MACRO MIRROR: Addressing the accountability challenge of e-commerce

In recent years, Bangladesh has seen a rise in electronic commerce along with other countries around the world. Many young entrepreneurs have come up with various digital products and services for customers. The availability of the internet and convenience in terms of saving time spent in traffic have helped this growth. However, the sector is yet to reach its full potential. Several challenges hinder its further expansion. Given the significance of the sector both in terms of business potential, employment generation and customer service, the Centre for Policy Dialogue (CPD) organised a webinar on Digital Platform Economy in Bangladesh recently. The keynote presentation and experts highlighted how the e-commerce sector can be expanded to serve more customers and also detailed which policy supports are needed for it to become an efficient sector.

A couple of days before the CPD webinar, the e-commerce sector in Bangladesh came to the limelight in connection with a huge scam of certain e-commerce ventures. Customers paid advances but the companies failed to deliver their products and refund their payments. Even before this revelation, there were red flags regarding the integrity of some online businesses which have been conducting e-commerce. The quality and price of products, delay in delivery of products to customers, difficulty in returning products, risk of not getting refunds, and overall quality of customer service have been the common complaints against a number of companies. The most talked-about company among the lot seemed to have performed every trick to cheat its customers and siphoned off a large amount of money by not refunding customers’ advance payments, even though they failed to deliver goods for a long time.

This whole episode of huge fraud by a widely promoted e-commerce platform even by some of the country’s respected media has shaken not only the integrity of the company itself, but also of those which have been advertising the services of the company. Of course, in a welcome move, a reputed financial transaction company has immediately disassociated itself with this fraudulent e-commerce platform.

At a time when there is a growing demand for e-commerce in Bangladesh, such irregular practice has destroyed the trust of consumers greatly. E-commerce is performed between businesses and customers based solely on trust as there is no face-to-face interaction between them. Customers rely on the e-commerce entities and pay for whatever product is displayed on the screen. Once the trust is gone, the sector will lose its customers. Retrieving the trust will require a lot of hard work and dedication. Even many large global e-commerce establishments have failed to survive once their reputation was at stake.

Of course, in our country there is a section of people who wants to thrive using only unfair means. Unfortunately, this number is increasing every day and not just in the e-commerce sector. The financial sector is another example where incidences of even bigger irregularities are unearthed regularly. The number of wilful bank defaulters is increasing. Additionally, dealing with occurrences when people are taking out money from banks and non-bank financial institutions through deceitful ways is also a major challenge for the financial sector. One of the reasons for irregularities with public money is that wrongdoers are rarely punished as they have connections with powerful people. Besides, these new rich with ill-gotten money are adored by society. A section of our society appreciates their wealth, gives them special attention and tries to follow their path in order to earn a luxurious lifestyle just like them. The definition of success to them is to possess wealth by any means and to flaunt the illegal wealth shamelessly.

The case of e-commerce is of course different from other established sectors. This is a new sector in Bangladesh. Regardless, during the ongoing Covid-19 pandemic the e-commerce sector has flourished significantly. Sales through digital platforms increased by 70 percent in 2020 compared to the previous year, according to the e-Commerce Association of Bangladesh. But the size of the sector is still small. Besides, if one goes by the strict definition of “e-commerce”, many businesses will not qualify to be e-commerce entities at all. It is not only about having a license to operate the business. The e-commerce company should also have proper policies about shipping, delivery, returns and refunds. Full disclosure on the product and also on the company about its assets and liabilities is a must. Besides, privacy policy on customer information is also an essential requirement for conducting e-commerce. Since many e-commerce companies do not fulfil these pre-conditions, the customers are being deprived of having value for their money and even being cheated by not receiving either the product or a refund.

The absence of a regulatory framework for the e-commerce sector has helped dishonest people to take the opportunity and commit fraud. Many digital commerce operators do not have license or a Tax Identification Number. Recently, the Ministry of Commerce has launched Digital Commerce Operations Guidelines 2021. The guideline instructs that the maximum number of days for the delivery of products will be five days once an advance payment is made by the customer. There are also details on when a company would hand over the ordered product for delivery and what will be the penalty if products are not delivered on time. It also instructs companies to inform customers about order updates through mobile text messages, emails or telephone calls. In case of failure to comply with the guidelines, the government can close down the company. Consumers can also lodge complaints with the Consumer Rights Protection Department and relevant courts.

Though experts have pointed out that the guidelines should have more details on consumer rights and business policies for the sector, the commerce minister reassured that this would be amended and improved if needed. In fact, this guideline is a first step towards formal measures by policymakers. If these guidelines are implemented, it will help improve the transparency and accountability of the mushrooming e-commerce operators by a large extent. But policies and guidelines cannot be static, their implementation has to be a dynamic process. With an evolving scenario, policies have to be changed and modified. So, this is a starting point and while applying these policies, the loopholes will become evident. Policymakers should have an open mind to work on e-commerce policies further to remove their limitations. Without a holistic e-commerce framework that ensures highest governance practices, the confidence of consumers cannot be regained easily.

The other requirement is the improvement of digital and physical infrastructure and skills. Though the number of digital commerce operators is increasing fast, the demand for e-commerce is growing faster since the population is large in Bangladesh. The existing infrastructure is not capable of meeting consumer demand. Acceleration of internet access and faster internet speed will be useful for enhancing the services. Besides, small and new e-commerce companies need financial and fiscal incentives. Companies also lack adequately skilled human resources. Complying with workers’ rights is also an issue in case of e-commerce.

Increasing customer literacy on digital business is also very important. Due to lack of awareness, customers fall prey to the businesses’ tricks which ultimately leave them in distress. Consumer rights associations and media can help such consumers by providing regular information on which companies they should be careful of and how to protect themselves from being cheated.

Finally, we will certainly see further acceleration of digital commerce in the future. It will have impact on governments, industries and consumers as it will unleash new ways of conducting business and providing services. How much we can benefit from this transformation will depend on how we prepare ourselves for its challenges.

Dr Fahmida Khatun is the Executive Director at the Centre for Policy Dialogue.