E-commerce in rural Bangladesh: The missing dots

E-commerce is commonly described as a monumental revolution in the information age. In this age of the internet and digital technology that drives creation of new opportunities, the government and the private sector have taken various initiatives to ensure that daily necessities reach the doorsteps of people easily and quickly. 

But surprisingly, Bangladesh has yet to develop e-commerce based initiatives addressing the rural population. 

The rural people's connection to e-commerce platforms has so far been that of being the producers. No initiative has yet been taken to address the rural population as consumers.  

City dwellers may not realise, but shopping in rural areas is not as easy as in urban areas. One study found that 73% of people from rural areas go to the city for wider access to goods, such as  mobiles, TVs, motorcycles, etc. In order to do this, they have to travel an average of 20km. 

Rural consumers, as a result, face major problems such as the proliferation of counterfeit products, unavailability of branded products, and lack of scope to choose from a wide variety of products. Due to low vendor density in these regions, the distribution frequencies of the big companies are low. 

But these issues can be solved through the implementation of data and predictive technology. 

The actual picture of e-commerce development in the country is not satisfactory. It remains a popular and a growing alternative to conventional retail only in the upper middle class and upper-class in urban areas. The lion's share of the country's e-commerce orders come from Dhaka, Chottogram, Gazipur, and Narayanganj. 

Illustration: TBS

According to the e-commerce association – Ecab, more than 1,600 e-commerce organisations are currently operating in Bangladesh. With a dearth in innovation, all these e-commerce platforms are fighting in the same ocean. 

In the meantime, the country's rural economy is diversifying. As agricultural work in the country is expanding, the non-agricultural sector is also growing in the rural area. Improvement is noticeable in most of the villages. 

Improvement in health, education and communication infrastructure is apparent, along with improvement of haat bazaars and most villages are becoming part of the electricity grid. The village roads are now connected with Upazila-districts and highways. 

In the changing scenario, in order to bring the benefits of e-commerce to the village, technology has to be combined with supply chain management. 

The tyranny of middlemen is still a major obstacle to rural economic development. According to a report by the ministry of agriculture, farmers sell cabbage at an average price of Tk13.50 but when it comes to Dhaka city, the price increases up to Tk36. This pushes us into a vicious cycle: rural people are becoming poorer and the middle class in the cities are lining up behind the TCB trucks. 

In order to overcome this problem, we need rural digital superhighways where rural farmers and urban people will meet together.   

In China and Indonesia, the online-to-offline e-commerce model (O2O) is playing an effective role in the rural economy by building strong coordination and relationships between rural people and the e-commerce platforms. 

The online to offline model is a type of business strategy where the buyer orders online but takes delivery from specific points. This gives rural buyers confidence in online shopping and also alleviates the problem of finding villagers' addresses. 

There are going to be a hundred economic zones in our country. We need to think of ways to accelerate the development of our rural economy by linking economic zones with rural e-commerce. 

Future initiatives for the development of rural e-commerce will require a strategy to maximise the use of manpower. Also, the platforms will have to prove their worth through performance, that will require integration of physical and digital activities. Otherwise, initiatives will go in vain.   

Acquiring customer trust and solving last-mile problems through online-to-offline (O2O) method is a magical strategy. At this point, I would like to share a personal experience. During the first wave of Covid-19, libraries in the country had closed due to the countrywide lockdown. In order to ensure the supply of academic books is in line with demand while keeping channel partners' interest stable, we adopted the online-to-offline strategy. 

In a very short time, we created a platform where we took orders and arranged the deliveries from a library nearest to the students. The response was more than what we could have anticipated. 

Our villages are in need of a change maker – an entrepreneur – who will come forward to make a positive difference through an innovative platform that offers buying and selling of branded products, digital banking/insurance services, facilitates urban people's  investment in vegetables, fisheries, and poultry,  builds grain banks for farmers, facilitates rental for agricultural equipment, etc. –  all under one roof. 

And only then, real development will take place in our villages and it will have a direct impact on the development of our rural economy.  With the promising combination of machinery and technology, our villages will overcome the inequality of digital facilities. And we will experience the universal benefits of e-commerce.  

Sazzad Reza Basunia works at Boibazar.com as its Business Head. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.