The Miracle of E-Commerce Growth in Bangladesh

Over the past few decades, Bangladesh has seen monumental growth in its economic sector due to the rise and growth of electronic commerce. E-commerce has contributed to economic change on a localized and national level, providing opportunities for Bangladeshi citizens to become more self-sufficient and independent in their economic decisions. The rise of the microfinance loan industry in Bangladesh has been supported by e-commerce as well, showing the scope of the sector in structural development.

E-commerce is defined as economic activity that is carried out through electronic means. The growth of e-commerce has occurred through the rapid development of the information and communications technology (ICT) sector, which has blossomed in many developing countries. The benefits of ICT growth are significant; they serve as a new method of economic development and as a way for countries to increase participation in in the tech industry. 

Bangladesh is one of the most obvious examples of e-commerce growth, which can be seen in the stark increase of Internet use by 22% from 2013 to 2014. This has been possible due to developments in government policy, as well as significant private sector involvement. In 2009, the Bangladesh Bank started allowing online transactions to take place between members of society. Four years later, the bank allowed for the use of international credit cards to buy and sell products and services. According to the International Telecommunication Union (ITU), the number of people that partake in Internet usage has grown from 6.5 percent to 18.2 percent from 2013 to 2016.

Private sector investment is another significant actor in the rise of e-commerce in Bangladesh. There has been increased investment in the e-commerce industry, particularly in newer startup companies.  Some of these companies include Solaric, Smart Compare, and Light Castle Partners. The competition between these businesses is extreme, and the consumers are often the ones that determine their success or failure.

There are four specific types of e-commerce that are present within the country: business-to-business, business-to-consumer, consumer-to-consumer, and business-to-employees. All of these aspects of e-commerce have different incentives and results, and appeal to various different societal functions. In urban areas especially, the rise in technology and e-commerce has transformed the way people communicate and interact with each other. International companies such as Alibaba have entered the Bangladeshi e-commerce industry, signifying the continued globalization that is occurring in the region. 

Like any other form of progress, there are hurdles that need to be faced as e-commerce continues to grow. Identity fraud and online theft are inevitable consequences of the rise of e-commerce, one of the many new risks that have emerged. As the sector has become more established in the country however, there have been steps taken to safeguard consumers from those whom may take advantage of the emerging industry.  The Information and Communication Technology (ICT) Act was established in 2006, and serves as a way to protect the victims of cyber crime and to punish the perpetrators. 

The microfinance industry in Bangladesh has grown as well since e-commerce was introduced, an indirect effect of the industry development. Grameen Bank, a leading microfinance institution in the country, gives poor, rural women small loans with the expectation that they will use the money to become more independent and self-reliant. According to Lamia Karim in Microfinance and Its Discontents: Women in Debt in Bangladesh, a “consumer base” has been formed of people who need the bank for their loans, even to repay their previous loans, regardless of the loan amounts and the payback time. The success of microfinance loans is wildly debated, as oftentimes the loans are being used for the wrong purposes. The Grameen Bank promotes women as economic actors, which serves as a method for empowerment, but does not fully address the social barriers women face in the region. While there are some success cases and some failure cases with microfinance loans, the bank has been growing alongside the tech industry and adopting new practices to help further alleviate poverty in the country.

The intersection of e-commerce and microfinance loans has become increasingly significant as technology has become a new outlet for development, and can be seen with the creation of Grameenphone. The service provider company was established with support from the Grameen Bank and a Norweigen telephone company called Telenor. Grameenphone is now one of the leading telecommunications company in Bangladesh, and offers everything from international roaming services to health tips. This company was created with the incentive to offer phone coverage to all people of Bangladesh, including those who could not afford phones themselves. Aligned with the Grameen Bank model, the purpose of this organization is to empower and provide new opportunities for rural women specifically. 

The Grameen Phone Scheme that Lamia Karim discusses in Microfinance and Its Discontents: Women in Debt in Bangladesh, portrays the relationship between microfinance and e-commerce in action. Relatively wealthier borrowers of the Grameen Bank use their loans to buy cell phones, and then allow others to use it for a specific price. These borrowers can now serve as the regulators of their own business, and can make money while paying off their bank loans. This practice portrays how people can use the rise in technology to their benefit, although it caters to a specific socio-economic class within the loan borrowers. 

E-commerce has revolutionized the way people connect and operate within society, increasing opportunities outside investment as well as internal economic development. The effects of the rise of e-commerce are extreme, especially in regards to creating new avenues for international business and varying consumer-producer relations. Companies such as Grameenphone have emerged from the growth of e-commerce, which exemplify the wide scope of impacts that technology can have for various different socioeconomic groups. The rise in e-commerce has created more resources and opportunities for individuals within the country, while also triggering larger changes for Bangladesh on a global level.