About E-Commerce and uses of E-Commerce in Bangladesh

Md. Rashedul Hasan Riyad

Department of Business Administration
World University of Bangladesh
E-mail: rhriyad2222@gmail.com

This paper aims to highlight the status, statutes, potential and constraints of e-commerce
development in Bangladesh. Both the statutory laws as well as the challenges in implementing
them will be attempted. The paper shall also list specific policy changes aimed at bringing
improvements to the legal and regulatory environment affecting ecommerce.

Introduction
Electronic commerce (EC or e-commerce) describes the process of buying selling, transferring,
or exchanging products, services, or information via computer network, including the Internet. E-
business refers to a broader definition of EC, not just the buying and selling of goods and
services, but also servicing customers, collaborating with business partners, conducting e-
learning, and conducting electronic transactions within an organization. Others view e-business
as the “other than buying and selling” actives on the Internet

Bricks and clicks is a business strategy or business model in e-commerce by which a company
attempts to integrate both online and physical presences. It is also known as Click-and-mortar or
clicks-and-bricks. For example, an electronics store may allow the user to order online, but pick
up their order immediately at a local store. Conversely, a furniture store may have displays at a
local store from which a customer can order an item electronically for delivery.

The bricks and clicks strategy has typically been used by traditional retailers who have extensive
logistical and supply chains. Part of the reason for its success is that it is far easier for a
traditional retailer to establish an online presence than it is for a start-up company to employ a
successful pure dot.com strategy, or an online retailer to establish a traditional presence. This
strategy has contradicted analysts who believed that the internet would render traditional retailers
obsolete through disintermediation.
Definition:
In a word e-commerce can be defined as performing business activity via internet or another
electronic network. Book defines “Electronic commerce is an emerging concept that describes
the process of buying and selling or exchange of product, service, and information via computer
network including the internet.

The buying and selling of products and services by businesses and consumers through an
electronic medium, without using any paper documents. E-commerce is widely considered the
buying and selling of products over the internet, but any transaction that is completed solely
through electronic measures can be considered e-commerce.
There are many different definitions and understanding about E-Commerce.

According to Frederick J. Riggins and Hyeun-Suk Rhee, a recent pilot survey

Shows that some practitioners and managers view

E-Commerce - buying and selling goods and products over internet.

However, researchers believe the E-Commerce practice should include a wide variety of presale
and post-sale activities.

Transacting or facilitating business on the Internet is called e-commerce. E-commerce is short

for "electronic commerce."
Popular examples of ecommerce revolve around buying and selling online. But the ecommerce
universe contains other types of activities as well. Any form of business transaction conducted
electronically is ecommerce.
At last E-commerce (or electric commerce) refers to the buying and selling of goods and services
via electronic channels, primarily the Internet. Online retail is decidedly convenient due to its 24-
hour availability, global reach and generally efficient customer service.

Examples of Ecommerce: Online Shopping, Electronic Payments, Online Auctions,

Internet Banking, Online Ticketing and so on.

History of E-Commerce:
 In 1950’s companies began to use computers to store and process internal transaction
records.
 By 1960’s businesses that engaged large volume of transaction had begun exchanging
transaction information on punched card.
 In 1968’ Transportation Data Co-ordination Committee (TDCC) was formed by some
companies.
  In 1979’ ANSI (American National Standards Institute) chattered a new committee to
develop uniform EDI (Electron Data Interchange).
 In 1979: Online shopping was invented in the UK by Michael Aldrich.
 In 1982: Minitelwas introduced nationwide in France by France Telecom and used for
online ordering.
 In 1984: World's first recorded B2C online home shopper. Mrs JaneSnowball uses the
Gates head SIS/Tesco system to buy groceries.
 In 1987: Swregbegins to provide software and shareware authors means to sell their
products online through an electronic Merchant account.
 In 1990: Tim Berners-Lee writes the first web browser, Worldwide Web, using a NeXT
computer.
 In 1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies
Will Change the Way We Shop and What We Buy. St.Martin’s Press.ISBN 0312063598.
 In 1994: Netscape releases the Navigator browser in October under the code name
Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens.
Attempts to offer flower delivery and magazine subscriptions online. Adult materials also
become commercially available, as do cars and bikes.Netscape1.0 is introduced in late
1994SSLencryption that made transactions secure.
 In 1995: Jeff Bezos launches Amazon.com and the first commercial-free24 hour,
internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco
begin to aggressively use Internet for commercial transactions. eBay is founded by
computer programmer Pierre Omidyar as Auction Web.

