E-Commerce in Bangladesh

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BRAC University Journal, Vol. II, No. 2, 2005, pp. 49-56

Ziaul Hoq
School of Business American International University-Bangladesh (AIUB) Banani, Dhaka 1213, Bangladesh and

Md. Shawkat Kamal
Department of Management and Business BRAC University, 66 Mohakhali C/A Dhaka, Bangladesh. and

A H M Ehsanul Huda Chowdhury
School of Business American International University-Bangladesh (AIUB) Banani, Dhaka 1213, Bangladesh

ABSTRACT E-commerce has a significant impact on business costs and productivity. E-Commerce has a chance to be widely adopted due to its simple applications. Thus it has a large economic impact. It gives the opportunity for “boundary crossing” as new entrants, business models, and changes in technology erode the barriers that used to separate one industry from another. This increases competition and innovation, which are likely to boost overall economic efficiency. Key words: E-Commerce, Bangladesh, B2B, B2C, Logistics

1. INTRODUCTION E-commerce is a way of conducting business over the Internet. Though it is a relatively new concept, it has the potential to alter the traditional form of economic activities. Already it affects such large sectors as communications, finance and retail trade and holds promises in areas such as education, health and government. The largest effects may be associated not with many of the impacts that command the most attention (i.e. customized product, elimination of middlemen) but with less visible, but potentially more pervasive, effects on routine business activities (i.e. ordering office supplies, paying bills, estimating demand). 2. OBJECTIVE OF THE STUDY • • • To examine impact of e-commerce on business cost and productivity. To evaluate present status of e-commerce. To identify how e-commerce reduces cost 49 • •

of customer services and after sales services. To identify key success factors of ecommerce To provide insights for policy formulation in the area of e-commerce. 3. METHODOLOGY

The article has been written on the basis of secondary information. The secondary information and data were collected from published books, journals, research papers, and official statistical documents. Reports published on ‘e-commerce’ by Organization of Economic Cooperation and Development (OECD) provides important ideas regarding the topic. 4. DEFINITION OF E-COMMERCE Electronic commerce, or e-commerce, is the buying and selling of goods and services on the

Ziaul Hoq et al Internet. Other than buying and selling, many people use Internet as a source of information to compare prices or look at the latest products on offer before making a purchase online or at a traditional store. E- business is sometimes used as another term for the same process. More often, though, it is used to define a broader process of how the Internet is changing the way companies do business, of the way they relate to their customers and suppliers, and of the way they think about such functions as marketing and logistics. For the purpose of this study e-commerce is taken to mean doing business electronically. (Lindsay P., 2002) Other terms that are often used when talking about e-commerce are B2B and B2C, shorthand for business-to-business, where companies do business with each other, and business-toconsumer, where companies do business with consumers using the Internet. These are considered to be main forms of e-commerce. 5. THE ONLINE ECONOMY The advent and spectacular growth of the Internet have spawned claims of a ‘new economy’ governed by a ‘new economics’. Economists rarely endorse such claims, pointing out that basic microeconomic and macroeconomic principles still apply. Shapiro (1999, p. 2) for example comments that –‘Fortunately, history can still be our guide …while we cannot rely much on the classical model of perfect competition and price setting firms, we don’t need a fundamentally new economics’. Shapiro and Varian (1999, p. x) argue that, ‘even...
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