Virtual apparel marketplaces have potential for additional $500m exports: Study

Bangladesh has the potential to achieve another $500 million in apparel exports to the US, the European Union, and African region through virtual marketplaces by 2027, according to a new study.

To tap this potential, the country may create a virtual market platform by this time, said Dipa Sultana, senior business consultant and project manager at LightCastle.

She made the observation while presenting the findings of the study titled "Establishing a Virtual Marketplace for Bangladeshi Apparels" during a press conference at the office of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in Uttara on Thursday.

The International Finance Corporation (IFC) conducted the study in collaboration with LightCastle, a consulting firm, for the BGMEA.

Dipa Sultana said Bangladesh also has the potential to export $308 million to these markets through a virtual marketplace by 2026.

The study said about one-third of total apparel sales in the EU and the US are estimated to shift to online channels by 2027.

Bangladesh can gain 0.20% of the USA, 0.10% of the EU, and 0.75% of the African virtual apparel markets, whose worth will be $489 million by 2027, according to the study.

Dipa Sultana said the virtual marketplace will reduce the lead time and the cost of business and simplify business procedures in international trade.

The number of middlemen in the trade will also be reduced, which will ultimately make the business more competitive, she added.

She mentioned that there will be international warehouses near the destinations.

BGMEA President Faruque Hassan said in virtual marketplaces, local garment suppliers can sell their goods to wholesalers, retailers, brands, and even end consumers directly, which will ultimately help to get more prices as the middlemen will not be in place to take away a portion of the business.

Currently, Amazon and Alibaba are doing this business – as these companies have their own virtual marketplaces – and supply goods to their customers sourced from Bangladesh, he said.

Faruque Hassan sought policy support for establishing international e-commerce for such virtual marketplaces by the local entrepreneurs so the country could gain a significant portion of global business.

Because the future of the business, not only in garments but also in cases of other products, is virtual online business platforms, he said.

To tap this potential, the industry will need some changes in customs rules; otherwise, one will be able to directly export any small quantity to any foreign customer.

Talking with TBS, Shovon Islam, chairman of the BGMEA's Standing Committee on Press and Publicity, said, "Through virtual marketplaces, we want to target small brands and small sellers as business-to-business (B2B), those who are currently staying out of our range or doing through buying houses; it will reduce their cost and bring benefits for exporters as well.

"If we can export $10 million worth of apparel initially, it will not take time to grow to $2 billion."

The study was an initial step towards the virtual market, and it will need at least another year of serious work, said Shovon Islam, who also worked for Hewlett-Packard (HP) for about 20 years and worked at Microsoft as a software architect and chief technology officer.

"If we want to target the end consumer (B2C), that will require a lot of investment," he said, adding that setting up a virtual marketplace could be like a subsidiary entity of BGMEA, similar to the BGMEA University.

At that time, financial support may come from the World Bank, IFC, JICA, or venture capital investors, he added.

In the fiscal 2022-23, Bangladesh exported garment items worth $46.99 billion, according to data from the Export Promotion Bureau.