The Biggest Pitfall of e-Commerce in South Asia

Amazon Delivery Robots e-Commerce

The e-Commerce wave is moving fast in the South Asian region. We are seeing billion-dollar companies and lots of funding in seed-stage startups in this continent. Giants like Alibaba are investing in the e-commerce market. E-commerce sites are moving from web presence to mobile. Every commodity is moving online. Unlike India and Pakistan, other regions of this belt (ex: Nepal, Bangladesh, Myanmar, Cambodia) are experiencing the tip of the iceberg now. E-commerce was there a couple of years back, but now the entrance of MNC’s is creating competition with existing local players as well as building the market faster than the local ones resulting increase in order and delivery response rate.

As a profession & enthusiast of e-commerce and technology venture, I was very keen to observe the rise of internet ventures in Bangladesh from the beginning. Later on, when I started my career in e-commerce, my job was to build an online marketplace from the scratch, where similar models were not present in Bangladesh (except classifieds and online stores) at that time. We have faced tremendous challenges dealing with the mindset of sellers, buyers and competition and market situation.

No one believed that shoes can be sold very well via an online marketplace. But we changed the perception of both seller and buyer by taking the challenge that led to a very successful order rate and the entrance of big local and foreign brands as my client. But that’s another story. I would like to point out the biggest problem the e-Commerce players are facing in South Asia right now. Can you guess what this is?

It’s not an online payment gateway and access to credit cards. It’s not a widespread wifi network throughout the country. It’s not a fake customer order or high operation and marketing cost.

It’s delivery.

Cash on delivery changed the avenue of shipment method in India and Pakistan and it still accounts for 95% of delivery for online stores. I am not just explaining it from the experience collected from Bangladesh. But also from the similar experience gained through my conversation with colleagues and friends in Nepal, Myanmar, and other neighboring countries.

In the beginning, we tried to deal with more than five third-party delivery provider including a multinational one. Every one of them failed miserably to meet our customer’s expectations over the months, regardless of our continuous help. For example, a highly populated country like Bangladesh, where road infrastructure is not so good and traffic is a big concern. It’s very tough to complete same-day delivery with a large number of orders each day. As everything is kind of centralized with capital Dhaka. Sellers have less confidence to send products via cash on delivery to outside of capital without advance payment resulting in more canceled orders.

e-Commerce traffic Dhaka
Dhaka Traffic | Picture: Dhaka Tribune

The buyer may choose a mobile payment system offered by the Telco and banks, but still, cash on the delivery system is ruling over them. Customers are still not so savvy ordering products just by seeing pictures, rather they would want to check it first. At the same time, sellers also prefer cash on delivery as it’s the most convenient method for closing orders and increase customer satisfaction.

On-demand delivery has big potential. But without a structured delivery system presented in multiple cities, it’s not even feasible for a nationwide courier service to cater to everyone with the on-demand model. A popular but catchy grapevine about online store delivery in Myanmar that I heard from my colleagues is, sometimes they try to deal with local drug dealers to know the best possible route of delivery for their products. In Nepal, most of the deliveries are in Kathmandu city, not in other areas due to hilly roads and fewer orders. In Bangladesh, a small road accident may cause huge traffic on highways for 2 – 3 days. In Sri Lanka, it’s much better. But Colombo is still the primary focus.

That is why multinational internet venture Rocket Internet started their own delivery service dedicated to their e-commerce ventures in Bangladesh and it will soon roll out in other countries. They have great success stories from their operation in Africa, where infrastructure is much worse in some cases.

Innovative ideas like drop points, custom packaging, same day pickup, and delivery, teaching sellers about custom invoicing and good customer service practice are some of the initiatives and examples of their delivery service. Currently, the leading online marketplace in Bangladesh named Daraz (a venture of Rocket Internet) is showing positive growth among other e-Commerce ventures in this area.

To cater to their ever-growing needs, the German Internet venture conglomerate established their own delivery support and with the help of industry experts, similar market experience, and operational excellence, they are cracking one of the biggest problems of e-Commerce roll out in this region.

Apart from that, some local players are also establishing delivery companies to support local eCommerce players. Such as Pathao, eCourier, Biddyut, Go Fetch (updated, 2017)

e-Commerce delivery pathao
Pathao Delivery in Bangladesh
e-Commerce delivery Go Fetch
Go Fetch Delivery in Bangladesh

As I have mentioned before, it’s just the tip of the iceberg. The customer mindset and perception is changing blazing fast and there’s no way this tsunami will stop in the upcoming future. After all, it’s solving the other big problem of the everyday life of general people. Getting their desired product within a very short time with replacing option, where they do not have to deal with intense traffic and time-killing travel. Social media is fueling the growth of online purchases like never before and it won’t stop till it reaches the peak. (You know what? it will rise even after that).

The article was originally published at Tech in Asia on September 10, 2015, and featured in and later featured at Business Standard. Some points are modified based on the present scenario. For more e-commerce article, visit here.