Logistics companies that cater to online businesses in Bangladesh have prospered during the coronavirus pandemic, as an increasing number of people moved to digital platforms to make purchases.
The convenience of being able to shop for most products from the comfort of one’s home is a key driving force behind the massive growth in online retail platforms and f-commerce as well.
Besides, online retail platforms make it possible for people to avoid the risk of infection since the goods are delivered to their doorstep, usually by independent logistics aggregators.
This led to a 50 per cent spike in home deliveries amid the pandemic, according to industry insiders.
“Logistics companies related to online sales have huge potential in Bangladesh as e-commerce currently accounts for just one per cent of the total retail sales,” said AKM Fahim Mashroor, chief executive officer of AjkerDeal, an e-commerce platform.
“That’s why many new players are coming into the business while existing players are ramping up their capacities,” he added.
E-commerce accounts for 24 per cent of all retail sales in China. The market size in India surpassed $60 billion in 2020, according to Statista, a German market and consumer data company.
Strong and effective logistics services have played a pivotal role in expanding the local e-commerce market.
Similarly, e-commerce is the main catalyst for the rise of logistics behemoths — Delhivery, Ecom Express and Shiprocket in India and Cainiao and JD Logistics in China.
Sensing the huge prospect of logistics in Bangladesh, Indian end-to-end e-commerce logistics solution provider Ecom Express acquired a majority stake in Bangladesh’s home delivery service provider Paperfly for around Tk 100 crore in January.
Ecom Express covers the majority of states in India, delivering more than 5 lakh products per day.
“So, with the expertise of Ecom, we are now working on expanding our operations in the country,” said Rahath Ahmed, co-founder and chief marketing officer at Paperfly.
For Ecom Express, entering Bangladesh marks its maiden venture outside India.
According to Ahmed, the main challenge for the growth of e-commerce in Bangladesh, and subsequently, logistics, lies in creating a broad range of sellers.
“In Bangladesh, when it comes to getting delivery orders from e-commerce platforms, we find most of the sellers are located in the capital. E-commerce logistics will get a shot in the arm if we can create millions of sellers outside Dhaka.”
Before the pandemic, Paperfly made more than 9,000 deliveries per day. The number fell to 10 per cent in the beginning of the nationwide lockdown to curb the spread of Covid-19 last year.
The scenario started to change for the better after the government eased restrictions at the beginning of June.
Now, Paperfly makes around 15,000 deliveries across all 64 districts, with 90 per cent of the shipments bound for destinations outside Dhaka.
The company has set its foot in almost every union in Bangladesh and made 48 lakh deliveries since its inception in February 2016.
“Bangladesh is not a big country, so bringing down the delivery time to 24 hours anywhere in Bangladesh is our next goal,” Paperfly said in a statement.
The company currently takes three to five days to complete delivery in remote areas.
According to experts, faster delivery is the key to success for most logistics and e-commerce aggregators.
Pathao, well-known for its ride-sharing business, was initially launched as an e-courier platform back in 2015.
“In the last few years, logistics services have boomed,” said Hussain M Elius, CEO of Pathao, which delivers products to almost all districts but is concentrated mainly in Dhaka, Chattogram and Sylhet.
According to him, there are two significant challenges to expanding the platform’s operations: the first is the cash-on-delivery option, and the second is lower orders in some areas.
“In some cases, customers who order products with the cash-on-delivery mechanism refuse to accept the product. For that, logistics companies suffer losses.”
After expanding its operations, the company found that it received minimal orders from certain areas, which is not financially viable.
“So, digitalisation in every step, from placing orders to making payments, is essential for an effective logistics service,” Elius added.
Pathao also has a food delivery arm that operates in Dhaka, Chattogram and Sylhet, with 9,000 registered restaurants.
For local logistics companies, there is a need to enhance automation and efficiency, said Biplob Ghosh Rahul, CEO of eCourier, a logistics provider.
The pandemic has been a boon for the Dhaka-centric company as the number of daily deliveries soared to 8,000 in June last year, up from 5,000 in the pre-pandemic era.
eCourier now makes over 3 lakh delivery per month, around 90 per cent of which inside Dhaka. The company has completed 46 lakh deliveries since it was launched in 2014.
