Bangladesh is emerging as one of the most exciting markets in Asia and D’reach’s Rabeth Khan shares how the country’s digital maturity has evolved over the years and is now offering new opportunities.
It seems just the other day, when the internet arrived in the country in 1992 and, more profoundly, from 1996. Since then, digital life in Bangladesh should have flourished much faster than it has in but there were infrastructural and mental roadblocks. It took a lot of time to get from dial-up to broadband and even more for Wi-Fi zones. Mobile internet was only for the rich as data costs were (and still are) very high and people didn’t know how to harness the power of internet.
The digitisation surge
But everything started to change in the last 10 years. Bangladesh’s digital transformation has finally caught up with the rest of the world and credit must be given to the government, which has been building the foundation over the last one decade with submarine cable infrastructure, bandwidth expansion, software hub creation, startup funding for digital and technology-based businesses and continual price reductions in Mbps costs.
Progress of digitisation continues across all government-run operations including national ID and passport applications, tender submissions, registrations, car licences, utility bill payments and even COVID-19 vaccinations. Everyday life is going digital and online
Most recently, the Bangladesh government launched the Sadai app which enables online sale and purchase of farming and agricultural products.
Falling smartphone prices have engineered connectivity, online and app use, knowledge building, and financial freedom. As per BTRC’s June 2021 statistics, about 120.95 million people in Bangladesh are now connected to the internet, with 110.90 million out of the population of 166 million accessing it on their mobile phones.
Peer-to-peer digital connectivity
The biggest impact of digitisation was felt on one-to-one communication – voice calls on mobile phones are fast declining and increasingly shifting towards apps like FB Messenger, WhatsApp, imo, Viber, LinkedIn and others for free voice interaction, free messaging and personal virtual interaction and entertainment indulgence.
For example, imo’s usage patterns among Bangladeshi users define the progressing potential of the communication app industry. According to its official release, in 2020, 96bn messages, 30bn international messages, 26bn audio and video calls, and 15bn international calls were made by Bangladeshis using imo. In 2020, amid the pandemic, there was an increase of 8.2% in messages and a 7.8% rise in video and audio calls on imo platforms, compared to 2019.
News and entertainment thrive online
News is consumed more online than via television or newspapers. As per Alexa analytics, the daily unique page visits on online local news portals stand at an average of around 3.5m with an estimated average time spent of over six minutes.
This shift to online news consumption has forced all TV and newspapers to put more focus on their online and streaming versions.
- Facebook also used to be big for breaking news and news consumption but the recent surge in fake news and unverified sensationalist content is prompting readers to fall back on core news sources and platforms.
- International news platforms like Huffington Post and Wall Street Journal are increasingly popular in niche urban geographies.
- Apps like TikTok and Likee have become extremely popular among the new alpha generation across the country, although it has attracted regulatory scrutiny and social criticism for the quality of their content, such as the promotion of violent and unacceptable lifestyles.
Social media is still dominated by Facebook, Instagram and LinkedIn. According to media reports and NapoleanCat, Facebook had more than 47.2 million active users in Bangladesh as of June 2021, or about 28% of the population; 21.2 million of the users are aged 18–24, comprising 69.1% male and 30.9% female.
This clearly shows Gen Z’s affinity with social media, while Generation Alpha inclines towards apps like Instagram which has a country user base of 4.7 million. In May 2021, LinkedIn had 4.1 million users and Twitter is still in its nascent stage.
The advent of digital life has also changed the delivery of entertainment drastically. YouTube has become the alternative television across the segments with average spend time of about 19 minutes per day, while both local and international streaming apps and OTT platforms have increasingly penetrated urban homes in the last two years.
Until 2020, Netflix had an approximate user base of over 200,000 and growing fast. Other video content streaming apps like Amazon Prime, Hoichoi, Zee5, Bongo and a few other local apps are heating up the content consumption battleground, with those aged 18–34 being the core consumers of streaming content.
