Chapter -08
Concept of E-Commerce
Electronic Commerce (E-Commerce) refers to all forms of business transactions conducted
over an electronic network, primarily the Internet. It includes the exchange of goods,
services, information, and payments between different parties—whether businesses,
consumers, or government entities—through digital platforms.
It covers not only buying and selling but also marketing, customer service, supply chain
management, and electronic data interchange (EDI).
Evaluation of E-Commerce Growth
Initially, E-commerce was limited to simple online retailing and information exchange,
where companies used websites mainly to display products and contact details.
However, with the rapid development of information and communication technology (ICT),
especially after the widespread use of the Internet, smart phones, and digital payment
systems, E-commerce has evolved into a multi-dimensional ecosystem. It now includes
online marketplaces, mobile apps, digital banking, and even AI-based personalized
shopping experiences.
In Bangladesh, the E-commerce industry began in the early 2000s, but growth was slow
due to poor Internet access and lack of digital literacy. From 2010 onwards, the sector grew
rapidly with improvements in mobile Internet connectivity and the rise of mobile financial
services (MFS) such as bKash, Nagad, and Rocket.
COVID-19 further accelerated online shopping behavior, leading to the expansion of
platforms like Daraz, Chaldal, and Foodpanda.
Advantages of E-Commerce
1. Convenience: Customers can shop from anywhere at any time without visiting a
physical store. It offers 24/7 accessibility.
2. Cost Reduction: Online businesses require less physical infrastructure and staff,
reducing overhead and operational costs.
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3. Global Reach: A local business can reach international customers easily through
digital platforms and online marketing.
4. Faster Transactions: Orders, payments, and deliveries can be processed instantly
through secure online systems.
5. Customization and Personalization: Businesses can use data analytics to study
customer preferences and offer personalized recommendations.
6. Better Inventory Management: Automation and real-time data help track stock
levels, reducing overstocking or shortages.
7. Increased Market Efficiency: E-commerce eliminates middlemen, ensuring better
pricing and direct communication between sellers and buyers.
8. Enhanced Customer Feedback and Loyalty: Online reviews, social media
interaction, and digital support systems improve brand trust and loyalty.
Traditional vs. Electronic Business
Electronic Business (E-
Aspect Traditional Business
Business / E-Commerce)
Global accessibility through the
Market Access Limited to local or regional area
Internet
Operation Hours Fixed (e.g., 9 AM–9 PM) 24/7 availability
Lower infrastructure and
Cost High fixed and operating costs
transaction costs
Customer Virtual/Online via chat, email, or
Face-to-face
Interaction social media
Digital payments, cards, mobile
Payment System Cash or cheque-based
banking, etc.
Automated and real-time
Inventory Manual tracking
monitoring
Speed of
Time-consuming Instant and efficient
Transactions
Traditional advertising (TV, Digital marketing, SEO, and social
Marketing
print) media campaigns
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IT Issues in Business
While Information Technology (IT) is the backbone of E-commerce, it also introduces
several technical and security challenges.
1. Cyber security Threats: E-commerce platforms are vulnerable to hacking,
phishing, and data breaches. Protecting sensitive information like credit card details
and passwords is critical.
2. Privacy Concerns: Businesses must ensure the protection of customers’ personal
and financial data in compliance with data protection laws.
3. System Reliability: Technical problems such as server downtime, website crashes,
or slow loading can lead to customer dissatisfaction and financial losses.
4. Digital Payment Risks: Online frauds, unauthorized transactions, and weak
payment gateways can harm business credibility.
5. Integration Challenges: Integrating various systems (e.g., website, inventory
management, ERP, and CRM software) can be complex and costly.
6. Legal and Ethical Issues: E-commerce must comply with IT laws, cybercrime
prevention laws, electronic contract laws, and consumer protection regulations.
7. Technology Obsolescence: Rapid changes in technology require continuous
upgrading of software, servers, and security systems.
Online Business Models
E-commerce operates through different business models depending on the parties
involved:
B2C (Business-to-Consumer): Direct selling of goods or services to consumers.
Example: Amazon, Daraz, Pickaboo, Chaldal.
B2B (Business-to-Business): Transactions between businesses such as wholesalers and
retailers. Example: [Link], Indiamart.
C2C (Consumer-to-Consumer): Online platforms that allow individuals to sell directly to
others. Example: eBay, [Link].
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C2B (Consumer-to-Business): Individuals offer products or services to companies.
Example: Freelancing on Fiverr, Upwork.
G2C (Government-to-Citizen): Government services provided online to citizens.
Example: Online utility bill payments, tax filing systems.
Application of E-Commerce in the Context of Bangladesh
E-commerce has become a key driver of digital transformation in Bangladesh across
multiple sectors:
a) Retail Sector: Platforms like Daraz, AjkerDeal, and Pickaboo provide nationwide
product delivery. Chaldal specializes in online grocery shopping with same-day delivery in
major cities.
b) Food and Grocery Delivery: Foodpanda, HungryNaki, and Pathao Food revolutionized
food ordering and delivery services.
c) Banking and Finance: Widespread adoption of mobile financial services (MFS) such as
bKash, Nagad, Rocket, and Upay has enabled secure cashless transactions.
d) Education Sector: Platforms like 10 Minute School and Bohubrihi provide online
learning, exam preparation, and professional skill courses.
e) Government Services: E-Governance initiatives enable citizens to pay taxes, register
births, and apply for land documents online.
f) Rural Commerce: Thousands of entrepreneurs use Facebook pages and messenger
commerce to sell clothing, handicrafts, and homemade food across the country.
Challenges Facing E-Commerce in Bangladesh
1. Lack of trust due to past scams and frauds.
2. Poor logistics and delayed delivery services.
3. Limited Internet access in rural and remote areas.
4. Weak legal framework for online dispute resolution.
5. Cyber security concerns and lack of digital literacy.
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E-Commerce-Based Business Ideas (Bangladesh Context)
1. Online Grocery Delivery Platform: An app-based service offering fresh produce,
dairy, and essentials with same-day delivery in urban areas.
2. Digital Handicraft Marketplace: An online platform connecting rural artisans to
domestic and global buyers to promote local products and cultural crafts.
3. Online Pharmacy: Provides doorstep delivery of medicines, health products, and
doctor consultation services through verified prescriptions.
4. Freelance Service Portal: A local version of Upwork, connecting Bangladeshi
freelancers to local businesses for short-term projects.
5. E-Learning Platform: Offers affordable academic and professional training courses
in Bengali, focusing on skill development and exam preparation.
6. Online Bookstore: Specializes in academic textbooks, research materials, and e-
books for university and college students.
7. Fashion and Boutique Store: Sells locally made clothing, jewelry, and accessories,
integrating virtual fitting and home delivery.
8. Event Management Platform: Provides booking for event planners, decorators,
and catering services through a digital platform.
9. Used Electronics Marketplace: A secure digital marketplace for buying and selling
used phones, laptops, and gadgets with verified sellers.
10. Online Agriculture Supply Chain: Connects farmers directly with consumers or
wholesalers, ensuring fair pricing, transparency, and reduced middlemen.
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