Bangladesh's e-commerce sector stands at a critical juncture. The market has gone through a series of developmental iterations over the last decade and is now poised for growth, offering a significant opportunity for investors and stakeholders. The overall digital commerce awareness has grown. More people shop online today than ever before and the number is growing every day. Internet and mobile phone penetration has grown. Infrastructure such as logistics has improved. The trust perception in online commerce has improved after a series of unscrupulous incidents post-pandemic.
Five to six years back, ecommerce was one of the top trending sectors in the learned community of founders and investors who follow the Bangladesh market. It is no longer the case. Ecommerce has slowly lost its glamor. Partly because the expectations from the sector were high and it failed to deliver. But five-six years back, the market was not ready. While Bangladesh had more ecommerce companies at that time, the timing was not right. Many ecommerce companies struggled and failed because they were early. Online shopping was not a thing. Digital payment was not as convenient as it is today. Logistics and other infrastructure challenges abound.
Startup success is a multiplicative function, involving many different factors. But the most important factor, according to many experts, is the timing. An idea of which time has come is simply indomitable. For ecommerce, five-six years back was early. However, today it appears that the timing for ecommerce is right. Consumer awareness and acceptance is there. The infrastructure is ready. The only thing lacking is the right investment and resources. If these two things happen, the Bangladesh ecommerce market is ready to boom.
That being said, the sector has major challenges ahead. The most critical challenge is perception. There is a subtle consensus among many people that Bangladesh's ecommerce is past its growth phase. There is not much opportunity in the segment. Today, that perception is the single most serious challenge for the ecommerce sector in Bangladesh. It has created an environment of low expectations among the stakeholders and many investors tend to discount ecommerce as a potential vertical. This is a clear misunderstanding about ecommerce in Bangladesh which is not only affecting the development of the sector, it means a lot of people are missing a big opportunity.
Key points:
Market Potential: Bangladesh, with its population of over 170 million and rapidly growing tech-savvy consumer class, presents a huge untapped market for e-commerce.
Digital Transformation: Recent years have seen substantial improvements in internet penetration (44.5% as of early 2024), smartphone adoption, and digital payment systems, creating an increased readiness for e-commerce growth.
Investment Opportunity: Despite its potential, the B2C e-commerce sector in Bangladesh has received less than $200 million in total investment, significantly lower than comparable markets like India or Indonesia. Some of the leading players in the sector have shown incredible capital efficiency. For instance, Pickaboo, the electronics and gadget-focused ecommerce player raised only $3.1 million in total investment. The company has built an excellent business with that investment. Chaldal, the leader in grocery, raised some $30 million in total investment. Beauty and lifestyle player Sajghoj raised $2.3 million in total investment. This underinvestment indicates a few things. First, many of today’s growing ecommerce companies in Bangladesh have shown excellent capital efficiency. Second, it represents a unique opportunity for early movers.
Growth Drivers: A young, tech-savvy population, rising middle class (The middle and affluent class (MAC) is expanding rapidly by an average of 10.5% annually, adding around 2 million people each year. By 2025, the MAC population is expected to triple to about 34 million), and shifting consumer behavior towards online are key factors driving e-commerce adoption.
Challenges Overcome: The sector has navigated several challenges over the past years, including logistical issues and consumer trust, emerging stronger and more resilient.
Future Outlook: With the right investments and strategic focus, Bangladesh's e-commerce market is projected to experience excellent growth in the coming years, potentially rivaling many mature markets in the region.
This whitepaper aims to provide a comprehensive overview of the e-commerce landscape in Bangladesh, its evolution and promising future, dispel common misconceptions, and highlight the compelling investment case for this high-potential market primed for growth.
