DUCSU LPR


Online business as alternative business model in Bangladesh for harnessing demographic dividend


Jun 22, 2020

Read Article

Shares: 5



Background

Increasing internet users are reshaping ICT sectors by utilizing the possibilities for trade and commerce (Hossain, Jaannat, & Yasar, 2019).  Again, the online business is significantly increasing in Bangladesh. The implementation of technology-based solutions and adaptation to changing demand are the key factors to future of business development services because of experience and methodologies in the industry by entrepreneurs. The trend of E-commerce is getting higher day by day. For example, Hossain (2000) discussed that Business-to-Consumers (B2C) e-commerce was missing in Bangladesh, while a few Business-to-Business (B2B) and Business-to-Government (B2G) transactions existed. But in 2020, we know Business-to-Consumers (B2C) model has already become very popular all over the world. In 2017, Bangladesh had a boost in e-commerce by evolving the rate of 70% from 2016.  Also, in 2017, the B2C market measure made up to BDT 900 crore against the 133,571 crores total retail market (IDLC, 2018). That’s the result of entrepreneurship. Entrepreneurship is a process which generate values and this process enables use of resources (Penrose, 1959; Wenerfelt, 1984). Day by day online business is becoming a major area of interest within the field of entrepreneurs.  The objective of this study is to present the scenario and opportunities of online based business and services as entrepreneurship from the consumer perspective in Bangladesh. In this paper, we firstly try to present customer’s demand and perception toward online shop by survey. Then we discuss the present and future opportunities in terms of demographic factors economical condition for harnessing the demographic dividend.

It is fairly known to everyone that due to declining fertility and mortality rates, Bangladesh has experienced age structural changes throughout the past couple of decades. Age structure also has been changed because of this transition which make a decline in early age group (0-14 years) and an increase in the working age population (15-60 years) and a decline in the dependency ratio. This share of working population can create a new economic opportunity which is known as “demographic dividend” as more working people means a greater number of labors who can employ most of their time in productive activities as they are young, which in return brings more economic wealth. The portion of the young age (18-29 years old) chop down from 46 % in 1961 to 30.0 % in 2011 and the portion of the working age (15-64 years old) group increased from 48.8 % to 66.1 % (BBS 2011).

Bangladesh is a country which is on the verge of demographic dividend by rise in human capital, and increase in GDP, but still it’s not up to the mark (Roy, Mallika, 2019). No doubt, Bangladesh has a growing economy and e-commerce is a good indicator where internet is being used by half of the people in the country for several information and needs (Wajed, 2018). However, the e-commerce sector or online business can be a window of hope for the existing young working age population (age 15-64 years old) of Bangladesh in order to harness demographic dividend.

Few studies (Alam, Mohammad, 2012; Karim, Thohidul & Qi, Xu, 2018; Mohiuddin, Md, 2014; Hossain, Md & Ali, Md & Kibria, Muhammad Golam & Bhuiyan, Mohammad, 2013;  Faruq, Tanveer, 2017)  have been found to present the scenario of current opportunity of online business, mostly regarding on profitable perspective for the businessmen.  Also, the present studies do not express the social perspective whether it can be a place for harnessing the dividend given by demography.  This study aims to present the scenario and opportunities of online based business and services as entrepreneurship from the consumer perspective in Bangladesh. Another interest is to cross match the scenario of economic opportunity by online business for harnessing demographic dividend in Bangladesh. The features of online shopping enable the usefulness and customers emotional dimension to experience the service from home (Menon and Kahn, 2002; Childers et al., 2001; Mathwick et al., 2001).

Method

Internet survey has been led with quantitative approach in Bangladesh. Internet surveys provide more ability for the easy access and opportunities than other typical tool for data collection (Couper, 2000). Also, this method enables cheap and fast communication for survey (Sheehan & Hoy, 1999; Weible & Wallace, 1998).

The structured questionnaire has been sent to the university students and job holders through Facebook groups. The questionnaire was sent to the university students and job holders as a form model using Google Forms. Mainly these Facebook groups are university students based where campus related conversation are discussed. The sample size was calculated as at least 138 with 95% confidence interval and population size was 20000 for Facebook groups where proportion rate was 90% because of the response distribution. However, 147 total responses have been collected for further analysis. SPSS version 25 is being used for the analysis of this study.

Ethical issue

No respondent is interviewed with his/her name. All kind of personal information is kept secret for the purpose of the study. Data is handled with a concern for keeping the identify secret and maintain the confidentiality. Selection bias was tried to be minimized by reaching variety of groups and ages for the sample.

