Efficient logistics network a must to boost e-commerce post pandemic
The journey of e-commerce started in Bangladesh almost 30 years ago in the late 90s with gift sites targeting the non-resident Bangladeshis.
Since the beginning, there was very slow growth until 2008. In 2009, two major changes took place as Bangladesh Bank allowed online payment and the country witnessed the introduction of WiMAX internet that became quite popular in the country and official journey of e-commerce started in the same year. Bangladesh Association of Software and Information Services was formed.
In 2013, the Bangladesh Bank gave permission to buying products and services online using international credit cards.
From 2013 to 2019, this sector observed tremendous growth and is considered the next major driver of economic development mainly because of the favourable environment of e-commerce business such as ever-growing internet penetration, the rapid growth of financial inclusion, consistently developing web population, focus on digital Bangladesh initiatives, a cultural shift of consumer spending behaviour to digital, increasing per capita income, foreign investment-friendly policy, developed infrastructure and most importantly a bunch of young and tech-savvy population and a big market of 167 million population.
Unlike other decades, the starting of the new decade in 2020 was different due to coronavirus. The pandemic has fundamentally changed the world as we know it.
This coronavirus crisis has created new opportunities to some businesses and the most booming one is the e-commerce sector. It has caused a shift in consumer behaviour and a handful of these new habits will likely remain in the long-run.
Online purchasing will continue to be a prominent channel for consumers. The coronavirus will permanently change consumer behaviour and purchasing habits, which will remain in the post-pandemic era too.
It is estimated that at present there are approximately 2,000 e-commerce sites and 50,000 Facebook-based outlets and 80 per cent of the online sales are taking place in a couple of major cities only. Some 35,000 individuals and above 25,000 small and medium enterprises (SMEs) are part of this sector.
Mainly, three types of e-commerce are popular in Bangladesh: Business-to-Business (B-2-B), Business-to-Consumer (B-2-C), Consumer-to-Consumer (C-2-C).
The e-commerce sector in Bangladesh is on a growth trajectory and current market size is approximately Tk 8,000 crore and has been growing at about 50 per cent annually and is projected to cross Tk 25,500 crore by 2023.
The ongoing expansion and robust outlook have led to a progress story that will positively impact the entire e-commerce ecosystem through creation of employment and entrepreneurship opportunities.
As per a global study finding, for every job that is created by the e-commerce industry, three or four more jobs are created in downstream industries and the e-commerce industry is making an important contribution in ensuring gender equality, by providing women with increasing opportunities to become part of the growing bandwagon.
The factors behind the boost of the e-commerce segment are double-digit growth of internet penetration, financial inclusion, government policies, and a shift of consumer behaviour.
The digital logistics ecosystem plays the main role in the expansion of e-commerce business. E-commerce sector's presence, success and growth mainly depend on the capability and efficiency of the nationwide digital logistics ecosystem.
Here in Bangladesh, all sectors have developed a lot, save for one of the key drivers, which is a nationwide digital logistics ecosystem and network.
Every order of e-commerce includes product flow, information flow and capital flow. Much of these flows should be achieved by logistics.
If the logistics of e-commerce is not cost-efficient or modern or do not have a nationwide footprint, consumers may go for traditional commerce again.
As we know for any e-commerce business, properly coordinated logistics is the key to grow and succeed.
Looking back 30 to 40 years ago, there was a relatively straight line between suppliers and retailers. As e-commerce has grown and become a worldwide channel, it has become much more complex.
To excel at e-commerce, logistics network needs to be more efficient and some of the key goals of e-commerce logistics are meeting product delivery deadlines, improving customer services and reducing operating and inventory holding costs.
In Bangladesh, logistics and transport system are two of the main challenges to keep the e-commerce trends going.
Currently, e-commerce businesses are doing well in a couple of cities only. A mix of government initiatives and collaboration, technology, resources, and best practices can help this business to grow and some of the steps that can be taken for it are as follows.
NATIONWIDE LOGISTICS FOOTPRINT
Anyone living in Dhaka can easily wish to get product or services from e-commerce and the same way any Dhaka-based merchant can easily sell and deliver product or services through e-commerce. For example, anyone living in a remote thana of Tangail can place an order in an e-commerce platform.
But chances are very low for the product to satisfy the consumer due to long delivery lead time, high cost, poor product safety and packaging.
If someone, who is living in Khulna adjacent to the Sundarbans, wants to sell pure honey, we are assuming that he/she may get online orders. But due to the absence of e-commerce logistics services, his/her opportunity of becoming an entrepreneur and earning financial solvency may come to an end.
Currently, e-commerce logistics companies are doing business by focusing mainly on delivering products from Dhaka. But to spread wings across the country, e-commerce logistics footprint should be established all over Bangladesh and only then new entrepreneurs and new employments will be created.
