1

Md. Mahbubur Rahman Alam

B. Sc. (Statistics) Dhaka UniversityM. Sc. (Statistics, Major in Econometrics) Dhaka University

PGD(ICT)BUETM. Sc. (ICT) BUET

Assistant Professor, BIBM, Mirpur, Dhaka.Cell: 01556323244, Mail: alam_mr@yahoo.com Website: mralam.net

Application of E-commerce and M-Commerce in Business Development: Bangladesh Perspective

E-Commerce

E-Commerce (Electronic Commerce) refers to marketing, selling and business over the Internet or in other word

E-Commerce can be defined as a form of business transactions in which the business parties interact electronically.

In the simplest form, we can say that, E- Commerce is the movement of business on the web.

E-Commerce Vs Traditional Commerce

Traditional Commerce E-Commerce

Market Physical Virtual

Identity of Buyer and seller

Spot and physical Human to Human

Through media Human-Media-Human

Immediacy Getting goods and service Immediately

Getting goods and services at later time.

Price Cost + Profit Cost + Profit + Transport Cost/ Shipping cost

Privacy and Secrecy

Not a major concern here. Consumers are not asked for personal information

It is a major concern for the authority. Consumers are asked for personal information

E-Commerce Traditional Commerce

Sale/purchase of books and CDs Sale/purchase of high-fashion clothing

Online delivery of software Sale/purchase of perishable food products

Online tracking of shipment Sale/purchase of expensive jewelry and antiques

Advertising and promotion of travel services

E-Commerce Vs. Traditional Commerce

Advantages of E-Commerce

This is no doubt 'easy for the busy people'.

24 * 7 operation

Reduction of cost

More choices

Quicker delivery

Advantages to Customers:

Advantages of E-Commerce

Globalization

Reduction of cost

Low cost advertising

Strategic Benefit-

Error detection and correction

Supervision expenses

Mail preparation

Advantages to Business:

Advantages of E-Commerce

Opportunity for disabled

Enables people in Third world countries and rural

areas to enjoy products and services at a reduced

cost

Enables more individuals to work at home, and to

do less traveling for shopping resulting in less

traffic on the roads and lower air pollution

Allow some merchandise to be sold at lower price

Advantages to Society:

Disadvantages of E-Commerce

Hidden costs

Network unreliability

Small companies are unprepared for global

selling

Lack of skill and training of the employee

Lack of security

Ethical concerns

Reasons for E-Commerce not being Very Successful

Not everybody has access to a computer

Buying goods over the Internet is not ‘natural’:

-- The absence of ‘touch-feel’ factor

-- The interaction is unnatural

People are concerned that buying over Internet is

unsafe.

E-Commerce Transaction Model

Business

Consumer Consumer

Business

Government

Business Models of E-Commerce

Depending on the parties involved in the

transaction,

E-commerce can be classified into 4 models.

These are:

Business – to – Business (B2B) model

Business – to – Consumer (B2C) model

Consumer – to- Consumer (C2C) model

Consumer – to – Business (C2B) model

B2B Business Model

B2C Business Model

C2C Business Model

E-commerce Impact on Various Channels

Airline ticket

s

Banking

Bill payme

nt

Insurance policy

Software distributio

n

Traditional system 8.0 1.08 2.22 to

3.32 400-700 15.00

Telephone-based 0.54

Internet-based 1.0 0.13 0.65 to

1.10 200-350 0.20 to 0.50

Savings (%) 87 89 71 to 67 50 97 to 99

US$ per transaction Source: Meeker, 2013.

M-Commerce or Mobile Commerce

The wireless Internet has three main features that permit mobile services to be more personalized than traditional Internet applications.

First, mobile telephones are carried by their owners almost everywhere and kept switched on most of the time.

Second, wireless operators are uniquely able to determine the identity of a user.

Third, operators can detect a user’s exact location, enabling a whole range of new applications.

10 Biggest Markets by Global e-Commerce Sales

1. China ($562.66B in sales projected for 2015)

2. United States ($349.06B in sales projected in 2015)

3. United Kingdom ($93.89B in sales projected for 2015)

4. Japan

5. Germany

6. France

7. South Korea

8. Canada

9. Russia

10. Brazil ($18.80Bin sales projected for 2015)

The Bangladeshi e-Commerce : Inception

In Bangladesh e-Commerce started as early as 1999. However the progress had been stagnant for over a decade.

The first e-Commerce websites were linked with ISPs as well as internet related products were being sold.

www.munshiji.com, www.bdshop.com, www.bijoyonline.com were one of the first e-commerce sites in Bangladesh.

To understand more on e-Commerce in Bangladesh, we have to look at the progression of the connected infrastructure, Internet, Telephony as well as the Banking sector.

The Ecosystem

e-Commerce

E-Payment Systems &

Infra

Delivery logistics Systems

Consumer awareness & confidence

Internet Penetration

Technical development

Short History of e-Payment Systems in Bangladesh

• Vanik systems, currently kown as LankaBangla Finance was the first company to introduce credit cards in Bangladesh.

• These were completely static non Magnetic strip cards with swipe impression charging systems.

