Economic Reporter :
Despite setbacks, of which there were many in 2021, the e-commerce sector still saw growth, backed by continuous improvements in online banking and fintech and the rise of a tech-savvy demographic with high purchasing power.
Covid-19 sped up that growth as people started adopting digital shopping due to lockdown restrictions and soon, e-commerce platforms started mushrooming everywhere. According to the e-Commerce Association of Bangladesh (e-CAB), official reports, and industry insiders, online sales rose about 70% in 2020 from the previous year, and market size of the industry stood at nearly $2 billion as of August that year.
E-CAB Vice President Mohammad Sahab Uddin estimates that valuation of the sector in 2021 might have crossed Tk20,000 crore – about $2.32 billion.
By 2023, the market is predicted to reach a size of $3 billion.
But the journey was not easy for the sector, and these difficulties, in part, were prompted by investigation into the irregularities of Evaly.
One reason why Evaly got away with its business model for so long was the absence of a regulatory body and a policy framework for the sector.
There were no specific operating guidelines till the middle of this year, although a digital trade policy had been passed in 2018.
Sahab Uddin says these setbacks actually helped them identify significant problems in the sector, “which are being addressed continuously” and which will help the industry pick up even more pace in 2022.
“We did not have a policy or guideline for a long period, but that is not the case anymore. The framework will evolve further as the market develops even more,” the e-CAB official added.
Crime and punishment
Complaints of undelivered products, refusal to pay refunds, and a cult of personality surrounding Evaly boss Rassel dominated the first half of the year. But as these complaints started to pile up, several banks and mobile financial services (MFS) cut ties with the platforms under suspicion.
When patience ran out, several people started filing cases with the court against Evaly, Dhamaka Shopping, eorange, Sirajganj shop, and Qcoom.
Later, Evaly CEO Mohammad Rassel and his wife Shamima Nasrin were arrested on allegations of embezzlement and fraud.
Law enforcers also arrested Ring-ID Director Saiful Islam on charges of misappropriating Tk200 crore in just three months by alluring people to its investment scheme promising online income.
E-commerce platform eorange.shop’s owner Sonia Mehzabin, her husband Masukur Rahman, and Chief Operating Officer Aman Ullah are also currently behind bars for embezzling Tk1,100 crore from consumers.
Investigations by several authorities also revealed embezzlement and irregularities against various other e-commerce sites that had gone under the radar till then.
The Criminal Investigation Department (CID) also prepared a list of e-commerce companies that reportedly swindled large sums of money from customers in the name of selling products, online investments, and e-loans on their platforms and social media.
In July 2021, the Digital Commerce Operation Guidelines went into effect.
The guideline provided proper instructions for deliveries, pricing, and showcasing of products, which led to several platforms shutting down as they could no longer take advantage of the advance-first model – a model eliminated by the introduction of the escrow system.
But that soon gave birth to a new problem.
Stuck in escrow
Following the guidelines, the central bank started acting as a third party by holding the payments and transferring those to sellers only after the delivery of the product.
However, the system was not automated. Requirement of manual input for verifying transaction receipts led to huge delays in disbursing funds.