Currently there are 5 largest and most famous worldwide Internet retailers: Amazon, Dell,
Staples, Office Depot and Hewlett Packard.

According to statistics, the most popular categories of products sold in the World Wide Web are
music, books, computers, office supplies and other consumer electronics database.

History of ecommerce is a history of a new, virtual world which is evolving according to the
customer advantage. It is a world which we are all building together brick by brick, laying a
secure foundation for the future generations.

Objectives of E-Commerce:
Objectives give the business a clearly defined target. Plans can then be made to achieve these
targets. This can motivate the employees. It also enables the business to measure the progress
towards to its stated aims. E-commerce facilitates the very process of international transaction;
this involves securing and finalizing a contract, delivery of the product, and finally payment for
performance of the contract. The movement of goods and services, as well as the payment
mechanisms within a country and more so outside a country, are governed by regulatory and
legal issues. Hence, the regulatory environment is at the core of e-commerce development.

 Save time
 Improve service
 Reduce process errors
 Reduce the cost of core service provision
 Free staff to provide value added service
 Improve morale
 Give people the tools and time they need
 Profit maximization
 Profit satisfying
 Sales growth
 Growth versus profit
 Short-term versus long-term

Goal of an E-Business:
The goal of any e-Business project is to create value. Value can be created in different manners:

 Positioning on new markets

 Increasing the quality of products or service
 Prospecting new clients
 Increasing customer loyalty
 Increasing the efficiency of internal functioning

Types of E-Commerce:
Types of e-commerce require throwing some light on the narrow line of distinction of between e-
commerce and e-business on the first hand. E-commerce can be classified based on the type of
participants in the transaction:

Business to Business (B2B): Business to business, B2B, ecommerce transactions happen

between two companies. B2B activity is not new, but the Internet has changed how everything is
transacted. An example of B2B is a company that outsources its bookkeeping activities to
another company. Another example includes a business that buys its products from a wholesale
company. B2B transactions are usually handled with lines of credit and companies often times
have long-lasting relationships with one another. The seller has responsibility of determining the
buyer's creditworthiness.
B2B ecommerce transactions are those where both the transacting parties are businesses, e.g.,
manufacturers, traders, retailers and the like.

Business to Consumer (B2C): When businesses sell electronically to end-consumers, it is

called B2C ecommerce. Business to consumer, B2C, transactions deal with customers
purchasing products and services from companies through the Internet. Online shopping has
increased significantly in recent years. Many companies take extreme security measures to
protect the sensitive financial information of consumers. B2C ecommerce transactions are not
strictly bound to retail shopping. Many customers purchase health insurance, auto insurance and
similar products online. One reason for the popularity of B2C ecommerce is consumers enjoy the
convenience of purchasing products and services online.

Example: CDs, Books, Software, downloadable music etc.

Business to Government (B2G): In this case the government provides services to its citizens
via EC technologies. Governments can do business with other governments as well as with
businesses (B2G).

Consumer to Consumer (C2C): Consumer to Consumer, C2C, ecommerce activity is

more recent, and usually requires a business to play the middleman. Companies like ebay and
Amazon have made C2C more popular. The way it works is companies that have products to sell
list them through a third-party site. Consumers looking to purchase products visit the site and
search the available products. The consumer purchases the product and the seller is responsible
for delivering the product. The business that plays the middleman usually requires a transaction
fee from either the seller or buyer.

Some of the earliest transactions in the global economic system involved barter, a type of C2C
transaction. But C2C transactions were virtually non-existent in recent times until the advent of
ecommerce. Auction sites are a good example of C2C ecommerce.

