24pc of female online entrepreneurs shut businesses in June: study

Though the online sales of health products and daily essentials were booming due to Covid-19, the ongoing pandemic has taken a heavy toll on online retailers of fashion, cosmetics, and other imported products, says a recent study.

Of those trying to reduce the losses of revenue by cancelling orders and selling off their stocks since April, 24 percent of them eventually had to shut their businesses in June.

The study by the Brac Institute of Governance and Development (BIGD) at Brac University was first conducted in April and then followed in May-June, Mehnaz Rabbani, programme lead (Research, Policy, and Governance) at BIGD, said while presenting the findings during a webinar today.

With lower startup costs and a broader reach, a growing number of entrepreneurs in Bangladesh had turned to the online retail market in recent times.

A large percentage of these entrepreneurs are female who operate their businesses through social media like Facebook.

These online businesses usually see a rise in their sales on special occasions, such as Eid and Pahela Baishakh.

But this time around, as both the events were observed under a nationwide closure due to the pandemic, 79-84 percent of the entrepreneurs experienced lower revenue earnings than last year's Eid and Pahela Baishakh.

Though the impact of this decline in revenue has been nothing short on female entrepreneurs who rely on their online businesses as the only source of income, it also has knock-on effects on those employed in these businesses.

The study found that within one month after the first round of survey, 121 employees were laid off. If things do not improve for these businesses, the study apprehends that nearly 550 more people's jobs could be at stake within the next seven months.

However, a greater number of entrepreneurs now, in fact, do believe that their businesses will improve.

The study findings show that the percentage of entrepreneurs who are confident that their businesses will bounce back has increased from 15 percent in April to 21 percent in June.

There has also been a decline in uncertainty with regard to overcoming this shock from 30 percent to 18 percent.

With this overall increase in confidence level, nearly half of the entrepreneurs now believe that it will take them from six months to nearly a year to recover from the losses they suffered.

Meanwhile, these resilient entrepreneurs, most of them being female, are still practising the same coping mechanisms they had adopted in April, such as cancelling orders, giving discounts, laying off employees, or remaining the same.

According to the study, though fewer orders have been cancelled in June compared to April, there has been an increase in the percentage of entrepreneurs who were giving discounts -- from about 13 percent in April to 33 percent in June.

Besides, with a nearly 4 percent increase since April, about 14 percent of the businesses are also laying off their employees.

The alarming rise in these desperate coping mechanisms illustrate the scarcity of resources needed to sustain these online businesses.

With over 65 percent of these businesses having no formal registration or a trade license, they remain ineligible for the government's stimulus package.

This has forced over 68 percent of the entrepreneurs to rely on their personal savings and about 20 percent to take loans from their friends and families. 

Also, with 63 percent of the entrepreneurs being unaware of where to seek governance assistance from, many have turned to other support systems or avenues, such as online entrepreneur forums, webinars, family and friends, and other known entrepreneurs to receive guidance and help during these trying times.

The study findings also show that the financial issues due to insufficient support or access have contributed to their increased stress levels, while staying indoors resulted in most of them spending a significant amount of time in household chores.

This has cut down the time spent in running businesses or office related-work.

Selima Ahmed, MP, founder and president of Bangladesh Women Chamber of Commerce and Industry (BWCCI), said there is no noticeable mention of "women entrepreneurs" in the Covid-19 stimulus package circulars published by the Bangladesh Bank, although women entrepreneurs continue to play an essential role in contributing to the economy of Bangladesh.

In response to this, Maheen Sultan, senior fellow of practice at BIGD, Brac University, mentioned how the 5 percent allocated for women entrepreneurs in the Tk 2,000 crore stimulus package by the central bank, is clearly not being translated or communicated with commercial banks. 

Meanwhile, lack of digital literacy among many women entrepreneurs who own and operate small businesses in Bangladesh continues to hamper their recovery in pandemic situations, Salima Ahmed also said.

Dr Imran Matin, executive director of BIGD, clarified that this research is "exploratory" with the objective of shedding light on a new, emerging sector in Bangladesh, rather than being a representative study, and that their priority is to maintain research integrity and avoid "overclaiming".