E-commerce of Bangladesh: Shaping the future of shopping

The e-commerce landscape in Bangladesh started its journey in 2013-14 timeframe. Shopping from home was not a popular phenomenon at that time because people used to take comfort in dropping by the mall or kitchen market or superstores and have a look-and-feel shopping experience. Not until recently, the market has started taking a shape with the emergence and active participation of few major players. Although, e-commerce in Bangladesh is still at quite nascent stage, the 165 million population with 33% mobile internet penetration, the market seems to be substantially potential in upcoming days. Alongside, e-commerce is being largely aligned to the Mobile Financial Service (MFS) as it’s mode of payment, which complements each other and demonstrates great promise to grow. The recent announcement of the Chinese smartphone maker Xiaomi of setting up an e-commerce plant in Bangladesh, is prone to open new doors of opportunities for this market.

Catalysts of growth

In the past 4-5 years, certain factors accelerated the expansion of e-commerce market. The penetration of mobile internet and the active mobile internet usage have been remarkable. Alongside, bringing feature phones and smartphones within lower-middle class people’s purchasing power expanded the e-commerce market to a great extent.

 Meteoric penetration of internet

The rise of e-commerce in Bangladesh predominantly ascribes to the rollout of 3G internet in 2012. Since 2012, internet subscription grew at an average rate of 19.4% annually, which amounts to 87 million as of June 2018. However, internet subscribers may not be the active internet users as anyone who used the internet just once in the past 90 days, is called an internet user (BTRC). According to Google, Bangladesh had 40 million active internet users as of November 2017, which is 24% of the total population. Amongst them, 14 million are daily active internet users, making up 8.7% of total population. Neighboring India which made a stellar progress in e-commerce, has 35% of its population as internet users.


 Smartphone penetration

It is a surprise how smartphone has been penetrated into all ranks of Bangladeshis. The newly launched feature phones by the local handset manufacturer Walton got popular in the lower-class households due to it’s cheap price, BDT 999. Affordable brands like Symphony, Infinix brought the smartphone and feature phones within mass people’s purchase ability. Mobile subscribers amounted to 145 million as of December 2017, amongst which, 45 million are smartphone users.


 Worsening traffic condition

With 36% of the country’s urban population living in capital Dhaka, it has become one of the world’s most densely populated cities. According to a World Bank estimate, in the last 10 years, average traffic speed has dropped from 21 km/hour to 7 km/hour, only slightly above the average walking speed. Congestion in Dhaka eats up 3.2 million working hours per day. Where reaching workplace in time has become a challenge now, making time to drop by shopping malls or kitchen market is a hassle.  People sitting at gridlocked traffic in their vehicles and going through the popular e-commerce sites, has become a regular sight in recent times.


 Young population

The young and vibrant population of Bangladesh is making the e-commerce websites more and more popular. Even, electronic e-commerce sites are breaking the notion that online purchase of electrical items may pose risk of getting faulty products. 


Dynamics of Bangladesh e-commerce Market

 Total Market Size

The e-commerce market made a quantum leap in 2017; growing at a whopping 70% from 2016. In 2017, the B2C ecommerce market size amounts to USD 110-115 million (around BDT 900 crore) against the 133,571 crore total retail market. On the contrary, the size of Indian mega e-commerce market stands at USD 17 billion. According to the experts, Bangladesh e-commerce is at a stage where the Indian market was probably 5-7 years ago.

 E-grocery market size

The size of Bangladesh’s e-grocery market is much smaller at USD 4-5 million, or about 0.03% of the country’s overall grocery market and 3-4% of total ecommerce industry. Chaldal made the mark in e-grocery space, being the rst of its kind in Bangladesh. Basically, they started out in 2013, at a time when selling fresh was not very common in global grocery picture. Only two companies, Instacart (U.S.A) and Bigbasket (India) were doing it.


 Demand side

According to market experts, the size of the online purchasers is about 2 million.

How many business models exist in e-commerce space?

The e-commerce space of Bangladesh is at a nascent stage now, however the industry got some variations in business models. With each models, comes unique advantages and challenges to deal with. Since the e-commerce space in Bangladesh is mostly teemed with ventures focusing on lifestyle products, there is a prevalence of “Retail model/ Inventory-led model”.

