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HomeNews & ViewsBusiness FocusBangladesh Looks to Boost $489 Million: Garment Industry Exploring on Virtual Marketplace

Bangladesh Looks to Boost $489 Million: Garment Industry Exploring on Virtual Marketplace

Bangladesh’s rapidly expanding apparel sector, essential to the country’s economy, is about to undergo a dramatic change. Ready-made garment (RMG) industry demands are being extensively studied by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), which is actively researching the establishment of a virtual marketplace platform. This creative project could give the industry an incredible $489 million boost, catapulting Bangladesh into the forefront of the world’s apparel manufacturing economy. Bangladesh’s RMG industry is a shining example of tenacity and flexibility. It has become a well-known worldwide supplier for its affordable prices and knowledgeable staff. However, the sector needs to be more impervious to the dynamic nature of global trade. Conventional approaches to buyer-seller communication, which frequently depend on trade exhibitions and in-person sample exchanges, need to be more effective and resource-intensive. This is the area in which the idea of an online marketplace excels.

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Figure Courtesy: BGMEA

The Bangladeshi Garment Manufacturers Association (BGMEA) sees a day when they can quickly and affordably engage with global buyers directly by creating a specialised platform. Geographical limitations would not apply in this virtual environment, allowing producers to exhibit their goods to a larger audience directly and disregarding the necessity for intermediaries. Envisioning a platform filled with excellent product descriptions, virtual tours of manufacturing facilities, and interactive tools that enable buyers and sellers to communicate in an actual real-time marketplace might offer more advantages than higher productivity. With the platform’s help, Bangladeshi manufacturers may effectively communicate with potential customers and manage their brand narrative. This increases trust and promotes transparency, vital in today’s cutthroat market. The virtual platform can also expedite the sample procedure, which is typically expensive and time-consuming. With the availability of 3D garment simulations and internet catalogues, buyers no longer require physical samples as much. This results in financial savings and the encouragement of ecologically friendly behaviour. The virtual marketplace is expected to generate $489 million in revenue, evidence of its revolutionary potential.

There are various reasons for this increase. First and foremost, the platform is anticipated to provide access to new markets and consumers previously closed off by conventional means. Second, more orders may be placed due to improved communication and quicker response times. Lastly, the virtual platform can enable smaller businesses to compete globally, even though they sometimes need more means to attend foreign trade exhibitions. However, creating a profitable virtual marketplace has its challenges. It will be crucial to provide user-friendliness and solid cyber security safeguards. Integration with the current payment and shipping systems will also be essential for the platform to run well. Training the personnel in new marketing techniques and how to use the virtual platform will also be crucial. The potential benefits outweigh the difficulties. The BGMEA’s investigation into a virtual marketplace is a daring step toward a future-proof and more digitalised RMG industry. With this plan, Bangladesh might become a global leader in garment production, empower manufacturers, and see considerable economic growth. The globe is excited to see how a virtual marketplace may revolutionise the RMG sector as Bangladesh begins this momentous journey.

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Figure Courtesy: BGMEA

Bangladesh’s rapidly expanding apparel sector, which contributes significantly to the nation’s export revenue, aims to increase its potential $489 million by investigating the possibility of establishing an online marketplace. The leading trade association for the industry, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), is currently evaluating the viability and possible advantages of establishing such a platform.

Difficulties with the Conventional Model: Despite its achievements, the Bangladeshi garment sector still needs help with the conventional export paradigm. Among them are:

  • High Reliance on Middlemen: Middlemen play a significant role in exports by bridging Bangladeshi producers and foreign consumers, increasing the process’s complexity and expense.
  • Limited Buyer Reach: Smaller and medium-sized manufacturers may miss out on profitable opportunities as they sometimes struggle to connect with a larger group of foreign buyers.
  • Information Asymmetry: It’s possible that customers and manufacturers don’t have access to comprehensive information about one another’s products and services. This may make negotiating more difficult.
  • Slow Turnaround Times: The traditional paradigm commonly involves long-drawn-out communication procedures and in-person sample exchanges, which contribute to slower turnaround times.

Virtual Market: A Potential Revolution in Technology: A virtual marketplace platform might alleviate these difficulties by providing Bangladeshi clothing makers with a more effective and transparent means of connecting with foreign consumers. How to do it is as follows:

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Figure Courtesy: The Business Standard
  • Direct Buyer Connection: By eliminating middlemen and expenses, manufacturers may present their goods and abilities directly to a worldwide audience.
  • Broader Market Reach: The platform can give users access to a larger group of possible customers, increasing export prospects, especially for smaller firms.
  • Increased Transparency: Purchasers can easily access accurate product details, certifications, and production capabilities, promoting confidence and well-informed choices.
  • Improved Communication: The platform allows buyers and manufacturers to communicate more quickly and effectively, resulting in shorter turnaround times.
  • Streamlined Processes: Online technologies can increase productivity by streamlining sample management, order placement, and document interchange.

Possible Advantages and Anticipated Growth: The Bangladeshi apparel industry is anticipated to gain a great deal from the use of a virtual marketplace platform:

  • Enhanced Exports: The platform’s ability to enable simpler connections and quicker transactions is predicted to boost exports by up to $489 million.
  • Increased Competitiveness: Increased effectiveness and a broader market reach can fortify Bangladesh’s standing in the international apparel market.
  • SME Growth: Smaller producers have easier access to foreign markets, which promotes their expansion and industry participation.
  • Job Creation: Increased exports may result in higher production demands, which could create new jobs in the industry.

