Competitive advantages determine whether a company can move forward. E-commerce is the right tool for gaining competitive advantage nowadays. Business now goes online. Some restrict the definition of e-commerce only to internet enabled transactions while some others defined broadly saying not only internet rather telecommunication and telecommunication based tools are also involved in e-commerce activities. In Bangladesh perspective, the broader definition is accepted to all.
Like traditional commerce, e-commerce does not involved only in buying and selling of goods and services rather includes inter-company and intra-company functions like negotiations and transactions, manufacturing and marketing etc. using email, Electronic Data Interchange (EDI), fax, file transfer, video conferencing etc. Depending on the involvement with electronic means, a company can be either a complete or partial e-commerce user. Usually e-commerce is done in four forms: Business to Business (B2B), Business to Consumer (B2C), Consumer to Business (C2B) and Consumer to consumer (C2C). However, Business to Government (B2G) transaction may also exist.
Right now more than 6.5 million people are using Internet in the country with the help of around 200 registered ISPs and dial-up services and the cost of using Internet is low. The increasing number of user of Internet creates more opportunity of e-commerce in the recent years.
In order to cope with the present world, almost all of the financial organizations and international businesses in Bangladesh enter in the information highway through hosting website. Banks and other financial organizations have started online transactions like fund transfer, payment etc. However, almost 82 percent usage of Internet accounts for only to send e-mail while in developed countries like USA, it is only 5 percent or less. This indicates that e-commerce in Bangladesh lags far behind.
Human resource is must for the development of e-commerce and in Bangladesh, around 10000 people are being produced by the educational institutions and training centers around the country, which is not adequate for a country.
Since Bangladesh is a developing nation, the opportunity for the development of local and international trade and business, like all other LDCs, is increasing. Although it faces some barriers like infrastructural, cultural and outlook problem, recent steps taken by the government may change the situation. The government has taken some steps to build ICT capable society recently to materialize its dream of a ‘digital Bangladesh’.
1.2 The key trends identified include:
– Online railway and bus ticket bookings becoming the preferred segment in online travel,
– Growing emergence of corporate travel packages,
– Growth in offline counters,
– Emerging travel information portals backed by Online Trading Agents (OTAs),
– Rising international travel, booming tourism, emerging travel information portals, and
OTAs serving as a preferred search tool for checking fares and ticket availability.
1.3 Technical features of an e-commerce internet solutions:
1. Compatibility with the pre-existing resources – Putting up an e-commerce website is a huge task; we can not complicate it with technical difficulties. We have to make sure that any software chosen is compatible with existing applications, operating system, and hardware. Nowadays, most e-commerce servers support different operating system with the Windows NT and the UNIX as the most common.
2. Capability to import existing data – Choosing an e-commerce internet solution that can enable to import data from another location. If we have a large database, this is a particular necessity because it would be a complicated and costly process to input the large file into the new system. Most high end e-commerce internet solution offer this capability whole entry-level solutions usually don’t include this feature.
3. APIs for linking – Linking finance systems and inventory management to the commerce server is a difficult aspect in setting up an e-commerce website. If intended to use this feature, it is recommended for to look into APIs because it allows software programmers to create codes that will link the legacy system to the e-commerce server.
4. Shopping carts – When we think about e-commerce internet solution, one of the first things that come to mind is the shopping cart. Shopping carts allows customer to browse the store to add and remove items as they go along to “checkout”.
5. Multiple payment systems – majority of online payments are made through credit cards and debit cards. However, a good e-commerce internet solution will go the extra mile to provide other types of payment options so you can maximize profit.
The considerations stated above are just some of the factors we need to look for in an e-commerce internet solution. There are many other details in an e-commerce internet solution that are equally important because it will contribute to either the success or failure of the online endeavor. E-commerce is considered as the next big thing that will drive internet usage growth in the world driven by growing number of credit cards, good online shopping places, transactional websites and the way banking is done today.
1.4 Government Impetus
The present Government is encouraging private entities to invest in ICT sector. In 2010 the Government of Bangladesh has introduced E-commerce law. For increasing and implementing this law Ministry of Commerce, Ministry of Information and Communication and Planning Commission jointly implementing the E-commerce in Bangladesh-
There is E-commerce committee headed by commerce secretary.
– Ministry of Information and Communication is working for enacting a law regarding ³Electronic Transaction act´.
– Online order from foreign buyer has started.
– http://www.registrarofcompniesbangladesh.com here registration of joint stock company started as online.
– Online non-financial transaction has started by all banks from 31-7-2002.
– Intra-bank transaction started from 31-07-2003.
– Some bank already started credit card system in limited way.
– The first week of November 2009 Bangladesh Bank has given permission of E-commerce in local currency through banks within the country.