Others Forms of E-Commerce:

On some platforms, ecommerce has shown the promise of explosive growth. Two such examples
are:

 M-commerce:
M-Commerce is short for "mobile commerce." The rapid penetration of mobile devices
with Internet access has opened new avenues of ecommerce for retailers.
  F-commerce:
F-commerce is short for "Facebook commerce." The immense popularity of Facebook
provides a captive audience to transact business.

Electronic business: Electronic is any information system or application that empowers

business processes. Today this is mostly done with web technologies.

Some common applications related to electronic commerce are the following:

 Email
 Enterprise content management
 Instant messaging
 Newsgroups
 Online shopping and order tracking
 Online banking
 Online office suites
 Domestic and international payment systems
 Shopping cart software
 Teleconferencing
 Electronic tickets

Electronic Commerce Applications:

 Direct Marketing
 Stocks, Job
 Online Banking
 Procurement and Purchasing
 Malls
 Auctions
 Travel
 Online Publishing
 Customer Services
 Intra business Transactions

Dimensions of E-Commerce:
 Market Models
 Communication Protocols
 Product Ontology
 Marketplace Visualizations
 Personalization
 Trust & Reputation
 Privacy & Security
 Payments & Transaction Processing
  Intermediaries
 Legal Issues

Advantages of E-Commerce:
The primary advantages of ecommerce revolve around the fact that it eliminates limitations of
time and geographical distance. In the process, ecommerce usually streamlines operations and
lowers costs.

 Remain Open All the Time .Buying/selling 24/7/365.

 Low operational cost and better quality of services.
 Overcome Geographical Limitations.
 Gain New Customers with Search Engine Visibility.
 Locate the Product Quicker.
 Eliminate Travel Time and Cost.
 Provide Comparison Shopping.
 Enable Deals, Bargains, Coupons, and Group Buying.
 No need to physical company set-ups.
 Easy to start and manage a business.
 Provide Abundant Information.
 Create Targeted Communication.
 Create Markets for Niche Products.
 Improved customer service to clients it results in higher satisfaction and more sales.
 Lowers telecommunications costs because the Internet is much cheaper than value-added
networks (VANs).
 Enables a very specialized niche market.
 Helps some small businesses compete against large companies.
 Higher Margins
 Information sharing, convenience, and control.

Limitations of E-Commerce:
 There is no guarantee of product quality.
 Ecommerce Lacks That Personal Touch.
 Ecommerce Delays Goods.
 Many Goods Cannot Be Purchased Online.
 Ecommerce Does Not Allow You to Experience the Product Before Purchase.
 Anyone Can Set Up an Ecommerce Website.
 Customer Relations Problems
  Anyone can easily start a business, and there are many bad sites which eat up customers’
money.
 There are many hackers who look for opportunities, and thus an e-commerce site,
service, payment get ways; all are always prone to attack.

 Lack of universally accepted standards for quality, security, and reliability.

 Lack of national and international government regulations and industry standards.
 Perception that EC is expensive and unsecured.
 Unresolved legal issues

Traditional and Electronics Business Transaction:

The business processes are broadly divided into five main categories namely:

 Market product and services,

 Sell and deliver products and services,
 Process payments,
 Manage relationship,
 Manage the enterprise.

What Is a Payment Gateway?

A payment gateway is a service that authenticates and automates electronic payments made by
shoppers to ecommerce merchants. It allows ecommerce merchants to accept credit cards on
their websites.

A payment gateway is an interface between the banks (or financial institutions) of the shopper
and the merchant. It facilitates the transfer of money from the shopper's account to the
merchant's account.

The payment gateway is a software application. To draw an analogy, think of the credit card
swipe machine at the checkout counter. Akin to the swipe machine, the payment gateway:

 Processes a transaction securely

 Verifies details such as identification and limits
 Accepts or rejects the transaction.

Some payment gateways are programmed to compute tax and shipping costs too. All gateways
have algorithms to detect fraud. Though payment gateways were designed primarily for
ecommerce websites, many physical retailers find it convenient to use a payment gateway
instead of a swipe machine.
How to Choose a Payment Gateway?
The primary issues to keep in mind when selecting a payment gateway are:

 Compatibility: You need to ensure that the technology platform required for the
payment gateway is compatible with your shopping carts technology.

