The present scenario of micro-merchants in the FMCG sector of Bangladesh

Did you ever have a closer look at the FMCG micro-merchant trade prominently impacting the economic sector of Bangladesh? Influential, yet overlooked. The motive of this article is to represent a contemporary case study and analysis regarding the situation of FMCG micro-merchants in Bangladesh.

Over 1.1 million people are occupied as micro-merchants in the FMCG (Fast-Moving Consumer Goods) trade here, who generates almost $18.42 billion in sales with the inventory value of $16.72 billion.

Micro-merchant

A micro-merchant is someone who runs his business in lower-value transactions; in a small neighborhood kiosks or stores with monthly sales ranging from $436 to $3,195.
Generally, micro-merchants are male but an estimated number of 94,800 are female; with an average of 38. They hold a minimum level of educational background.

Majority of the micro-merchants have stated that they possess trade license, which means most of the businesses are formalized.

Engagement with technologies

Almost every micro-merchant owns mobile phone and in recent days, so many of them are also using smartphones as it’s becoming affordable these days; which can be helpful in their business to manage orders, accept payments also transact between people and business.

Knowledge about digital financial services

Micro-merchants are mostly aware of mobile financial services. Out of 10, 3 of them have MFS accounts but usually the suppliers are less interested to accept payment in this process recently.

Relationship with the customers

Micro-merchants maintain a very good relationship with the customers and mostly they have regular customers who spend a significant amount of time in their shop. More often they allow dues from them with whom they have a profound bond.

Sales Projection

As micro-merchants have so many regular customers with superior bond, they analyze the customer’s need by their regular buying preferences and time to time revamp according to the demand.

Present scenario and analysis

The very first comprehensive study of FMCG merchant has been done by the United Nations Capital Development Fund (UNCDF) lately, that has represented the gaps in data by which the nature of micro-merchants, employment opportunities and the market size can be understood. It also found that the trade proffers great opportunity to do something new like digital payments to FMCG micro-merchants and digitalization of whole supply chains.

A web portal www.microentrepreneursasia.com contains data and information about the first comprehensive study about Micro-merchants in Bangladesh. It was inaugurated by the secretary of the financial institution’s division under the finance ministry, Md Ashadul Islam. He said the portal would act as an enabler of rural development through micro-entrepreneurs.

“This is a big step forward to better understand the landscape of our micro-merchants and entrepreneurs which will enable policymakers and financial service providers to design policies and targeted products in an effective manner.” Md Ashadul Islam.

He has also mentioned that the government is giving priority to the involvement of micro-merchants and small, micro & medium enterprises in the formal sector for the acceleration of sustainable economic growth.

According to him, the government has also started realizing the significance of digitalization and the use of digital technologies in the economic sector, also retail shops.

As micro-merchant businesses are formalized, they should have access to formal financial services but 57% of them don’t have a bank account. 68% among them rely on microfinance institutions for loans and 30% have mobile-money account. But their usage is quite limited.

A renowned MFS Surecash stated that almost 10-15% merchants are already working with them.

"We are working with 80,000 villagers and 10 million mothers across Bangladesh," SureCash.

They said they have been helping clients with stipends by the digital wallet service which can be used for various kinds of payments.

Recommendation

Without any doubt, Micro-merchant business has brought-out a dynamic change in the economic sector of Bangladesh. It can be clearly seen that the FMCG has a prominent role in the economic health. But the constraints which can be found giving a closer look like, betel leaf and cigarettes being the most sold-out Item can be the most problematic issue. Banking is also limited to them while only 1 out of 10 of them borrow from the bank in spite of being credit-worthy.

So, in such a situation the government should develop some policies so micro-merchants can follow a formal financial system as it’s a very potential system to hold on .