The firm recently launched a few new services, including air parcel, line haul, corporate delivery, merchant delivery, person-to-person (P2P) delivery, and warehouse services.
These services offer customers end-to-end tracking facilities, enabling corporations, merchants and general consumers to fulfil their delivery needs under a single umbrella.
“Customers now can make online parcel delivery orders from home, and our people will collect the parcel from their doorsteps and deliver it to the receivers,” Rahul said.
Uber rolled out a similar service called Uber Connect in June last year.
The development came just weeks after the San Francisco-based tech giant announced that it would shut down its popular food delivery arm, Uber Eats, as the pandemic forced almost all restaurants to close down at the time.
Uber Connect enables Dhaka residents to send and receive parcels and also order items from shops within city limits.
Redx, a logistics courier service provider, delivers e-commerce and f-commerce products door to door, covering all eight divisions in the country. It charges Tk 70 for parcels weighing one kilogramme inside Dhaka and Tk 150 if bound for outside Dhaka division, which is lower than some of its competitors.
Industry insiders believe that the charges for logistics facilities are much higher in Bangladesh compared to other countries, which is detrimental to the growth of the country’s e-commerce industry.
“If a customer outside Dhaka orders a Tk 300 shirt, he often has to spend Tk 140-150 on logistics. So, it will have to be reduced a lot more,” said AjkerDeal’s Mashroor, the pioneer in the local tech-based start-up scene and has deep knowledge about the industry.
He emphasised building private-public partnerships in this regard.
“There are more than 9,000 post offices in the country. If they have an agreement with logistics platforms, then logistics services can be provided across the country for a far lower cost,” he added.
The global trend is that customers spend only 5 per cent of a product’s value on logistics, whereas it is about 20 per cent in Bangladesh.
Foodpanda, the market leader in terms of food delivery with a presence in all 64 districts, launched a grocery delivery arm by partnering with stores such as Shwapno, Bengal Meat, Unimart, and Lazz Pharma in April last year amid lockdowns.
As the pandemic has turbocharged the number of home deliveries for daily necessities, Foodpanda now delivers groceries, medicine and other essentials.
A subsidiary of the Berlin-based Delivery Hero, Foodpanda has Pandamart, a cloud store that delivers a wide array of products, ranging from household essentials to fresh fruits.
Similarly, e-commerce platform Evaly launched E-logistics in April last year. It now makes 15,000 deliveries of grocery, pharmaceutical items and food items, said Md Gahidul Islam, head of e-logistics and senior manager at Evaly.
Meanwhile, Delivery Tiger added a new dimension to the country’s e-commerce logistics market as it provides wholesale logistics services for logistics platforms that provide retail and last-mile deliveries.
Personal delivery mechanisms
Building its own delivery mechanism for e-commerce platforms has become a global trend. For example, Amazon, an American multinational technology company, handles its own deliveries.
In Bangladesh, Chaldal, launched in 2013 as the pioneer online retail platform, makes over 5,000 deliveries per day all over Dhaka and its adjacent areas, including Narayanganj, with its own delivery mechanism.
Chaldal added 560 new jobs to take its total number of employees to 1,400 last year.
Domino’s Pizza also makes home deliveries with its own fleet of riders, said Ahmed Rajeeb Samdani, managing director of Golden Harvest Group, which runs Domino’s chain in Bangladesh.
Daraz, the country’s e-commerce market leader, is expanding its logistics footprint as well.
As a part of its vision to create a better e-commerce ecosystem and build a countrywide logistics infrastructure, Daraz announced its plans in June last year to invest Tk 500 crore by 2021 to set up logistics infrastructure that would help expand its reach to all districts.
A big chunk of that investment has already been utilised for different purposes, including the purchase of more than 100 vehicles, facilitating the shipment of products across the country through its own conveyances.
“Now we are equipped with the logistic infrastructure that Alibaba uses,” said Syed Mostahidal Hoq, managing director of Daraz Bangladesh, which is owned by China’s e-commerce behemoth Alibaba.
Daraz still outsources some deliveries to independent logistics providers as it makes more than 60,000 orders per day.
Many f-commerce providers also make deliveries by themselves or with the help of family members.
Kaniz Fatema, who sells homemade food through f-commerce, had to make a few deliveries herself during the pandemic as there was no proper logistics support, which is a major impediment for the women who make a foray into the business.