Spotify’s recent launch in the market is set to propel music consumption to a new level, adding to music consumption on VAS services by mobile phone operators and YouTube. Canadian-origin audio and video content distribution platform Stingray is also targeting Bangladesh’s big music consumption population by tying up with a local operator.
With the youthful population, high growth in internet consumption and advent of 5G, there is opportunity for international online entertainment brands to enter the areas of music, fashion and movies. But success will only happen if there is strong understanding of local needs and global content is adapted to the local taste and language.
The e-commerce boom and going cashless
A big part of the transformation to digital life has been the change in online purchasing behavior. While it was growing at an assured pace in the last few years at around 25%, COVID-19 has accelerated it to benefit e-commerce businesses and F-commerce operators. From daily needs and impulse buys to food deliveries and fashion, everything is going online with the estimated e-commerce segment in Bangladesh predicted to grow to US$3 billion by 2023.
In 2020, the pandemic spurred growth of more than 150% and global giants like Alibaba already have a strong presence in the country with investments in various startups and local businesses, while Amazon is predicted to arrive in the near future.
New local e-commerce businesses are being launched every other month but while all these look promising, recent trends of delivery and refund failures, the absence of consumer rights protection, and unhealthy underpricing are worrying signs.
The government recently launched new directives to protect consumers from deception and make the industry more sustainable and profitable. The increased use of credit/debit cards and online financial payment gateways have been a big catalyst for growth.
As Bangladeshis continue to embrace online shopping, both local and foreign players can foray and into the market. Profitability is there if one strikes the perfect balance of inventory, pricing, delivery and users.
According to Bangladesh Bank data, at the end of 2020, there were more than 1.62 million credit card users and 19.99 million debit cards holders.
On the other hand, mobile financial services (MFS) monthly transaction in April 2021 stood at BDT63,478 crore (1 crore = 10 million) or US$7,381 million.
Double-digit rise in digital adspend
Another sector on the cusp of transformation due to the digital surge is the advertising scene. In a country like Bangladesh – where non-digital platforms like television have always been the leader, followed by print and radio – digital advertising has already overtaken print and radio to be the second biggest media platform in terms of consumption and reach.
- Five years ago, the top 20 brands allocated 3–5% of their annual adspend to digital.
- Today, digital has risen to 10–15% of the annual advertising budget and industry analysts predict that in the next two years, digital adspend will rise to more than 25%.
- The biggest bulk of adspend is on Facebook, accounting for more than 60%, followed by Google, YouTube, local online news and entertainment platforms.
- Programmatic advertising, which was largely Google-based, has started to spread across multiple operators, both local and international.
Digital advertising is a necessity today for engagement and interaction with fans. Any brand entering the Bangladesh consumer landscape can use a plethora of measurable social media and online advertising platforms to penetrate the market at less than a quarter of the cost of traditional advertising modes.
The revolution in digital life is being triggered and pushed forward by the continued emergence of online and app-based startups across multiple sectors, transforming the urban and rural lives of Bangladeshis. From B2C and B2B e-commerce, to motherhood care-giving and medical and health services, skills development and education, agriculture and enhancing farmers’ livelihoods, women empowerment and entrepreneurial skill shaping, financial and online insurance and logistics and advertising, the list goes on.
AI and data are the two core components driving these startups. Most recently, nine Bangladeshi startups were featured in Forbes 30 under 30 Asia 2021 listing, clearly signalling the strong innovation-driven business culture in Bangladesh.
Bangladesh in digital mode is business-ready
As the country races to become a mini-Silicon Valley, change – from the traditional way of life to AI-dominated living – is inevitable. Investments from global venture capitalists and equity investors are tapping the potential of 166 million Bangladeshis with its big population of youths embracing the future.
The government plans to introduce 5G by the end of 2021 and this will surely disrupt internet-based services across all sectors by improving the current internet speed benchmarks, which have been among the lowest in the world. According to Ookla,
Bangladesh’s business and investment landscape – with its healthy GDP growth in the last decade making it one of the fastest-growing economies in the world – is ready for business in the digital age.