1.5 The impact of E-commerce
E-commerce can transform the way products and services are created, sold and delivered to the customers. It can also change the way in which the company works with its partners. The followings are well established benefits of e-commerce:
Improved productivity: Using E-commerce, the time required creating, transferring and process a business transaction between trading partners is significantly reduced. Further more human errors like duplication of records are largely eliminated with the reduction of data entry and re-entry in the process. This improvement in speed and accuracy plus the access to document and information will result in increase in productivity.
Cost savings: The cost savings stem from efficient communication, quicker turnaround and closer access to market.
Streamlined business process: Use of internet and with automation of business process can make business more efficient.
Better Customer service: Customer can enjoy the convenience of shopping at any hour and anywhere in the world.
Opportunities for new business: Business over the internet has global customer outreach. There are endless possibilities for business to exploit and expand their customer base.
1.6 Supportive Framework for E-commerce
Electronic commerce generates competition, revenue and profit. It also creates flow of goods and services and hence traffic. Subsequently, it can act as an incentive for investors to finance locally available infrastructure, connectivity and bandwidth. However, before this “virtuous circle” can be initiated the “magic triangle”—access, trust and know-how – an essential precondition for the start-up and expansion of electronic commerce, must be firmly established between both the public and the private partners involved. This magic triangle can only be set in place if it receives the full and active support from the various stakeholders.
Access to e-technology such as the internet is necessary but not a sufficient condition for the development and growth of e-commerce. The popularity of e-commerce in any economy will be dependent not only on the cost, efficiency and reliability of Internet technology but also on the supportive framework that includes legal and financial infrastructure support as well as support in the form of technical expertise (know-how). A week and inefficient supportive environment can damage the trust among partners and will stranglehold the possibilities and attractiveness of using technology for business and commerce.
1.7 Economics of E-commerce for Bangladesh
With the increasing diffusion of ICTs, more specifically the Internet, the global business community is rapidly moving towards Business-to-Business (B2B) e-Commerce. The buyers/ importers gain a clear advantage when the Internet gives them access to the global market, by which they can compare prices across regions, find out whether prices vary by order fragmentation, get awareness about substitute/ alternative products. Consequently, the sellers/ exporters make sure that they are well portrayed in the cyber world through websites and portals. Like buyers, sellers also benefit from increased and more efficient access to the global market through the Internet. Bangladesh is pursuing an economic policy of export-led growth. With the rising forces of globalization, it is becoming increasingly important that the private sector, particularly the export sectors are well prepared to meet the requirements and expectations of the importers and also stand out in the competition against exporters in other countries. In such a scenario, two issues are becoming particularly important for Bangladeshi export sectors, one, whether businesses are automating their internal processes with the use of ICTs to become increasingly efficient and competitive in a global context, and two, whether businesses have effective presence and participation in the cyber world. International organizations such as UNCTAD (United Nations Center for Trade and Development) and WTO (World Trade Organization) have, over the last several years, put much emphasis on the importance of E-commerce for developing countries. UNCTAD has special programs to facilitate developing countries to transition into E-commerce. The WTO has also developed rules and guidelines for global E-commerce transactions.
1.8 E-commerce practices in Bangladesh (Present)
Despite being a under developed county, selected segments of the Bangladeshi business community has embraced technology with reasonable success. The Facsimile in the 1980s and mobile telephones in the 1990s popularized modern technology in the mass market. Personal computers and the Internet are also emerging as day-to-day business tools. The ruling government of Bangladesh who has come with the slogan of Digital Bangladesh has been focusing on implementing ICT in every sector of this country. For the first time in Bangladesh E-commerce law has been introduced in 2010. These positive indicators are favoring the prospects of E-commerce in Bangladesh.
– RMG Sector
– Banking on the Web (Online Banking, SMS Banking, Any Branches Banking)
– Online Shopping
– Web Hosting, Domain
– Online cards, gifts
– Pay Bill
– Education
– Ticket Purchase etc.
1.9 Challenges of E-commerce for Bangladesh
1. Network Infrastructure
– Intra-bank and Inter-bank Connectivity
2. Local and Global
– Bank-Client Connectivity
– Security of transaction
3. Banking mechanism
– Automation
– Convertibility of the Bangladesh currency
– Retention quota
– International credit cards
4. Capacity Building: Human, Technical and Regulatory
– Quick Settlement, Online credit Information, Skilled e-Manpower, Regulatory Framework
5. Investment
6. Legal Infrastructure
7. Currency Convertibility: Access to Global Finance
8. E- Culture
1.10 Growth of E-commerce in Bangladesh
In Bangladesh the growth of online ticket booking will be dependent on the credit and debit card holders size and the attitude towards online booking system. The consumer habits of the growing middle class is a boon for the credit card business of top banks in Bangladesh, even while the majority still deals in cash.
