74% of Bhutanese e-commerce consumers use unregistered online agents that advertise their products through free social media platform such as Facebook and Instagram. Only 26% purchase from the registered local, regional and global ecommerce companies.

In Bhutan, the surge in e-commerce activities is evident with 129 licensed operators, while an undisclosed number operates informally on platforms like Facebook and Instagram. The lack of reliable data on informal growth raises concerns, exacerbated by a notable increase in consumer complaints. The Office of Consumer Protection (OCP) received 14 complaints in FY 21-22 alone, ranging from non-delivery of goods to product discrepancies and refund refusals.

Against this backdrop, a study on e-commerce operations from a consumer safety perspective is deemed essential. The study aims to explore potential government interventions for enhanced consumer protection services. Concerns include system security, reliability, standards, unfair trade practices, and consumer protection issues due to inadequate e-commerce implementation.

E-commerce, encompassing transactions through the internet, mobile devices, or information networks, is transforming Bhutan’s marketplace. The rapid growth, fueled by the internet’s accessibility and convenience, is evident in the increasing use of social media and e-commerce platforms for various transactions.

E-commerce involves diverse commercial relationships, from classical business-to-business (B2B) and business-to-government (B2G) transactions to a growing focus on business-to-consumer (B2C) transactions. While offering manifold benefits such as time and cost savings for consumers and lower operational costs for businesses, it also poses risks, including unfair trade practices and difficulties in seeking redressal.

Guidelines on E-Commerce, 2019, are in place to regulate e-commerce activities, aiming to ensure consumer rights are protected. Additionally, the National Competition Policy, 2020, and the Consumer Protection Act, 2012, contribute to promoting fair competition and safeguarding consumers.

Surprisingly, a significant 74% of Bhutanese e-commerce consumers use unregistered online agents on social media, while only 26% opt for registered local, regional, or global e-commerce companies. This preference exposes consumers to higher risks of fraud and deception.

Online shopping frequency is notably high, with 70% of respondents considered frequent online customers. The most commonly purchased items include garments, cosmetics, and accessories (82%), followed by electronics and accessories (12%). A growing trend is also observed in ordering groceries online, possibly indicating changing lifestyles and increasing trust in local online services.

overview of the current state of e-commerce in Bhutan, highlighting various aspects such as customer satisfaction, consumer spending, challenges faced, privacy concerns, consumer education, information transparency, and policy implications. Here’s a breakdown and analysis of key points:

Customer Satisfaction:

• Positive Aspects:
  • 89% satisfaction with accessibility and treatment by e-commerce operators.
  • Majority spending less than Nu 3,000 per month on online shopping.
• Negative Aspects:
  • 11% dissatisfaction, citing reasons like inequitable treatment, denial of goods, and preferential treatment.

Consumer Face Risks:

• Challenges:
  • Trustworthiness issues with e-commerce operators.
  • Vague contract terms, online payment security, and data protection concerns.
  • Mismatch between advertised and supplied goods (69% faced this issue).
  • 18% faced fraud and deception, not receiving goods after payment.

Privacy and Data Security:

• Concerns:
  • 20% of respondents provided sensitive information like credit card numbers.
  • Lack of safeguards to prevent misuse of customer information.

Consumer Education and Awareness:

• Gap:
  • 71% of shoppers not aware of their rights and responsibilities as consumers.
  • 38% of government, corporate, or private sector employees lack awareness.

Information and Transparency:

• Issues:
  • 73% claim e-commerce operators don’t display refund/exchange policies.
  • 52% find payment information inadequate and misleading, not specifying additional fees.

Future Growth and Policy Implications:

• Growth Factors:
  • E-commerce expected to grow with improved internet connectivity and mobile device ownership.
  • Progressive policies and legislation guiding the e-commerce industry.
• Policy Suggestions:
  • Adoption of e-commerce policy by the Ministry of Economic Affairs.
  • OCP to enhance monitoring and inspection of e-commerce operators.

Recommendations:

• Consumer Awareness:
  • Urgent need to educate consumers on their rights, risks, and protections.
  • Prioritize awareness programs, especially for employees and students.
• Information Transparency:
  • E-commerce operators should display policies transparently.
  • Clarity on additional fees and charges in payment information.
• Data Security:
  • Strengthen safeguards to protect sensitive customer information.
• Local Business Support:
  • