How Evaly, Dhamaka, Eorange hurt the e-commerce sector

Bangladeshi e-commerce customers have come through two options over the last two years – no or a decent discount and product delivery within the same week, or, up to insane 50% discount and delivery after months.

Naturally, an increasing number of customers were rushing for the second one, and that hurt the growth of the first group of regular e-commerce sites who finance any discount out of their own money instead of burning advances from customers.

Most of the regular e-commerce sites faced one-fourth to one-third drop in sales during the rise of errant platforms including Evaly, Dhamaka and Eorange as their unusual discounts attracted too many customers, said AKM Fahim Mashroor, a tech entrepreneur who founded e-commerce platform Ajkerdeal much before the rise of Evaly and suffered sales losses later.

"That was the short term impact, which is manageable in the long run," he said, "The long term impact of the rise and apparent fall of the errant sites is worse – the trauma of the people, a dent on the confidence on e-commerce."

The set of our core customers, mostly the early adopters, have been sticking to their purchases from regular e-commerce platforms and they still are, he said.

But, new customers, whom the industry needs most to grow up to its potential, seem to be shaky seeing all the bad news regarding e-commerce because of Evaly, Dhamaka and Eorange.

"Creating new customers is going to be tougher now as customers' confidence to order online has been hurt," he feels, "We need awareness campaigns communicating the difference between bona fide e-commerce and errant platforms in the name of e-commerce."

Both good and bad e-commerce sites emerged amid no significant compliance obligation, but now there have come a set of tough regulations and that is an additional pressure on the good sites.

For example, Mashroor said, gateway's payment clearing after delivery is taking an additional time, regardless of whether the e-commerce is practicing a regular model or a deep-discount, delayed-delivery model.

To get paid in time, most e-commerce platforms are inspiring cash on delivery and it is increasing their costs as customers are returning up to one-third of the products in such orders, while the return rate is not even 10% for prepaid orders.

His company, having early stage foreign investment which demands compliances and a great deal of due diligence, is also a victim of the recent confidence dent on e-commerce.

WaseemAlim, co-founder and CEO of Chaldal, the pioneering grocery e-commerce, said grocery segment was not hurt much as customers prefer on time delivery and quality. But overall errant platforms distorted the e-commerce sector, he added.

"After many people's bad experience in online shopping, it will be difficult for us to convert new people to shop online."

He, however, said the recent course of events has not left any impact on their existing customers.

He opined that Ecab should be working on awareness building to let people know that the problem platforms are not the real face of e-commerce by any means.

"We need something for that, but no strategy is in place," he said.

How to overcome 

The confidence dent makes sense as people are reading negative headlines almost every day and the industry needs to overcome the negativities, said Abdul WahedTomal, Abdul WahedTomal, secretary general of the E-commerce Association of Bangladesh.

To restore the confidence of people, the industry needs each of its players to be fully compliant with the regulations and the recently set standards of operational procedure, he added.

Syed Almas Kabir, president of the Bangladesh Association of Software and Information Services (BASIS), said, "We all have something to learn from the mistakes committed in the e-commerce sector and the industry must grow from there."

The Bangladesh e-commerce market has grown to an annual size of around Tk20,000crore now and is expected to grow by three times in next three years, he mentioned, adding, "But for that the justice for the suffering customers and merchants of the errant platforms must be ensured alongside making sure no one is able to burn or embezzle customers money."

A central IT system among all the regulators and stakeholders that would ensure real time surveillance and the use of artificial intelligence to rapidly address any irregularity within any platform company is an urgent need for the sector and that should be led by an effective professional cell of the commerce ministry, he opined.

The government should allow the companies like Evaly to run their business under full compliances regardless of their founders' fate for the sake of the stuck customers and merchants.

Since they (platforms like Evaly) have had a large customer and merchant base, a restructured version of the platforms with full compliances under strong supervision may generate revenues and even profits which may be used to pay back the customers and merchants to some extent.   

The industry and the government offices concerned are working together to develop the ecommerce ecosystem to ensure the last mile delivery across the country in a shortest possible time, said Ecab Vice President Shahab Uddin. 

"The offered conveniences of e-commerce must win over some discount hypes in the long run and I am sure the full potential of the sector will be harnessed in coming years," he said, stressing the need for working to build an efficient, reliable e-commerce ecosystem.

Evaly with at least Tk500 crore payable to customers and merchants, Dhamaka Shopping with several hundred crore and Eorange with an even bigger amount are on the verge of collapse, leaving hundreds of thousands victimised.

Founders of Evaly and Eorange are under trial now, while Dhamaka's mastermind has fled to his second home in the USA.