Besides these two models, some e-commerce ventures in Bangladesh operate in different modalities. Ajkerdeal.com, one of the leading e-commerce ventures in Bangladesh follow Mercantile model. They merely act as an online marketplace; without having to maintain inventories. The merchants make the delivery in exchange for a small commission of 8% to 10%, depending on the type of product. However, Ajkerdeal.com on-boards merchants after without screening.

Another modality in ecommerce landscape is discerned in Bangladesh. A handful of ecommerce companies sell uncommon products like organic fruits and vegetables and local handicraft artisan items. Directfresh and Dorpon are two such ecommerce ventures. Directfresh is an agri-tech startup which trains the farmers on cultivation, procures products from them and sell to the customers via their online stores. On the other hand, Dorpon works with local handicraft artisans.

What challenges ecommerce ventures deals with?

The ecommerce space in Bangladesh is struggling with some challenges for which the entrepreneurs are yet to maximize their benefits.

 Earning Credibility

Ecommerce seems to have a connotation of “not selling what it promises to sell” among the customers. There is still a huge trust issue from customers’ end that the products they receive do not match to the image viewed on the screen at the time of purchase. However, the ecommerce ventures are constantly focusing on and taking measures for ensuring quality control.

Bagdoom, one of the popular lifestyle e-commerce, makes it a point that every product undergoes an inspection check after arriving at the company’s warehouse from the merchants, and only after receiving a quality control seal, that it meets the quality specifications, is the product allowed to be shipped to consumers.

Pickaboo goes live on Facebook often to respond to their customer queries.



Logistics is the heart of any ecommerce venture and it is a big issue in Bangladesh’s perspective. Often the ecommerce companies have a hard time managing their logistics and transportation requirements since they have to deal with a huge quantity of deliveries everyday both inside and outside Dhaka city. However, the sudden emergence of few e-delivery companies are coming to aid to the ecommerce venture in a bid to handle their large delivery requests.


 Unstructured supply chain/ Merchant illiteracy:

The supply chain for E-commerce is not strong yet. The merchants do not have proper warehousing facility to store the products, usually no formal or structured inventory management. The products are not arranged in an organized way, which results in a greater time to deliver an order. However, ecommerce companies are working with the merchants to address these challenges.

Kiksha.com is working with the suppliers in a bid to come up with solutions for better storage of products as well as online merchant panels to better manage their sales and inventories.

Predominantly, the merchants of the ecommerce ventures are SMEs (Small and Medium Sized Enterprises) or SOHOs (Small Office/Home Office), who are often technologically challenged. It is very hard to integrate with such merchants’ backend or inventory systems. Also, most of the merchants are not handy with laptops. Education the merchants take a big deal of effort for the ecommerce ventures.

Bagdoom holds training sessions twice a month with its merchants to make them more technologically savvy. They have a vision to implement ‘real-time’ integration so that once a product is sold from its inventory, its suppliers’ inventory is also updated.


 Inclination towards F-commerce:

Dhaka has 22 million active Facebook users, according to a statistic published in April 2017. The soaring number of Facebook users is making room for the F-commerce startups to grow. However, these F-commerce frequently fail to fulfill customer orders, which is where customers cannot take any legal steps as the shops do not operate within any legal framework. After a sour experience by using F-commerce, consumers usually hesitate to choose the electronic platforms for their future shopping purpose.


E-commerce in Bangladesh is at a nascent stage of development. Funding is a big issue since the lenders are not fully oriented with the e-commerce ecosystem. Banks, for instance, are subsidizing marketing and promotional costs for credit/debit cards with the leading apparel brands or restaurants; however, they are not warming up to e-commerce startups for lack of collateral. Banks are also not adequately prepared and aligned to finance E-commerce ventures, neither are local venture capital firms. In E-commerce sectors, investors have to burn their capital for over 5 years, but in reality, everyone focuses on short term investment. Venture capital firms are now realizing the potential in e-commerce ecosystem and come forward with convenient financial tools.