 Security: Detecting fraud is a moving target. Make sure to read up the latest about who is
winning this perpetual battle.

 Price: There is some merit to the notion that payment gateways have become a
commodity service. As a result your decision should certainly be influenced by the
pricing.

 Simplicity vs. Customizability: Some payment gateway providers such as PayPal and
Google Checkout are simple to implement, but do not permit a high degree of
customization. Others are more complex, but can be customized to your needs.

Often, you do not get to choose a payment gateway, as it comes bundled with your ecommerce
hosting account.

E-Commerce in Bangladesh:

E-Commerce in Different Sector in Bangladesh

Despite being a under developed country, selected segments of the Bangladeshi business
community has embraced technology with reasonable success. Personal computers and the
Internet are also emerging as day-to-day business tools. These positive indicators
are favoring the prospects of e-commerce in Bangladesh.

 RMG Sector
 Banking on the Web (Online Banking)
 Online Shopping
 Web Hosting, Domain
 Online cards, gifts
 Pay Bill
 Education
Challenges of E-Commerce for Bangladesh
*Network Infrastructure
Intra-bank and Inter-bank Connectivity
Local and Global
Bank-Client Connectivity
Security of transaction

*Banking mechanism
Automation
Convertibility of the Bangladesh currency
Retention quota
International credit cards

*Capacity Building: Human, Technical and Regulatory

Quick Settlement, Online credit Information, Skilled e-Manpower, Regulatory Framework

*Investment
*Legal Infrastructure
*Currency Convertibility: Access to Global Finance
*E-Culture

Why 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 on text, 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.

Some E-Commerce shop in Bangladesh

www.rokomari.com
www.webbangladesh.com
www.haatbazar.com
www.number1shop.com
www.bdbazar.com
www.bengalcommerce.com
www.sonarmarketplace.com
www.upoharbd.com
www.bdgift.com
www.cellbazaar.com
www.bikroy.com

Future in Bangladesh in E-Commerce:

Now a day’s use of technology in each and every sector has been very common. . In this era of
globalization we can hardly find any sector operating without using technology. So there is no
doubt and it is quite natural that business world will also use technology effectively as well as
efficiently and take the greatest advantage which is offered by technology. Internet is one of the
largest blessings of technology, which enables people from the distant parts or county to interact
or communicate easily. It has made the whole globe a single village. A new horizon has been
opened up for trade and commerce, namely electronic commerce (e-commerce) by none other
than one and only internet. E-commerce entails the use of the Internet In the marketing,
identification, payment and delivery of goods and services all are done by e-commerce using
internet. This paper highlights the future of e-commerce and constraints to e-commerce
development in Bangladesh. Here the challenges in implementing e-commerce in Bangladesh are
discussed.
To discover the future of e-commerce in Bangladesh, we must have a clear idea about what e-
commerce is currently there is some field where e-commerce is running successfully in
Bangladesh. Although this sectors are operating in our country in very limited operations due to
the lacks of adequate customer still it has many potentials to be pervasive. Anyway the sectors
are: 1. Online banking, Hotel booking, Airline ticket booking, Readymade garments, Oil and Gas
Sector.
After all we will use it properly after few years in Bangladesh.
Summary
A key reason why e-commerce, especially the business-to-business segment, is growing so
quickly is its significant impact on costs associated with inventories, sales execution,
procurement, intangibles like banking, and distribution costs. If these reductions become
pervasive, e-commerce has the potential to be the application that ushers in the large productivity
gains. Achieving these gains is therefore contingent on a number of factors, including access to
e-commerce systems and the needed skills. However, what is unique about ecommerce over the
Internet and the efficiency gains is that it promises the premium placed on openness. To reap the
potential cost savings fully, firms must be willing to open up their internal systems to suppliers
and customers. This raises policy issues concerning security and potential anti-competitive
effects as firms integrate their operations more closely.

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