The Path Ahead: Despite the potential advantages that are encouraging, BGMEA must consider several factors before deploying the platform. Among them are:

  • Building a Robust Infrastructure: It’s critical to have a safe, intuitive platform with compelling search features and unambiguous communication channels.
  • Ensuring Digital Literacy: Training and support programs could be required to teach manufacturers how to use the platform efficiently.
  • Upholding Quality Standards: Procedures must be established to guarantee the calibre of the products and compliance with moral production standards.

A View of What’s Up Next: The BGMEA’s investigation of a virtual marketplace platform is a progressive strategy to tackle issues and advance the Bangladeshi apparel sector toward a more technologically advanced and competitive future. By implementing this initiative, Bangladesh may secure major economic gains and maintain its position as the world leader in the apparel manufacturing industry.

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Figure Courtesy: The Daily Star

This is a helpful synopsis of Bangladesh’s efforts to strengthen its apparel sector through the investigation of virtual markets:

Regulatory Framework Difficulties: When attempting to enter the virtual marketplace, Bangladesh’s garment industry faces several obstacles relating to the regulatory environment. The 2018 National Digital Commerce Policy does not explicitly address foreign e-commerce but focuses exclusively on the domestic market. Consequently, apparel producers and exporters need help accessing international e-commerce sites. Among the principal difficulties are:

  • Global Payment Gateways: The lack of globally recognised global payment gateways hampered smooth cross-border transactions. Manufacturers want reliable and fast payment methods to interact with foreign buyers.
  • Working Capital funding: E-commerce businesses still have difficulty getting working capital funding. The dynamic nature of online sales may not be compatible with traditional finance structures.
  • Export Processing for Small Orders: Onerous export processes may deter manufacturers from entering the online marketplace.
  • Impractical Return Policies: Exporters must deal with needless complexity because the current return policies classify returns as imports.

BGMEA research and Possible Benefits: The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) carried out research to evaluate the unrealised potential of the virtual clothing market in important export hubs. Bangladesh hopes to increase its apparel revenue from virtual markets in the United States, the European Union (EU), and Africa by $489 million by 2027. Bangladesh aims to attain particular market shares to do this:

  1. 0.2% of the virtual clothing market in the USA
  2. 0.1% of the virtual clothing market in the European Union; 
  3. 0.75 per cent of the virtual clothing industry in Africa The anticipated profits would substantially contribute to the garment industry’s overall earnings in Bangladesh.

According to a report titled “Establishing A Virtual Marketplace for Bangladeshi Apparels,” the virtual garment market in the US, EU, and Africa is expected to be valued $308 billion by 2026. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) hired LightCastle, a consultancy firm, to work with the International Finance Corporation (IFC) to undertake the study. The study’s results were jointly released by the IFC, BGMEA, and LightCastle at a press conference yesterday at the BGMEA office in Dhaka. According to the report, Bangladesh might increase its share of the virtual clothing markets by 0.20 percent in the US, 0.10 percent in the EU, and 0.75 percent in Africa by 2027. According to figures from the Export Promotion Bureau, Bangladesh exported apparel worth $46.99 billion during the fiscal year 2022–2023.  Bangladesh hopes to overcome legislative obstacles to capitalise on the enormous potential of the virtual marketplace and join the global e-commerce industry. By utilising technology and strategic initiatives, the nation can position itself as a significant player in the digital fashion environment and significantly increase the revenue generated by its garment sector.

In short, the Bangladeshi apparel industry’s adoption of online marketplaces represents a turning point in its development. It has the potential to revitalise and strengthen a sector that has long been a pillar of the country’s economy. The allocation of $489 million towards investigating and growing in this digital space demonstrates a calculated acknowledgement of the evolving patterns in international commerce and consumer conduct. Using virtual platforms, Bangladesh’s clothing producers can overcome the difficulties caused by historical trade restrictions and logistical limitations. They also establish themselves as leaders in innovation within the global fashion sector.

Furthermore, this project promises to support long-term competitiveness and sustainable growth while maintaining the industry’s current position. Using technology, Bangladesh’s apparel industry may optimise workflows, augment transparency, and establish direct connections with global consumers, opening up novel growth and success prospects. In addition, by adopting virtual marketplaces, the sector may respond faster to changing customer tastes, trends, and demand patterns, maintaining its relevance and toughness in a global market that is becoming more competitive and dynamic daily. Ultimately, this calculated move highlights Bangladesh’s resolve to redefine its place in the world’s apparel sector, embrace innovation, and take advantage of the digital era’s prospects to further its economic development and prosperity.

References:

  1. https://www.dhakatribune.com/business/339523/bgmea-president-bangladesh-could-earn-489m-from
  2. https://www.thedailystar.net/top-news/news/rmg-can-gain-additional-489m-global-online-business-study-3528361
  3. https://www.tbsnews.net/economy/rmg/virtual-apparel-marketplaces-have-potential-additional-500m-exports-study-781590
  4. https://sourcingjournal.com/topics/sourcing/bangladesh-could-see-500-million-from-online-marketplace-bgmea-president-faruque-hassan-495361/
  5. https://www.dhakatribune.com/business/337761/bgmea-assesses-possibility-to-launch-a-virtual
  6. https://rmgbd.net/2024/01/rmg-can-gain-additional-489m-from-global-online-business-study/

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