Top players in the country’s plastic money business are adding up to 4,000 new users a month, industry insiders have informed. The number of the cardholders could potentially double in the next five years, they added. Most big restaurants and retail stores these days offer credit card facilities, which their customers find to be a more convenient way of making big transactions. Retail shoppers account for 60 percent of total spending through credit cards, followed by restaurants with 20 percent.
The total value of credit card transactions in Bangladesh is approximately $23 million per month. The number of cardholders could reach 15 hundred thousand by the end of 2015 if the existing regulatory restrictions are withdrawn.
1.11 Future prospects of E-commerce in Bangladesh
The communication sector in Bangladesh, including Internet, has changed dramatically within 2 years. The incentives both from government and public sectors have encouraged this sector progress. That can brightly be reflected by the volume of Internet users in Bangladesh. In the year 2000 just 0.1%, or 100,000, of the Bangladesh population gold get internet access, compared to 2007, with 450,000 subscribers, or 0.3%. Currently over 900,000 of Bangladeshis or about 0.6% of the population, use Internet actively. Though the penetration still remains very low, within the country the growth is significant over 600%. The Internet connection appeared in Bangladesh rather late with connectivity only in 1996. Over the last few years Internet market in the country has been growing rapidly, although obviously from a very low base. The government’s high internet tariff is hindering the growth of the ICT sector inside the country. Recently the government decided to cut the tariff by 50%. Out of 64 districts in Bangladesh, Internet services are available only in 6 major district headquarters. BTTB is planning to gradually roll out an IP network up to the 64 district headquarters. In January 2002, the Internet facilities were extended to 12 districts. The project is running on very fast and today almost 40 plus districts are getting Internet facilities. Followings are the barriers of E-commerce in Bangladesh:
– Very minimum number of users of web sites;
– Poor telecommunication infrastructure with limited fixed-line access, unreliable connectivity and low bandwidth (9K);
– High price of computer and hardware: The per capita income of our people is less than US$520. But in order to buy a computer it is needed US$500 and for this reason, it is beyond the capacity for a villager to buy it.
– Lack of technically efficient personnel;
– Lack of investment in hardware and software;
– The banking infrastructure in terms of electronic payments and inter-bank connectivity is poor. As such, the customers of 5770 branches of the local banks are unable to operate their account with the other branches of the same bank. Inter bank transaction is more cumbersome as the clearing-house of the central bank is not online. An inter-bank transaction may take even 2 weeks if the branches are different cities. Only branches of the private banks are interconnected with their respective head offices. They are also satisfactorily computerized. This represents only 25% of the entire banking sector.
– Small number of Credit/Debit Card users;
– Limitations of supportive legal system. Such as, exchange controls, protection of telecommunication monopolies, restrictive trade practice and prohibitions;
– Absence of cyber law;
– People’s mindset and very slow and expensive Internet services;
– Enterprise managers’ lack of initiative and leadership in taking advantage of E-commerce;
1.12 Keys to Success
In descending order of importance, the five critical keys to success for the proposed new e-commerce site are:
– Employing an experienced, highly professional management team that combines vision; realism; financial ability; solid knowledge of the online business; familiarity with, and belief in, the utilization and benefits of the latest electronic, and informational technologies; on-the-ground knowledge of the region and markets to be served; realization of the crucial importance of an organization’s personnel to its success; and a total familiarity with, and commitment to, the overall mission and goals of the proposed new online ticket sales software.
– Intelligent, progressive, and aggressive marketing that identifies the software as a different kind of player, one that is sharper and smarter, and with a higher level of professionalism and operational standard than is the norm in the target region. Concentration on safety, with highly trained, dedicated, and professional personnel, caring for the passenger and the passenger’s needs and wants, the advantages offered by advanced technology, and straightforward, understandable, highly competitive tariffs and pricing, all will form key pillars of the marketing strategy.
– Identification, through careful market research, of unserved or under-served routes and city pairs in the target market area with sufficient passenger demand to enable high load factors and profitable operations utilizing the category of transport envisaged.
– Use of advanced electronic and information technology to reduce staffing and other operational costs; expand the potential market base; readily capture sales opportunities; simplify and speed passenger; and enhance customer convenience and satisfaction.
– Looking to combine the core transport business with ancillary marketing concepts and activities and ground-based operations that support, supplement, and complement the elements of the business, including such activities as package-, group-, program offerings; value-added sales and customer services, Internet-based; and other logical business pursuits both within and outside the immediate transport business.
– Avoiding growth for growth’s sake and instead looking for solid niche-enlargement opportunities that will allow incremental, but always profitable, expansion.
Omar Shams 