Findings

Table-1 demonstrates the demographics of the respondents along with the history of online shopping. Among 147 responses, 20 (13.6%) people are under age 20, 100 (68.0%) which holds the largest age group for the sample size, and 27 (18.4%) are above 25 years old.  51 (34.7%) respondents are female where 96 (65.3%) are male respondents. 126 (85.7%) respondents are currently students from different educational institutions, mostly university going categories. Other 21 (14.3%) respondents are currently job holders. However, more than half, 53.1% of the total respondents answered that, the last time of purchasing any product is within the last month which holds the highest value of frequency and only 8.2% respondents replied that they never experienced of any online shop yet. This statistic shows the people aware of online shop now-a-days and using them in a good basis. From the Likert scale, more than half of the respondents, 52.1% said they are satisfied with the products and services. Astonishingly, No respondent expressed high level of dissatisfaction which also enables that, the service of online shops are usually good and customers enjoy that.  Almost half, 49.0% think people will move to online shop for purchasing products and foods instead of offline way day by day which tells the story in a line of the future. As people think to shop from the home, the demand of these types of shop will increase day by day. So, there is a big opportunity to boost the economy. 69.4% people believe Online Business" can be a good way for a permanent income. This line addresses that, the trading pattern can be move to a new dimension. Already in Bangladesh, the business holders are introducing their products and services through online pages and websites. 

Table 1 Demographics and experience toward online shop of the respondents

 

Count

%

Age category

min to 20

20

13.6%

21 to 25

100

68.0%

25 to max

27

18.4%

Sex

Female

51

34.7%

Male

96

65.3%

Profession

Student

126

85.7%

Job holder

21

14.3%

Last time when purchased a product, food or service from online shop

Within a week

24

16.3%

Within the last month

78

53.1%

Between one month and 3 months

21

14.3%

More than 6 months

12

8.2%

Never

12

8.2%

Satisfaction by  products and services

Very satisfied

18

12.5%

Satisfied

75

52.1%

Neutral

36

25.0%

Dissatisfied

15

10.4%

Very dissatisfied

0

0.0%

People will move to online shop for purchasing products and foods instead of offline way day by day

Yes

72

49.0%

No

30

20.4%

May be

45

30.6%

“Online Business" can be a good way for a permanent income

Yes

102

69.4%

No

15

10.2%

May be

30

20.4%

Any plan to start any online shop

Yes

66

44.9%

No

81

55.1%

 

The cross tabulation for age, sex and profession with the products are found in table-2. Mostly, people order food from online from all ages in the highest rate. The other items include cloth, electronic gadgets, book and stuffs. Within ages 21 to 25, all items are ordered in a high rate (83.30%). Also, female are more likely order cloths (53.80%) while male have a rate of 46.20%. For electronic gadgets, 80.0% of the total’s respondents are male.  By profession, students use online shop more than the job holders in a regular basis. This trend shows that, the future business models will allow the young generation to be the consumers for decades. Also, the major products will be food items, cloths and electronic gadgets.

Table 2 Demographics vs Types of products

Types of products

Cloth

Electronic Gadget

Food

Book

Other

All

Age category

min to 20

12.80%

6.70%

27.50%

11.10%

0.00%

0.00%

21 to 25

79.50%

66.70%

60.80%

55.60%

100.00%

83.30%

25 to max

7.70%

26.70%

11.80%

33.30%

0.00%

16.70%

Sex

Female

53.80%

20.00%

41.20%

55.60%

20.00%

66.70%

Male

46.20%

80.00%

58.80%

44.40%

80.00%

33.30%

Profession

Student

92.30%

100.00%

100.00%

66.70%

60.00%

83.30%

Job holder

7.70%

0.00%

0.00%

33.30%

40.00%

16.70%

 

Table-3 describes the customer’s opinion regarding the future of online shops. For all ages, people think people will move to online shop for purchasing products and foods instead of offline way day by day. Also, both male (43.8%) and female (58.8%) think positively about the future. Even the job holders agree to the statement. The young age group till 30 years old, agree that Online Business" can be a good way for a permanent income where age group more than 30, doesn’t believe that. Possible explanation can be the generation gap. Table-4 addresses the chi square test by the significance level at .05 to prove the above relationship scientifically valid. For example, the p value for age category vs the perception “People will move to online shop for purchasing products and foods instead of offline way day by day” is 0.33 which is higher than 0.05. So, we accept the null hypothesis that there is no association among age with people’s perception to online shop for purchasing products and foods instead of offline way day by day. Table-3 also shows that statement is true as in different age group, quite same results are found which doesn’t make any association among them. On the other hand, for age category and any plan to start any online shop, we reject the null hypothesis addressing there is no association among these two variables as p value is less than 0.05.

