F-commerce in a three-pronged crisis

Many Facebook-based platforms or f-commerce businesses that have launched in Bangladesh since the onset of the coronavirus pandemic are struggling to survive. Notable reasons include rising commodity prices and falling sales amid the global economic slowdown.

These Facebook-based platforms are facing major problems due to rising dollar prices. Various posts on Facebook pages are necessary to reach more people and boost the promotion of their products and services. For this, they now have to spend a lot of money to buy the US greenback. The impact of the Russian-Ukrainian war and disruptions to global supply chains drove up commodity prices and squeezed profits.

Khadija-Tul Kubra, the owner of Warisha Fashion, told the Daily Star: “We are fighting for our survival. The main challenge now is to sustain the activity. This Dhaka-based f-commerce platform has been selling chiffon sarees and woven products since 2019. Although the business sold more during the pandemic. As the effects of the global recession caused by the war 3 months earlier began, sales also fell. Khadija Tul Kubra said, “Sales have dropped significantly. The prices of yarns, fabrics and dyeing materials have increased. As a result, it became impossible to make a profit. Apart from that, customers are showing more and more reluctance to buy products day by day.

Those involved in f-commerce said f-commerce sales in 3 months were down 20% from last year. People have limited their purchases amid the rising cost of living due to rising food and fuel prices. Buy fewer products other than basic necessities. The inflation rate in Bangladesh was 9.1% in September. This has strained the household budget. However, the number of new f-commerce sellers is growing despite the debt.

Rahat Ahmed, co-founder and chief marketing officer of Paperfly, an online messaging service provider, told the Daily Star: “People used to open a page on Facebook and start a business. But now many merchants who have stores are opening Facebook pages to promote business and increase sales. The entrepreneur said, “Currently, the growth of f-commerce has slowed down due to the lackluster economic environment.” He also blamed the rising value of the dollar as the reason for the increased cost to boost their pages to increase business.

The US greenback has gained more than 20% against the dollar over the past year as foreign exchange reserves have dwindled. F-commerce has been booming in Bangladesh in recent years due to the growing number of Facebook users. The number of Facebook users in Bangladesh has reached 44 million. Bangladesh is among the top 10 countries that use social networking sites. In general, the more people a post reaches, the more the post is boosted on Facebook, the more people it reaches. Biplab Hussain, director of Tajafers, an f-commerce platform that sells gadgets, told the Daily Star: “The rising cost of boosting is now a major concern for them.”

A few months ago, after paying 15% Value Added Tax (VAT), it cost between Tk 105-110 per dollar. Now it has increased to 120-125 taka. If the F-Commerce platform does not have a business identification number from the Ministry of Commerce, it is liable to pay an additional 15% VAT due to third-party payment.

Biplab Hossain said, “In this case, the price goes from 135 Tk to 140 Tk. Many f-commerce platforms do not have such a business identification number. “Luxury goods sellers are facing a particularly difficult time due to the cash headroom required to open letters of credit (LC),” said AKM Fahim Mashroor, CEO of a digital parcel aggregator for SMEs Delivery. Tiger. Last June, the Bangladesh Bank set the LC opening margins for the import of luxury and non-essential goods at 100% and 75% respectively. Thus, the purchase of these products can be discouraged and foreign exchange can be saved.

Nasima Akhtar, president of Women and E-Commerce Trust, a Facebook-based community marketplace for women entrepreneurs, told the Daily Star: “Although the price of products is increasing, people’s income is not increasing, which affects sales of the f -business platform.’ He said, “The cost of production has increased due to the increase in the price of raw materials. Customers ask why prices are rising. These issues have a negative impact on female entrepreneurs. Another reason for the drop in e-commerce sales is that courier, delivery and logistics service providers are charging more for transporting goods due to the recent increase in fuel prices, the sources said.

The country’s major courier and logistics service providers have raised fares by almost 20% since last August after the government raised diesel and kerosene prices by 42.5%. Gasoline and octane prices rose 51.1% and 51.7% respectively. An entrepreneur told the Daily Star: “As the increase in fuel bills is definitely passed on to consumers, an item that used to cost Rs 500 will now cost around Rs 600.” Nasima Akhter urged women entrepreneurs to persevere and keep the entrepreneurial spirit to overcome this calamity. Facebook-owned Meta reported in March that 70% of Facebook-based businesses have been owned by women since the pandemic. Over 65% of business done by women on Instagram has increased.

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