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F-commerce plagued by three-pronged crisis

Fighting costly dollar and raw materials, falling sales
MAHMUDUL HASAN
Many Facebook-based platforms, which have sprouted in Bangladesh since the beginning of the coronavirus pandemic, are struggling to survive owing to the spike in raw material prices and decline in sales amid the global economic downturn.
The soaring dollar price is also a big headache for them as they have to pay more to buy the American greenback needed to make payments in a bid to boost their posts on their Facebook pages, reach more people and promote their products and services.
The devastating effect of the Russia-Ukraine war and global supply chain disruption has driven up raw material prices and lowered the profit margin.
“We are struggling to survive. Sustaining the business is now the main challenge,” said Khadija Tul Kubra, the owner of Warisha Fashion.
The Dhaka-based F-commerce platform has been selling muslin sari and handloom products since 2019. It posted higher sales during most of the pandemic.
The decline came three months earlier as the impacts of the war-induced global slowdown set in.
“Sales have dropped drastically,” Kubra said.
She said the price of yarn and fabric and dyeing materials has increased, making it impossible to make a profit.
“Besides, customers are getting more reluctant to buy products day by day.”
According to industry people, F-commerce sales have dropped 20 per cent year-on-year in the last three months, as people are tightening their purse strings amid the rising cost of living fuelled by higher food and energy prices.
Inflation in Bangladesh sat on 9.1 per cent in September, squeezing household budgets.
However, despite the economic owes, the number of new f-commerce sellers is on the rise.
“Earlier, people used to open a page on Facebook and then start a business. But now many physical stores are opening Facebook pages to expand their reach,” said Rahath Ahmed, co-founder and chief marketing officer of Paperfly, an online courier service provider.
The entrepreneur said the current slump in businesses has slowed the growth of F-commerce.
He also blamed the dollar price hike for making it costlier for the businesses to boost their page.
The American greenback has gained by more than 20 per cent against the taka in the past one year, owing to the falling foreign currency reserves.
In Bangladesh, F-commerce has been thriving for the last few years thanks to the huge size of the Facebook population. Their number has surged to 44 million, placing the country among the top 10 nations in terms of people using the social networking site.
By boosting a post on Facebook, a business’s content related to its products or services can reach more people than it would have organically.
Biplob Hossain, manager of the F-commerce platform Tajaoffers, which sells gadgets, said the rising cost of boosting is now the main concern for them.
A few months earlier, the cost for a $1-boosting was around Tk 105 to Tk 110 after paying a 15 per cent value-added tax (VAT). It has now soared to Tk 120-Tk 125.
If the F-commerce platform does not have a business identification number from the commerce ministry, it has to pay an additional 15 per cent VAT since the payment is made through a third-party agency.
“In that case, the price goes up Tk 135 to Tk 140,” said Hossain, adding that many F-commerce platforms have no such business identification numbers.