Table 3 Demographics vs Attitudes towards online shop of the respondents

 

People will move to online shop for purchasing products and foods instead of offline way day by day

 "Online Business" can be a good way for a permanent income

Any plan to start any online shop

Yes

No

May be

Yes

No

May be

Yes

No

Age category

0-20

45.0%

30.0%

25.0%

75.0%

0.0%

25.0%

0.0%

100.0%

21-25

48.0%

18.0%

34.0%

78.0%

3.0%

19.0%

51.0%

49.0%

26-30

50.0%

33.3%

16.7%

50.0%

16.7%

33.3%

50.0%

50.0%

30+

66.7%

0.0%

33.3%

0.0%

100.0%

0.0%

66.7%

33.3%

Sex

Female

58.8%

0.0%

41.2%

58.8%

17.6%

23.5%

35.3%

64.7%

Male

43.8%

31.3%

25.0%

75.0%

6.3%

18.8%

50.0%

50.0%

Profession

Student

50.0%

19.0%

31.0%

73.8%

2.4%

23.8%

40.5%

59.5%

Job holder

42.9%

28.6%

28.6%

42.9%

57.1%

0.0%

71.4%

28.6%

 

Table 4 Pearson Chi-Square Tests

 

People will move to online shop for purchasing products and foods instead of offline way day by day

"Online Business" can be a good way for a permanent income

Any plan to start any online shop

Age category

Chi-square

6.905

90.976

19.715

df

6

6

3

Sig.

.330

.000

.000

Sex

Chi-square

20.330

5.869

2.911

df

2

2

1

Sig.

.000

.053

.088

Profession

Chi-square

1.021

60.385

6.971

df

2

2

1

Sig.

.600

.000

.008

The Chi-square statistic is significant at the .05 level.

 

Discussion

Opportunity for harnessing demographic dividend

Firstly, we are discussing here about the age structure. Several regions have been completed the demographic transition and shifting to the fourth stage. But for Bangladesh, it is the stage three. It is found from different studies that, during the period of 1970-1980, many countries have been benefited economically for the boom of working age population (Mason, 2001). Also, these countries got advantages from many non-demographic factors like human capital, education etc. to boost the economy. Bangladesh is walking on the same path (Roy, Mallika, 2019).

Secondly, female labor force participation rates increased from 24% to 36% in the period of 2000 to 2019 (ILO, 2019). During that time, total fertility rate has been reduced, decreasing from 4.3 to 2.3 in 2011. This change for total fertility rate is found in both rural and urban areas in Bangladesh. Also the rate of female labor force participation has been increased from 26.5% to 34.5% between 2000 and 2019 (ILO, 2019). Our study is also addressing the increasing number of female respondents who are interested opening online shops. (See table-3)

Thirdly, we bring here the economic growth. From our findings, it is clear that people believe Online Business" can be a good way for a permanent income. This line addresses that, the trading pattern can be move to a new dimension. Already in Bangladesh, the business holders are introducing their products and services through online pages and websites (See table-2).  Bloom et al. (2000) and Mason (2001) suggested that Asia's socio-economic condition is correlated with the age structure of country where dependency ratio is found low. Bloom and Canning (2004) also found a high and positive correlation between economy and the portion of working-age people.

The idea of sectoral economy has been changed over time. In the last few decades agricultural share is decreasing in the GDP. It has been declined from 50 % to 16% between 1972 and 2014. From 1980, share of manufacturing has been increased in 20 % of GDP in 2014. Mentioned above, E-commerce made a boost of 70% in 2017 compared to 2016. So, we can easily understand, the e-commerce and online shop in going to boost the economy if the trend follows these kinds of benefits.

Conclusions and limitations

Financing from the private level is a must to sustain the economy as public fund cannot reduce the infrastructure gap (Badré, 2014). Without proper management of the private entrepreneurship like "online shop", it may bring a demographic catastrophe, may be a “youth quake” or “tsunami” (Teitelbaum and Winter, 2014). Entrepreneurship idea like online shop holds a great opportunity to reduce the pressure from the government job sectors as the private sectors flourish rapidly. Conducting this study gives us a big thought to think about the immense opportunity of economic growth by using this window of opportunity.  However, our objective was to try to understand about the customer’s perspective and demand as it is very important to be sustainable for being a new business model in Bangladesh. Our findings allow to say Bangladesh can boost up her economy if this model is being followed by meeting new trends and demands of the market and enabling new technology and opportunity for harnessing the demographic dividend. Our study has some limitations too. The first limitation addresses the small sample size. Due to the time constraint, we didn’t reach a large sample. Another limitation is population selection area. Mostly the respondents are from the urban area. Rural area representatives are in a few numbers. However, the main consumers of online shops are from the urban area till now. Considering the future scenario, it enables opportunity for further researches in this topic.

Based on our findings, we have tried to give some policy recommendations. Firstly, the loan process easier for the entrepreneurs should be easier so that more young people can come forward for online business without feeling any insecurities and the government should develop an enriched database of entrepreneurs. Secondly, the idea of online business and entrepreneurship should be incorporated in the school curriculum so that children grow up with a different mindset of future profession. Thirdly, the government as well as private institutions working on entrepreneurship should develop proper training and skill development facilities for the entrepreneurs, especially focusing on communication skills to reach more customers.

