Although online sales of health products and daily essentials were booming due to COVID-19, the ongoing pandemic has taken a heavy toll on online retailers of fashion, cosmetics and other imported goods, according to a recent study.
Many of those trying to cut revenue losses by canceling orders and selling their stock in April, 24 percent of them, went out of business in June.
The study, carried out first in April and then followed in May-June, by the Brac Institute of Governance and Development (BIGD), of the University of Brac, revealed the information.
In a webinar on Sunday, Mehnaz Rabbani, Program Leader, Research, Policy and Governance at BIGD, presented these findings.
With lower start-up costs and broader reach, a growing number of entrepreneurs in Bangladesh have recently turned to online retail.
A large percentage of these entrepreneurs are women who operate their businesses through social networks like Facebook.
These online businesses often see an increase in their sales on special occasions, such as Eid and Pahela Boishakh.
But this time, as both events were observed under a nationwide lockdown, 79 to 84 per cent of businessmen experienced lower income than on Eid and Pahela Boishakh last year.
While the impact of this decline in income has been no small feat for women entrepreneurs who rely on their online businesses as their sole source of income, it also has ripple effects on the people employed in these businesses.
The study found that within a month after the first round of the survey, 121 employees were laid off. If things don’t improve for these companies, the study estimates that almost 550 more jobs could be at stake in the next seven months.
Furthermore, more entrepreneurs now, in fact, believe that their businesses will improve. The study’s findings show that the percentage of entrepreneurs who are confident their businesses will recover rose from 15 percent in April to 21 percent in June.
There has also been a decrease in uncertainty regarding overcoming this shock from 30 percent to 18 percent.
With this general increase in the level of confidence, almost half of entrepreneurs now believe that it will take them from six months to almost a year to recover from the losses suffered.
Meanwhile, these resilient businesswomen continue to practice the same coping mechanisms they adopted in April, such as canceling orders, offering discounts, laying off employees, or staying the same.
According to the study, although fewer orders were canceled in June compared to April, there was an increase in the percentage of entrepreneurs offering discounts, from about 13 percent in April to 33 percent in June.
Also, up nearly 4 percent from April, about 14 percent of companies are also laying off employees.
The alarming rise of these desperate survival mechanisms illustrates the scarcity of resources needed to keep these businesses online.
As more than 65 percent of these businesses do not have a formal registration or business license, they remain ineligible for the government’s stimulus package.
This has forced more than 68 percent of entrepreneurs to rely on personal savings and around 20 percent to borrow from friends and family.
Additionally, with 63% of entrepreneurs not knowing where to look for governance assistance, many turned to other systems or avenues of support such as online entrepreneur forums, webinars, family and friends, and other known entrepreneurs for guidance and help. during these difficult times.
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The study findings also show that financial problems due to lack of support or access have contributed to their higher stress levels, while staying home caused most of them to spend a significant amount of time on housework.
This has reduced the time spent managing business or office related jobs.
Selima Ahmed, MP, founder and president of the Bangladesh Women’s Chamber of Commerce and Industry (BWCCI), said there is no notable mention of “women entrepreneurs” in the COVID-19 stimulus package circulars published by the Bank of Bangladesh, although women entrepreneurs continue to play an essential role in contributing to the economy of Bangladesh.
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In response to this, Maheen Sultan, Senior Fellow of Practice at BIGD, Brac University, mentioned how the 5 percent allocated for women entrepreneurs in the Tk 2,000 crore stimulus package by the central bank is clearly not being translated or communicated to commercial banks.
Salima Ahmed also mentioned how the lack of digital literacy for many women entrepreneurs who own and operate small businesses in Bangladesh continues to hamper their recovery in pandemic situations.
Dr. Imran Matin, CEO of BIGD, clarified that this research is “exploratory” with the aim of shedding light on a new emerging sector in Bangladesh, rather than being a representative study, and that his priority is to maintain the integrity of Research and avoid ‘overreacting’.
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