Our industry is digitising rapidly, are we ready?
We all knew the global pandemic would change the business world in some way but, until recently, it has been difficult to pinpoint precisely how. For many of us, the past 16 months have been a fight to remain competitive above all else. Indeed, for some, it has been a fight for survival.
As the dust begins to settle, however, and normal trading begins to properly resume in many of Bangladesh's largest export markets, one trend is presenting itself loud and clear: the shift to online, e-commerce sales.
I have followed with interest the financial results of the leading fashion brands and retailers these past few months. In the financial statements of all, online sales are growing rapidly—by 30, 40 and 50 percent or more in many cases. On the contrary, in-store sales are flatlining and even shrinking in a lot of instances. Shops are being closed as retailers look to save money on costly rents in buildings where footfall is shrinking fast.
The chief executives of many brands have already stated quite publicly that the online shift is here to stay—beyond the pandemic. The move to e-commerce is permanent, and will likely continue to gather pace.
This has potentially profound implications for Bangladesh if we wish to remain a valued partner of major western brands. There are numerous issues we need to consider around government policy, the existing digital infrastructure and the regulatory environment. Will they all be fit for purpose in an environment which is increasingly digital?
I believe there are several things we need to do to remain relevant as a trading partner.
Number one is having a resilient and cyber secure digital infrastructure to build trust and tell our trading partners Bangladesh is a country that can be relied upon. Therefore I was so pleased last year when the World Bank announced it was funding a four-year project in Bangladesh to improve cybersecurity, build resiliency during future crises, and enable the government to operate virtually to deliver critical public services to citizens and businesses. As well as reducing vulnerabilities from the pandemic, this work will also help us prepare for the Fourth Industrial Revolution, helping to digitise small and medium enterprises and strategic industries.
The next thing I believe we need to consider is training and education. We already have a world class ready-made garment (RMG) industry. But running in parallel to this we need the brightest, most agile digital minds. Experts in software development, coding, website development, online marketing—and a whole-range of other areas in between. Digital skills shortages will hold our economy back; they will hold our garment sector back.
We should also be in no doubt that our competitors are already pressing ahead in this area, including the likes of India, Pakistan and, of course, China. There is no time to waste.
The third area I believe we need to consider is tie-ups and partnerships with existing digital platforms. In a development we should all be taking note of, Pakistan recently announced its participation on the Amazon seller list—a move which will open up huge business opportunities for small to medium sized enterprises in that country.
Some experts believe Pakistan's participation on Amazon could generate up to one billion dollars' worth of exports and create hundreds of thousands of jobs.
Bangladesh needs to be considering fully its options for Amazon, ebay and the many other selling platforms which have proliferated globally in recent years. Indeed, I firmly believe our government should be looking to prepare training and development programmes to ensure our businesses can take full advantage from new opportunities offered by such platforms.
Such training, to be developed in conjunction with digital experts, including our universities, would support our business owners to improve quality and packaging of their products to the standards of Amazon and other platforms.
As indicated, it is not just Amazon. There are other selling platforms around the world, many of them specific to markets such as China (a huge export opportunity). Do we have the international trade experts within government to enable us to tap into these markets and understand how these platforms work? Often selling into new markets, even digitally, requires an understanding of cultural nuance as well different laws around issues such as customs, product packaging and legal regulations.
Finally, I believe the most important thing we must all be doing as exporters right now is talking to our customers—fashion brands and retailers. This sounds like an obvious point to make but it's surprising how many suppliers forget to do this regularly enough. It is also important to state that, as indicated, the past 12-months have seen a whirlwind of change, and this is ongoing. This change is having a huge impact on brands in terms of their logistics—their warehousing, their inventory levels, their requirements in terms of order sizes (smaller is increasingly popular) and so on.
Are we, as a supplier base, enabling them to better operate in this shifting environment? What can we do on a digital front to make their life easier, what kind of software do we need to invest in—in short, what do we need to do to become a trusted supplier and support them on their own digital journey?
Our rivals abroad will be asking these same questions and, as they say, the early bird catches the worm.
Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Apparel Exchange (BAE) and Bangladesh Denim Expo.