 

References

  1. Alam, M. J. (2012). E-commerce: benefits in trade & commerce, Bangladesh.International Journal of Management, IT and Engineering, 2(8).
  2. Badré Bertrand. (2014). Infrastructure Unbound. Project Syndicate. https://projectsyndicate.org/commentary/bertrand-badre-cautions-that-money-is-not-enough-in-meeting-countries--public-investment-needs
  3. Bloom, D. E., Canning, D., & Sevilla, J. (2004). The effect of health on economic growth: A production function approach. World Development, 32(1), 1–13. https://doi.org/10.1016/j.worlddev.2003.07.002
  4. Bloom, D., Canning, D., & Sevilla, J. (2001). Economic Growth and the Demographic Transition. https://doi.org/10.3386/w8685
  5. Chaudhury, R. H. (2014). Will Bangladesh seize or squander the economic opportunity offered by the demographic dividend? Asia-Pacific Population Journal, 29(2), 43–69. https://doi.org/10.18356/b3fc66a0-en
  6. Childers, T. L., Carr, C. L., Peck, J., & Carson, S. (2001). Hedonic and utilitarian motivations for online retail shopping behavior. Journal of Retailing, 77(4), 511–535. https://doi.org/10.1016/S0022-4359(01)00056-2
  7. Cookson, F. (1999). Credit Information in the Bangladesh Financial System. US Agency for International Development, 24.
  8. Couper, M. P. (2000). Web Surveys: A Review of Issues and Approaches. Public Opinion Quarterly, 64(4), 464–494. https://doi.org/10.1086/318641
  9. Davis, F. D. (1993). User acceptance of information technology: system characteristics, user perceptions and behavioral impacts. International Journal of Man-Machine Studies, 38(3), 475–487. https://doi.org/10.1006/imms.1993.1022
  10. Evans, D., & Volery, T. (2001). Online business development services for entrepreneurs: An exploratory study. Entrepreneurship and Regional Development, 13(4), 333–350. https://doi.org/10.1080/08985620110052274
  11. Hossain, M. A., Akkas Ali, M., Kibria, M. G., Bhuiyan, M. N., & Prof, A. (2013). A Survey of E-Commerce of Bangladesh. In International Journal of Science and Research (Vol. 2, Issue 2).
  12. Karim, M. T., & Qi, X. (2018). E-commerce Development in Bangladesh. International Business Research, 11(11), 201. https://doi.org/10.5539/ibr.v11n11p201
  13. Karim, M. T., & Qi, X. (2018). E-commerce Development in Bangladesh. International Business Research, 11(11), 201. https://doi.org/10.5539/ibr.v11n11p201
  14. Mallika Roy, B., Safiullah Kayesh, M., Roy α, M., & Safiullah Kayesh σ, M. (2016). Reaping Demographic Dividend in Bangladesh: Challenges and Prospects.
  15. Mason, A. (2001). Population change and economic development in East Asia: challenges met, opportunities seized. Stanford University Press.
  16. Mathwick, C., Malhotra, N., & Rigdon, E. (2001). Experiential value: Conceptualization, measurement and application in the catalog and Internet shopping environment. Journal of Retailing, 77(1), 39–56. https://doi.org/10.1016/S0022-4359(00)00045-2
  17. Menon, S., & Kahn, B. (2002). Cross-category effects of induced arousal and pleasure on the Internet shopping experience. Journal of Retailing, 78(1), 31–40. https://doi.org/10.1016/S0022-4359(01)00064-1
  18. Penrose, E. T., & Pitelis, C. N. (2009). The theory of the growth of the firm. Oxford University Press.
  19. Population size and growth. (2019). World Population Prospects, The 2019 Revision - Volume I: Comprehensive Tables, 2–113. doi: 10.18356/0f5a4c11-en
  20. Sheehan, K. B. (2006). E-mail Survey Response Rates: A Review. Journal of Computer-Mediated Communication, 6(2), 0–0. https://doi.org/10.1111/j.1083-6101.2001.tb00117.x
  21. Teitelbaum, M. S., & J.M. Winter. (2014, April 4). Opinion | Bye-Bye, Baby - The New York Times. New York Times.https://www.nytimes.com/2014/04/05/opinion/sunday/bye-bye-baby.html
  22. Wajed, A. (n.d.). How to Start an Online E-commerce Business in Bangladesh. Retrieved March 7, 2020, from https://debuggersstudio.com/how-to-start-an-online-e-commerce-business-in-bangladesh/

Weible, R., & Wallace, J. (1998). Cyber research: The impact of the Internet on data collection. Marketing Research, 10(3), 18.



Tags :




Md Yeasir Yunus & Marzia Fatema are students at the Department of Population Science, University of Dhaka.