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Bangladesh - Corporate - September 4, 2021

e-commerce facing reliance crisis

Restoration of confidence
is now a big challenge

Golam Mostafa Jibon:Following some unpredicted incidents, country’s e-commerce sector is now facing confidence crisis putting it on a big challenge.
It has now become a big challenge to restore the confidence among the customers.
Sources said, buying products at home has now become popular in the country since the beginning of corona pandemic. The pandemic has extended it to the rural and isolated areas. Everything from daily necessities to clothes, cosmetics, ornaments, furniture, cars, books, medicines, land and flats is now being bought through this medium. Due to customer interest and popularity, a large number of entrepreneurs have been created in e-commerce sector over the last few years.
Observing the market potential of Bangladesh, foreign e-commerce giants like Alibaba, Amazon and Walmart are also working to expand business in the country. But after allegations of fraud against several companies in recent times, the entire sector is now suffering from a crisis of confidence.
Gradually, negative perceptions of consumers are being created towards e-commerce. Stakeholders believe that, this could lead to the collapse of the overall fast-growing and promising sector. They believe that it will be a challenge to restore the confidence of the customers, if immediate and exemplary action is not taken against the fraudulent and destabilizing companies.
Mohiuddin Ahmed, President of the Bangladesh Mobile Phone Subscribers Association said, “Foreign e-commerce giants have the potential to come to Bangladesh. But, country’s e-commerce is now facing instability. Companies like Amazon may return, if those do not quickly win the trust of customers and resolve the crisis.”
Recently, a number of e-commerce companies, which gained popularity in a very short period of time, have been accused of embezzling hundreds of crores of Taka and cheating customers and merchants. Initially the accused companies made all the unusual offers to attract customers. Later, it was seen that even though they took money in advance, they were not delivering the products on time as promised. Consumers complain that they are not getting the product on time despite paying for the product. In some cases, the time limit is exceeded from 6 months to one year.
On the other hand, the suppliers or merchants of the companies said that their arrears are not being paid day after day. The money has been stuck with the institutions for a long time. After a few months, customers are being harassed because the product is not in stock. In most cases, e-commerce companies have no contact with customers or merchants. In the beginning, the companies used to maintain contact with the customer, but later they are shutting down all means of communication.
Information technology and e-commerce experts said that, in the beginning, various attractive advertisements are published introducing a kind of discount or cyclone offer. Not only that, they allured consumers offering that cashback will be given up to 20 percent-150 percent. The customers will get the product and also get the original money back. Seeing all these incredible offers, the customers also stumbled upon that e-commerce. Initially, they delivered the goods to some customers, but after a few days, a large number of companies received advance payment from the customers on time, as well as the merchants are not paying their dues. In such a situation, many are worried that the potential e-commerce sector is facing a big risk for a handful of companies. Instability in the e-commerce sector has been created mainly through a number of organizations. These include Evaly, e-orange, Dhamaka, Sirajganj Shop, Aladdin’s Lamp, Boom Boom, Adian Mart, Needs, Cucom, Dalal Plus, Bajaj Collection, 24ticket.com, Green Bangla, Excellent World Agro Food and Consumer and more others.
Officials at the Commerce Ministry said, the estimates given by Evaly as of July 15 show that, customers and merchant companies together accounted for about Tk 843 crore. But the capital of the company is only Tk 1 crore.
e-orange is accused of not giving products after taking money from customers like Evaly. It has been alleged that, the company has embezzled Tk 1,100 crore.
Sonia Mehzabin, Owner of e-orange and her husband Masukur Rahman are currently in jail for embezzling customer money.
Allegations of money laundering against Dhamaka have been intensified. Similarly, Sirajganj Shop, Aladdin’s Lamp and other e-commerce companies have been accused of not paying goods after taking money from customers.
Bangladesh Bank in a directive on August 30 said that, e-commerce companies will not be able to take the advance price of goods or services directly from the customers through their own bank. In addition, the central bank has instructed the concerned banks to ensure proper supervision in considering the risks.
The Ministry of Commerce has issued policies and guidelines for the management of digital commerce to maintain confidence in the e-commerce sector.
Although, these instructions are on paper, the victims have complained that there is a lack of monitoring of how they are being implemented in practice.
The new guidelines have mainly focused on product delivery and refunds. It has been said that, if the e-commerce companies and the buyers are located in the same city, the product has to be delivered within five days. They are in different cities; they have to ensure the delivery of the product within 10 days. If the product is not in stock, no payment can be accepted. The money paid in advance will be credited to the seller’s account after delivery of the goods.
E-commerce companies have to notify consumer by telephone, e-mail or SMS that the product is delivered to the delivery-man or delivery company within 48 hours of the buyer’s advance payment.
Delivery-man will deliver the product to the buyer within the next 72 hours. It said, e-commerce companies could not take more than 10 per cent of the value of a product in advance unless they were in a position to hand over the goods or services to the delivery man within a maximum of 72 hours. However, only administrative action can be taken against the accused for violating the policy, such as canceling the registration of the company. But there is no chance of taking any punitive action against those responsible for violating the policy.
It has been alleged that the Ministry of Commerce is not taking any action against the accused despite the instructions.
The victims said that the government has taken various initiatives to restore customer confidence and keep the market stable, but no effective action has been taken against those responsible so far.
They feel that this process is being delayed in various ways by giving one letter or notice after another and holding meetings from time to time.
Commerce Secretary Tapan Kanti Ghosh has termed the crisis of confidence in the e-commerce sector as detrimental to the economy as a whole.
He said, if the level of greed increases, both sides of the business are likely to suffer. Businesses may be at risk, consumers may be deprived of goods and services, or money may be lost. In this case, it is impossible for the government to solve every case or file a case. So the merchant and the consumer have to take the responsibility.
Noting that not all issues will be covered in the e-commerce policy, the commerce secretary said, some issues need to be addressed by merchants and consumers. It is up to the consumer to decide whether to take the risk or not.
Mohiuddin Ahmed, President of the Mobile Phone Subscribers Association, blamed the e-commerce organization as well as the E-Commerce Association of Bangladesh (E-CAB), saying the organization must take responsibility for instability and fraud. If necessary, the affected customers have to pay from the huge amount of money in their own fund.
He also called on the government to be strict in restoring confidence, saying that companies that are cheating can pay customers by confiscating their assets. Or set an example by arranging severe punishment against the responsible organization. Then no one will do it again.
E-Cab President Shami Kaiser and Secretary Abdul Wahed Tamal said, E-Cab has issued notices to 16 companies to show cause in different cases in response to complaints from consumers and vendors. Of these, the membership of four organizations has been suspended due to non-response to the complaint or unsatisfactory response. Further investigation is underway keeping nine institutions under observation. Calling on consumers to be vigilant, they said that in the interest of their financial security, they should be careful in purchasing products with unusual offers. They also requested that companies that do not comply with the ‘Digital Commerce Management Guidelines 2021’ refrain from shopping.

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