Until 2006, eCommerce in Bangladesh was virtually non-existent. The few eCommerce sites were exclusively used by the higher class, with enterprises that were purely niche-based. With rapid digitization, the number of eCommerce sites increased by more than 70% in 2007.
In recent years, Bangladesh has made considerable strides forward on the route to digitalization and new trends in ecommerce. However, when compared to developed countries, the rate of Internet penetration is still low. As a result, an eCommerce business in Bangladesh faces a slew of difficulties even before it gets off the ground. In this article we are going to talk key challenges to Start c-commerce business in Bangladesh. Let’s take a more in-depth look at each of them.
1. Aspects of the transaction :
The constraint is also visible in the transactional aspect. The biggest issue that e-commerce businesses in Bangladesh encounter is a lack of customers willing to make frequent purchases using debit or credit cards. There are around 5 million debit cards in circulation and 1 million credit cards. Only 1% of the population makes use of them for POS transactions. The rest is restricted to ATM use exclusively. This raises the issue of a shortage of online transactions, which is one of the eCommerce ecosystem’s most important pillars.
2. Product Sourcing :
In Bangladesh, Amazon, eBay, and Rakuten do not exist. So, the product source issue arises. Many e-commerce platforms rely on imports to meet customer demand. Customs and the entire process add greatly to the product’s cost. So there is no demand.
Local drop shipping is an option here. Drop shipping makes it difficult to manage product quality and brand reputation.
3. Niche Selection :
Identifying the appropriate consumer base Any ecommerce startup’s first and most pressing problem is deciding on a niche. Unless you are one of the big players, it is nearly impossible to put everything under one domain.
We need to know which niche has the largest online transacting customer base. The fact that most people under 30 prefer to shop online means that personalizing products to their needs is difficult. Customer segmentation is difficult when the bulk of the country prefers offline purchasing.
4. Insecurity for Payment Gateways :
Buyers of e-commerce sites have a lower faith in the payment gateways of startup e-commerce companies and are more hesitant to make online payments. To address this issue, one should select a platform that supports the top payment gateways in order to gain consumers.
5. Low Conversion Rate :
One of the advantages of eCommerce is that your customer base is not geographically limited. Anybody, anywhere in the world, can examine your products. On average, a successful e-commerce looks at a conversion rate of roughly 1% to 2% of total product hits. However, in the case of Bangladesh, it is less than 0.2 percent. While the local target market is tiny, there is also a general aversion to online shopping. As a result, eCommerce websites consistently struggle to create and convert leads.
6. Customer Retention :
Customer retention is another issue that is strongly related to lead creation. Globally, the largest e-commerce platforms secure a minimum of 30% client retention, with Amazon having a remarkable 93 percent retention rate. However, Bangladeshi eCommerce platforms fail to achieve a retention rate of even 10%. The difficulty emerges mostly due to a lack of an after-service policy and targeted marketing.
7. Market Saturation and Competition :
The present rivalry in the existing e-commerce business is still overwhelmingly focused on specific niches. It is this factor alone that makes the business possibilities for new eCommerce platforms difficult. In addition to that, there are already existing eCommerce platforms such as ChalDal, Daraz, ClickBD, and others that are available. In addition to market saturation and competition, a new eCommerce platform must contend with a number of other issues.
8. Lack of Trust :
There are a lack of trust among people buying products online. An increase in people’s tendency toward offline purchasing behaviors is accompanied by an increase in their level of trust in the things they purchase online. There have been innumerable instances of faulty or counterfeit products being delivered to customers. Occasionally, the merchant would refrain from providing things altogether and will only accept advance payments. E-commerce will struggle to compete with the offline market unless a solid regulatory framework is in place to protect consumer rights.
9. Lack of Adequately Trained Personnel :
Digital marketing and traditional marketing are not the same thing. In digital marketing and e-commerce, you target customers by email, coupons, SMS, or by maintaining a database, client tracking, and product inventory updates. A ordinary product marketer may be unfamiliar with all of these factors.
Many eCommerce platforms in Bangladesh reported a severe lack of competent individuals to administer and maintain an eCommerce site. Not simply site maintenance, but product management and delivery seem to be concerns.