Kiksha.com and Sindabad.com recently raised investment from Frontier Bangladesh, a Bangladeshi venture capital firm. Besides local venture capital firms, the leading e-grocery shop Chaldal.com received investment from seed fund and accelerator 500 Startups.

Direct Fresh received investment from a host of investment partners including RSA Capital, as a lead investor, Business Research International Corporation Inc. (BRIC), a global public and private equity investor and Razor Capital, a Bangladesh focused, recently launched private equity fund.


 Human Resource

Finding the right people for the right job is difficult, and finding someone with the entrepreneurial mindset needed at a start-up is even more difficult. This sector needs adventurous youngsters at the base level, and adaptive, tech-savvy leaders at the top. Finding this right combination is rare, and finding someone from a similar industry with necessary skill-sets is even rarer.


The recent events in the ecommerce space in Bangladesh

 Xiaomi intends to set up an e-commerce platform

Of late, Chinese smartphone maker Xiaomi officially announced its entrance to Bangladesh with a view to establishing an e-commerce platform within the next couple of years. Xiaomi’s mi.com is the eighth largest e-commerce venture in the globe and third in China and India. Having discerned the potential in Bangladesh e-commerce space, they have an intention to scale it up through their platform.

 Alibaba snaps up Daraz

The digital space of Bangladesh has properly piqued the Chinese e-commerce titan’s interests. In May 2018, Chinese tech giant Alibaba has expanded its footprints in Bangladesh after it snapped up online marketplace Daraz. Thanks to the deal, Bangladeshi customers will be able to purchase products directly from Alibaba’s vast marketplace without paying the high shipment charges and customs duty. With Alibaba’s involvement, Daraz’s total merchant number will expand significantly from existing two lakh.

Digital payment in cashless electronic shopping
bKash leading the pack

At the starting phase of e-commerce, Cash on Delivery (CoD) used to be the most popular method of payment, ascribing to a lot of reasons. People used to prefer paying after they receive the product since there was still a credibility issue in the market. However, tables have turned now. Major e-commerce companies have successfully cast away the doubts of mass people regarding the product quality by putting increasing effort in quality control. In the course of time, people are gradually shifting away cash payment. Although a substantial portion of the demand side still pay with cash, the rising popularity and wide penetration of Mobile Financial Services (MFS) are the new preferred method of payment for e-commerce market. According to the e-commerce entrepreneurs, their customers are taking comfort in paying with bKash, thanks to its occasional cashback offers. Especially, during festive season, sales through MFS shoots up.

Rocket by Dutch Bangla Bank Limited (DBBL) follows the suit after bKash. Online payment platforms like iPay, uPay have already tagged with some major e-commerce companies.

Rollout of National Digital Commerce Policy

In a bid to encourage the home-grown investors, the government rolled out the long waited National Digital Commerce Policy.

 The new policy does not allow foreign investors to hold a stake of over 49% in any e-commerce venture in Bangladesh- an endeavour to protect and boost the local investors

 The policy also mandated that the e-commerce entities clearly highlight the details of the products they sell online, which include the product’s quality along with its return policy- in a bid to prevent fraudulence and protect customer rights

 E-commerce companies will have to also sign deals with the products’ suppliers, delivery channels and payment gateways to ensure that customers’ rights are protected properly- an attempt to make the supply chain transparent


Future Trends in E-commerce space in Bangladesh

 According to market analysts, Bangladesh’s ecommerce market will surge to USD 20 billion by 2020, by when, according to Goldman Sachs, India’s online retail market is expected to reach USD 69 billion.

 Global investors are heading to India are beginning to make a stopover at Bangladesh. The opportunity in Bangladesh prompted Delhi-based digital marketing company MoMagic Technologies to launch Pickaboo, which is clocking monthly revenue of USD 600,000.

 Electronics will be more desired category in upcoming days since it falls under the category where what is seen on the marketplace, and what is received, is the same.

 In terms of payment method, focus on cash on delivery is gradually being shifted away to MFS, which will fully rely on the MFS and payment service providers eventually.

 Few big investors are likely to invest in this e-commerce space realizing its potential. Already, International Finance Corporation (IFC) shortlisted and is actively monitoring 43 startups for funding purpose.