of online shopping orders take place either on Facebook or over the mobile phone.
17% said they don’t find the product they want to buy while 8% respondents reported that they can’t access the service or service delivery does not reach their locality. This is an understandable problem. Due to logistics penetration, in Bangladesh, a majority of ecommerce deliveries happen in metropolitan cities.
Internet penetration is also a problem for over 8% people. In Bangladesh, while government data suggests that there are over 65 million internet users, the actual number is much lower. Moreover, mobile internet is still too expensive for most people and while smartphone penetration is on the rise, feature phone still dominates the market.