In the guise of rules, let’s not kill the golden goose

 

First published on 9 Oct, 2021 in the Daily Star

Local e-commerce platforms have experienced exponential growth in recent years, with changes in people's living standards and shopping behavior. According to the E-Commerce Association of Bangladesh (ECAB), the e-commerce sector in Bangladesh has experienced an approximate 100% growth in 2016-19. The fast rate of internet adoption, improvement in logistics communication, and the continuous improvement in online banking & mobile financial services (MFS) have played crucial roles in this tremendous growth of the e-commerce sector. Also, the rise in the tech-adaptable young population (over 50% population are under 35 years) and the increasing rate of Middle and Affluent Class (MAC) populations (10% per year) has fueled the growth of this sector. However, the COVID-19 breakout has dramatically paced the growth of this industry. While the implementation of lockdown one after another caused a lot of damage to almost all other businesses, the e-commerce sector expanded incredibly than ever. According to the official reports of E-CAB and statements of industry insiders, sales in e-commerce platforms rose by about 70% in 2020, and the market size of this industry stood at nearly $2 billion as of August 2020, which was only $0.654 billion in 2016.

With the steady growth of e-commerce platforms, we have seen the rise of numerous complaints and irregularities against them. According to the reports of several law enforcement agencies, between Jan 2016-Aug, 2021, about 20,000 complaints have been lodged with the National Directorate of Consumer Protection. There has been a common complaint of not delivering the products on time against various e-commerce platforms even after taking the money. However, these irregularities and complaints have called into question the progress of this sector. At the same time, questions can arise about the role and effectiveness of the relevant regulatory bodies. Although for quite some time there were different speculations over the business model, transparency, and suspicious way of doing business against various e-commerce companies, we have seen the absence of a proactive role among the regulators.
The traditional role of concealing the faults by the concerned authorities has been seen in this e-commerce incident, as commonly observed among them after any occurrence. Now, after various controversies related to this sector have come to the surface, regulators have become busy with catching flaws in the existing law & system. There has also been observed a tendency to accuse victim customers and the media houses in this matter. Undoubtedly, the consumers and media houses have enough responsibility for the recent scams. At the same time, the authority can't also deny liability for their mismanagement and lack of collaboration among regulatory agencies.

It is unimaginable to think that a sector to achieve a market size of $3 billion by 2023 had been operating without any specific operating guidelines for quite a long time. Although there was a digital trade policy passed in 2018 by the National Assembly, there were no guidelines for the e-commerce sites. Last year, when complaints started to emerge against numerous e-commerce companies, the lack of proper e-commerce guidelines sparked much discussion. In July 2021, the authority issued the Digital Commerce Operation Guidelines amidst the uproar of misconduct and consumer rights violations by several e-commerce sites. Efforts have been made by adding numerous rules to the guidelines to stabilize the sector. Under the guidelines, there are proper instructions for the delivery, pricing, and showcasing of products. Following the guidelines, Bangladesh Bank has already started applying the escrow service where Bangladesh Bank acts as a third party by receiving the payment against the transaction and transferring it to the selling party after the delivery of the product. However, this service also has been blamed for to delay in clearing the payments due to the manual method to verify the receipts. Nevertheless, the introduction of these operating guidelines to some extent has undoubtedly brought the mismanaged e-commerce sector into some control. However, the damage has already been done.

After embezzlement and irregularities against various e-commerce sites come out to the public, numerous cases have been filed for reimbursement by the aggrieved customers. We have heard of recommendations and amendments to numerous existing laws to bring discipline to the sector. Authority is carrying out investigations related to suspicious transactions and has formed a 16 members panel for the proper recommendations of measures. Through well-thinking implementations, these recommendations will undoubtedly help to establish a properly regulated e-commerce sector.
Alongside, there is a need to ensure the growth of the e-commerce sector not be hampered by these regulations. Standing on the brink of LDC graduation and demographic dividend, Bangladesh is going through several problems of which unemployment is an important issue. The e-commerce sector has the potential to create a significant number of jobs to overcome this challenge. E-Cab estimates the creation of 100,000 new jobs in the e-commerce sector during the lockdowns of the pandemic, and by the next 3-4 years, there will be 500,000 jobs in this sector. Again, many women and young entrepreneurs are becoming self-reliant through trading their products on Facebook. There are around 0.1 million Facebook-based digital shops. However, the number will keep increasing in the upcoming days.

The recent turmoil in the e-commerce sector is not a sudden one. Many experts were predicting this kind of consequence and had also warned general people regarding it. However, no one paid heed to them. As a result, the alleged companies have exploited the loopholes of the system. At the same time, the regulatory authorities have failed to take timely action. Recent events have shaken the confidence of consumers in e-commerce companies. Hence, regaining the consumers’ confidence should be the topmost priority which requires ensuring a properly functioning e-commerce sector. Passing new rules or forming a new authority is worthless as long as they are implemented. Cooperation among the different bodies such as the Ministry of Commerce, Bangladesh Bank, e-CAB, and the law enforcement agencies is a must for the implementation of guidelines and rules. Alongside, the authority needs to focus on faster clearance of the payment through escrow service by incorporating advanced tools of checking invoices. Finally, Consumers also need to be more cautious about proceeding to the unrealistic lucrative deals offered by e-commerce companies. Hopefully, the collective efforts from all the stakeholders will not let the prospects of this burgeoning sector vanish. 

This article was co-authored by Md Gias Uddin Khan who is an Associate professor of the Department of Economics at SUST.