1 Md. Mahbubur Rahman Alam B. Sc. (Statistics) Dhaka University M. Sc. (Statistics, Major in Econometrics) Dhaka University PGD(ICT)BUET M. Sc. (ICT) BUET Assistant Professor, BIBM, Mirpur, Dhaka. Cell: , Mail: 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

E-CommerceTraditional Commerce Sale/purchase of books and CDsSale/purchase of high-fashion clothing Online delivery of softwareSale/purchase of perishable food products Online tracking of shipmentSale/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 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 tickets Banking Bill payment Insurance policy Software distribution Traditional system to Telephone- based 0.54 Internet-based to to 0.50 Savings (%) to 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 ( $18.80B in sales projected for 2015)

The Bangladeshi e-Commerce : Inception In Bangladesh e-Commerce started as early as 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 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

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 Infrastruct ure & 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 (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 Logistics  e-payment gateway proliferation and use of BFTN in e-Commerce.  Single body to take e-com initiatives forward : e- Cab  Proper promotions and awareness building

Success Stories  It 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 USD  We 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 Cr. Monthly transactions on e commerce in  Currently around 1-2% of these transactions are over Banking channel  Taking the transactions to at least 30% should be the primary goal in  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) TransactionsAmount (Cr)TransactionsAmount (Cr) MICR 1,721, , ,659,368 1,520, Non-MICR 4, ,664 1, EFT 1,327,946 6, ,935,352 79, Credit Card 1,036, ,435,444 7, Debit Card 11,063,479 8, ,761, , Prepaid Card 50, , International Card 492, ,914,692 4, Total Card 12,643,279 9, ,719, , Internet 519,671 1, ,236,052 20, Mobile 97,334,572 13, ,168,014, , Agent 70, ,080 2, POS 1,527,163 1, ,325,956 12, E-commerce 93, ,123,