Regaining customers' trust will be the major challenge for Bangladesh's e-commerce sector in this new year of 2022.

Most of the outgoing year was marred with scams and controversies, leaving thousands in uncertainty over the recovery of thousands of crores of taka.

It stalled the substantial growth achieved by the sector, which even went well over 50 per cent amidst the pandemic, over the last couple of years.

Stakeholders said widespread mistrust was now making it difficult for online platforms to acquire new customers.

People are increasingly opting for the cash on delivery option, undercutting the country's efforts to bolster digital transactions and go cashless, they said.

"Our main challenge in 2022 is to gain customers' trust," Waseem Alim, CEO of local online grocery store Chaldal, told The Daily Star.

"The failure of some platforms to honour commitments has now stalled growth significantly. So, we have to maintain our commitment to gain the trust," he said.

Commitment here refers to delivering exactly the same products shown to customers on websites, making deliveries on time and putting a stop to the malpractice of not delivering products against advance payments, he added.

The e-commerce sector went through turbulent times since the beginning of 2021.

An increasing number of Evaly customers started filing complaints with the Directorate of National Consumers Right Protection (DNCRP), saying they were not getting products despite making payments months back.

However, the grave scenario of the sector started to surface when a Bangladesh Bank inspection, conducted at the commerce ministry's request, came to the fore in the middle of the year.

It found Evaly's liability to customers and merchants to be manifold compared to its assets.

Afterwards, scams started to unfold one after another involving platforms E-orange, Qcoom, Dhamaka, Aladinerprodip, Sirajganj Shop, Alesha Mart, Dalal Plus, etc.

All of the platforms emulated Evaly's business model -- luring customers with hefty discounts, sometimes even more than 50 per cent, to make advance payments.

Now, thousands of customers are in uncertainty over whether they would ever get their money back.

As for platforms that had built up a good reputation over the years with sound business practices, availing growth is now an uphill battle.

"The impact of the damage that was done in 2021 in e-commerce will linger this year. If honesty, integrity and a healthy environment can be ensured in the market, the platforms will recover," said AKM Fahim Mashroor, CEO of AjkerDeal.

He said the mistrust has fuelled the use of the cash on delivery option, which now accounts for more than 90 per cent of payments, shooting up from 70 per cent in the first half of 2021.

Card transactions for e-commerce purchases have also gone down, standing at less than Tk 800 crore per month in July, August, September and October whereas it was Tk 1,277 crore in June and Tk 1,183 crore in May.

The higher growth seen in 2020 and 2021 was partially artificial as many scammers had duped customers with the discount trap, said Mashroor.

According to him, Facebook-based commerce, or F-commerce, will undergo further massive expansions in the future for one key characteristic – the buyer and the seller are connecting directly and getting to know each other builds trust and reduces scopes for fraudulence.

Mashroor, one of the pioneers of the digital business who has been vocal against the discount trap, suggests that the government provide policy support for the sector's revival.

One major policy support could be the withdrawal of a 5 per cent VAT on online purchases.

According to his calculation, about Tk 100 is payable in the form of advance income tax, purchase VAT and another VAT on logistic service expenditure on every Tk 1,000-worth products purchased online.

RETURNING MONEY AND REGULATORY MEASURES

Amidst the outcry of customers and criticism over state agencies' inaction, the government initiated a crackdown on the second half of the year.

It started with the arresting of E-orange owners Sonia Mahzabin and her husband in August for allegedly embezzling Tk 1,100 crore of customers.

Rapid Action Battalion arrested Mohammad Rassel, CEO of Evaly, and his wife, Shamima Nasrin, the chairman, in mid-September. In early October, Qcoom owner Ripon Mia was also held by police.

Government agencies also took some regulatory steps.

On July 4, the commerce ministry issued the Digital Commerce Operation Guidelines, 2021.

It stipulates, among other things, that if the online platform and delivery destination are within the same city, the handover must be made within five days.

The government is also set to begin registering e-commerce and F-commerce firms within a month, providing a unique number to e-commerce platforms, according to AHM Shafiquzzaman, chief of the new Digital Commerce Cell opened by the ministry.

On the return of customers' money, he said a few thousand Qcoom customers, whose advance payments were stuck with payment gateway Foster, would get their money back in January.

"We sat with Foster and Qcoom officials (last week). We found that Tk 397 crore of Qcoom customers' money is stuck with Foster," said Shafiquzzaman, also an additional commerce secretary to the ministry.

Of the amount, Tk 100 crore-worth products have already been received by customers, meaning Qcoom will get that payment, and the rest will be handed over to customers within a few weeks.

On the issue of Evaly customers, he said it would be taken care of by a body formed by the High Court.

"We will try to settle every case, but after solving one platform's problem, we will take up another."

To build up the confidence, work has been progressing over enacting a legal framework.

However, industry people believe enforcement of existing laws and proper vigilance by regulatory authorities alone would be able to prevent potential scams.

"No new law is needed as we think it would jeopardise the growth of the industry. If the DNCRP is strengthened, it will be able to prevent future fraudulence in the sector," said Mashroor.