Online sales of groceries shrink under prolonged inflationary pressures in Bangladesh as people have to reduce their daily recipe to somehow make two ends meet, sources say.
Traders say that online grocery sales had surged during the COVID-19 pandemic, when Bangladesh -- and the world at large -- was under a lockdown with markets mostly shut down. But their sales have been on a slide since last year, having dropped 20 to 30 per cent until now.
"Consumers are cutting their budget due to inflation, thus buying less online," says a survey report quoting the traders in virtual marketplaces.
Overall inflation in Bangladesh was 9.74 per cent in April, by official count, while food inflation was even higher, 10.22 per cent, according to the latest data from Bangladesh Bureau of Statistics (BBS).
Now more than a hundred companies are involved with the online grocery business in Bangladesh. Chaldal, Meenaclick, PandaMart, Khaas Food, Ghorer Bazar, and Jogaan have almost become household names by now.
Chaldal Limited, one of the key players in Bangladesh's online grocers, set sails in 2013. Apart from basic grocery products, it offers diverse items, like fruits, vegetables, meat, fish, beverages, cooking-assistance home appliances, and cleaning products.
"Chaldal has posted impressive growth in the past several years, emerging as the market leader in the online grocery space," says Zia Ashraf, co-founder and chief operating officer of Chaldal.com.
His company had seen a remarkable revenue growth at an 89-percent Compound Annual Growth Rate (CAGR) during 2019-2022, reflecting its strong market position and customer demand, he recounts.
Before the pandemic that invaded the planet in 2019, Chaldal had delivered 3,500 to 4,000 orders per day. During the pandemic, this number surged to an average of 8,000 to 9,000 orders daily.
"Recently, the volume has decreased by 25 per cent to 30 per cent, with inflation playing a significant role in this decline," say the new-generation entrepreneur about what is known as intraflation in which consumers adjust to high prices through less consumption and cut-down buys.
Khaas Food, another popular online grocer, launched its business in 2015. In the post-Covid period, the sales growth shrank substantially, its digital --marketing -- strategist Monjurul Karim told the FE correspondent.
He, too, sees inflation as a major factor for the fall in their sales.
Now it has 11 outlets in Dhaka and five outside of the capital. Khaas Food offers buyers healthy and fresh edible produce, from oils, honey, and pure ghee to dry fruits, fish, juice, organic tea, and other daily staples.
Khaas Food sells its products both in-store and online.
"About 50 per cent of our sales are online," said Monjurul Karim.
Khaas Food products are priced higher for not compromising on quality. As a result, maintaining price -competitiveness is a major challenge for them, he said.
Online grocers face several challenges, including inadequate transportation and storage infrastructure, high operational costs, balancing competitive pricing etc. These problems hamper their targeted growth.
However, internet connectivity has significantly enhanced the accessibility of online shopping for a substantial part of the population, said Mr Zia Ashraf.
"Extensive product ranges, competitive pricing and promotions and the availability of cashless payments have made it increasingly appealing for people to use online grocery platforms."
So the online grocery business has the potential to more than double over the next five years if existing challenges are met properly.
On the other hand, popular superstores like Agora and Shwapno also have online delivery services.
Md Ashikur Rahman, outlet in -charge of the retail operations at Agora Limited, says they started online grocery services in 2018.
Initially, they could not sell desirably, but after two years, when the Covid-19 pandemic caused movement restrictions, their sales increased significantly online.
They have steady growth and hope buyers will rise several times in the next five years as people prefer to save time in their busy life.
Of every 10 Agora customers, two were online shoppers, he mentioned.
Mr Rahman also mentions about 70 per cent of online purchases are made through electronic payments.
However, the businesses have said there is still a tendency among most buyers to go to the kitchen market to purchase directly.
"If confidence is built, they will love online purchases for grocery items," he observes.
The projection of Statista says the grocery-delivery market in Bangladesh is expected to achieve a revenue of US$1.10 billion by 2024.
It indicates an annual growth rate (CAGR 2024-2029) of 18.40 per cent, leading to a market volume of approximately $2.56 billion by 2029.
Talking to the FE, Jahangir Alam Shovon, executive director at the secretariat of the e-Commerce Association of Bangladesh (e-CAB), said due to busy lifestyles and rapid urbanisation, online grocery is gaining popularity among people for the reason of saving time and ensuring quality compared to traditional grocery markets.
"There is a large opportunity for online grocery sales to double within next few years by means of ensuring necessary policy support and improving services."
Currently, 7.0 per cent of customers shop online in Bangladesh. Nearly 2.0 per cent of them are regular and 5.0 per cent are irregular consumers. About 25 per cent of them are online food and grocery customers, Mr Shovon said.
Mentioning the challenges, he said, "We have to pay 5.0-percent to 15-percent value-added tax (VAT) on delivery services."
Online-delivery stores charge a minimum cost for transportation for the convenience of the buyers. If there is VAT, it is an extra burden for the traders.
"We have been demanding a reduction in VAT in every budget proposal," he mentions.
"We also wrote to the authorities for permission for food delivery motorcycles with 16-inch-by- 16-inch carriers in 2021 for a smooth delivery system. But it has not yet been implemented."
He added that a significant portion of grocery items are perishable. Hence, it is important to deliver good-quality products and deliver them on time. This will attract customers online.
"There is still a lack of professionalism in this field."
On the other hand, consumer -rights activists emphasised ensuring food quality and services which sometimes grocers don't maintain.
Dilara Begum feels comfortable with home delivery, especially in a congested city like Dhaka. She is working in a private company.
"I don't have time to go to the grocery market regularly, so I most of the time order online for my necessary grocery items online."
Belal Hossain also sometimes takes online delivery especially for bulk items like rice, pulses, edible oils etc to avoid transportation hassles. He also feels more comfortable online than shopping in person in the market.
However, he says he still cannot fully rely on online shopping for grocery products. Sometimes he doesn't get delivery on time and sometimes the quality of the product is not desirable for him.
S M Nazer Hossain, vice president of the Consumers Association of Bangladesh (CAB), says there is a potential to protect the interests of the customer through online grocery, especially for the busy citizens.
"However, monitoring needs to be strengthened. Businessmen should also not compromise on quality, although the CAB sometimes receives such complaints," he says.
He suggests proper implementation of the Consumers' Rights Protection Act 2009.
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