• NCC Bank was the first commercial bank to introduce credit card.

• ATM card penetration started as early as 1999, however all Debit card and ATM cards remained in a “Walled Garden” status till 2004-5

Short History of e-Payment Systems in Bangladesh

• The first payment switches that came onboard in Bangladesh were “eCash” and “BEPS”

• “Q-Cash” and “Omnibus” were quick to follow.• BFTN has been implemented at the last – only an year or two

back.• Interoperability of the payment switches still remains elusive.

Bangladesh still relies on high level payment switch interoperability like “VISA” and “Mastercards”

• Recently “AMEX”, “JCB” and “DINERS CLUB” switches have been introduced.

Short History of e-Payment Systems in Bangladesh

• There have been multiple attempts to bring in e-payment gateways to Bangladesh.

• The cautious approach by Bangladesh Bank as well as commercial Banks as well hindered the growth.

• Bangladesh remains among one of the only two countries in SAARC region not to have access to global e-Payment solutions like Paypal and AliPay.

• Recently Bangladesh Bank is encouraging the inclusion of e-payment gateway in a Bank led model.

Short History of e-Payment Systems in Bangladesh

• “Payza” got introduced recently by Bangladesh Commerce Bank

• Among the many positives in a list of countless discouraging facts is the growth of MFS.

• bKash and DBBL are success stories. • Now over 14 active MFS brands are operating.• The country found its own way to progress despite all these.• Payment aggregators like “SSL Commerz” and “Walletmix”

have arrived.

Delivery and Logistics Systems

• Delivery and logistics systems are still underdeveloped• The country still relies on non automated hand to hand delivery

methods.• Though the Courier Services Association claims a daily

distribution of over 4 Million individual parcels and letters every day in the country, Most of it is undocumented or minimally documented

• The National Post office is the slowest to adopt new technologies.

• The commercial couriers are no better

The nagging problems still remains

Consumer confidence on Payment

Efficient Logistics

Proper Infrastructure

& Finance

Current status of e-Commerce in Bangladesh

Bangladesh has over 2000 active ecommerce sites currently operating all over Bangladesh.

Bangladeshis are one of the quicker races to adopt f-commerce.

There are currently more than 3000 f-commerce initiatives by Bangladeshis.

Daily over 3 LAC transactions are happening in e-commerce

Payment Gateway transactions are still the lowest around 30000 (Excluding MFS).

Where are we compared to our neighbors

Prospects of e-Commerce in Bangladesh: few pointers Active telecom penetrated Base is over 13 Cr. Active internet penetrated base is over 5 Cr. Already Smartphone sales is growing by 38% year by year. It is estimated that end of 2016, 90% of the Mobile penetrated

population will have internet capable handsets. Banking penetration is growing MFS penetration is growing at an explosive rate. e-Payment aggregators are coming onboard AlterNet payment systems are being introduced. Inactivity by Banks in financing is giving way to venture finance.

e-Commerce has many faces

We are still primarily working over “e-Tailing” Explosive growth opportunities are there in e-Ticketing,

Travelling and e-goods. Slowly these are getting introduced.

Challenges in coming days

Access to Finance Delivery systems and Logisticse-payment gateway proliferation and use of BFTN

in e-Commerce.Single body to take e-com initiatives forward : e-

CabProper promotions and awareness building

Success StoriesIt is said - where there is a will there is a way.Bangladeshi e-Commerce ventures are now going to

venture capitalists for funds.Chaldal.com received $ 0.5 million USD as seed fund.Bdjobs.com offloaded 28% of its shares for $30

Million AUD.Newscred.com has Series B funding of $20 Million

USDWe stepped into “Crowdfunding”.

Looking Forward Currently one data is floating around that last August-

September during the end of Eid-ul-Azha around 200 Cr. Was transacted for e com in a month.

We are looking at a 200-300 Cr. Monthly transactions on e commerce in 2015.

Currently around 1-2% of these transactions are over Banking channel

Taking the transactions to at least 30% should be the primary goal in 2016-2018

Few research predicts by 2020 Bangladesh e-Tailing will become 20% of all retail sales.

Number of Transaction in Different Delivery Channels (2015)

July 2015 (Monthly) Yearly (2015)

Transactions Amount (Cr) Transactions Amount (Cr)

MICR

1,721,614

126,675.00

20,659,368

1,520,100.00

Non-MICR

4,222

90.40

50,664

1,084.80

EFT

1,327,946

6,616.00

15,935,352

79,392.00

Credit Card

1,036,287

637.00

12,435,444

7,644.00

Debit Card

11,063,479

8,410.00

132,761,748

100,920.00

Prepaid Card

50,622

32.00

607,464

384.00

International Card 492,891

356.00

5,914,692

4,272.00

Total Card

12,643,279

9,436.00

151,719,348

113,232.00

Internet 519,671

1,674.00

6,236,052

20,088.00

Mobile

97,334,572

13,745.00

1,168,014,864

164,940.00

Agent

70,340

203.00

844,080

2,436.00

POS

1,527,163

1,053.80

18,325,956

12,645.60

E-commerce

93,650

29.30 1,123,800

351.60