Bangladesh Post Office, which is providing postal services, has nationwide footprint having 9,886 post offices, infrastructure as well as own fleet facilities. Within a very short time, they can establish a vibrant e-commerce logistics services across the country.
Due to a lack of resources, skills gap and other limitations it would be best if they can go for public-private partnerships to make the most use of its vast network across the country.
On the other hand, existing private logistics companies can jointly collaborate to expand their network across the country.
Poor logistics is one of the major setbacks behind the sluggish growth of the e-commerce industry in many developing markets, including Bangladesh. We can boost its growth, create new entrepreneurs and employments by setting up e-commerce logistics footprint all over Bangladesh.
DIGITAL LOGISTICS PLATFORM FOR E-COMMERCE
The digital platform can unlock significant pockets of value. Here, the platform will act as an aggregator, which will work well in our current fragmented market. This platform will have similarities with the on-demand vehicle hiring digital platform like Uber, Pathao.
There will be one national platform where all logistics companies will be connected and their services, price and network live visibility will be there. If any merchant wants to deliver a product, he/she can enter that platform, see live services and can compare delivery lead time along with the cost.
Currently, most of the logistics start-up companies are based in Dhaka. If this platform can be developed, then a significant number of logistics start-ups will be established and this will not only ensure competitive services but also create full and part-time jobs around the country.
To develop this digital logistics e-commerce platform, BASIS, the posts and telecom ministry, the Access to Information (a2i) and private organisations can play an active role.
DIVERSIFIED LOGISTICS FLEET
The main objective of the diversified logistics fleet is to ensure on-time delivery of products at competitive prices and explore all transport fleet services. Currently, all logistics companies prefer delivering goods through roads. But we can explore our domestic passenger airline network also.
As we know, each aeroplane has a certain cargo carrying capacity and if they can get customer forecasted cargo weight through an app in advance then they can easily sell remaining capacity to e-commerce logistics companies.
It will not only ensure faster delivery of products to customers but will also ensure competitive ticket price benefits for airline passengers if they do not use their allocated cargo.
In the same way, water transport network can also be explored. A certain portion of Bangladesh gets affected by flood each year and to serve customers of those areas a proactive initiative utilising water transport facilities can be explored too.
DECENTRALISATION OF FULFILMENT AND WAREHOUSE FACILITIES
Bangladesh's current e-commerce businesses are operating mainly through centralised warehouse systems and recently we came to know that one of Bangladesh leading e-commerce businesses is going to invest to expand their logistics infrastructure across the country through setting up multiple product hubs in different divisional districts.
To avoid going for huge investments, other logistics start-up companies can jointly set up a warehouse or product hub across Bangladesh.
The main objective of decentralised warehouses is to send goods relatively closer to the customer, which will ensure greater delivery flexibility and shorter lead times. And due to decentralisation across the country, new employment opportunities will be generated too.
EFFICIENT REVERSE LOGISTICS
Returns management may be the most challenging aspect for e-commerce sellers and in Bangladesh, the quality of this particular service is not at all up to the mark. Efficient return policies will encourage buyers and help them purchase goods with the confidence that they will not be stuck with the products that do not suit their needs.
The e-commerce logistics plans and services should be defined such a way that the customers can have clear visibility and live updates on their products.
SMART ANALYTICS AND USE OF LATEST TECHNOLOGY
Tech-enabled logistics ecosystem will not only bring efficiency in business but will also ensure intangible benefits like better customer care and customer satisfaction. GPS tracking is one of the core digital logistics inventions and the ever-growing e-commerce logistics can make most of the GPS vehicle tracking system to reap better benefits for the business.
Logistics providers should plan their way forward smartly to be able to make fast and seamless delivery and leverage the maximum output from the growing digital consumer class.
Usage of business intelligence (BI), Big Data and smart analytics in digital logistics can be a game-changer in e-commerce. Big data also plays a vital role in optimising product transit by making real-time data analytics possible.
The Covid-19 has massively accelerated the growth of e-commerce globally as well as in Bangladesh. As per DHL Global E-Tailing 2025 study, over the next 10 years, online retail will continue to gain popularity in both emerging and developed markets.
As a result, e-commerce logistics companies will have to play a key role in providing supply chain management services that evolve with consumers' changing shopping habits.
In Bangladesh, the e-commerce sector's growth has exceeded all expectations and so far, it had a significant impact on changing the economy.
Right e-commerce logistics road map will actively boost economic variables and growth rates and will lead to the creation of new employment, entrepreneurs, higher wages and higher standards of living for individuals.
It will attract foreign direct investment and increase production and growth rates, which will lead to achieving our sustainable development goals, the upper-middle-income country status by 2030 and the Vision 2041, which aims at establishing Bangladesh as a high-income country.
The author is the head of supply chain and procurement at bKash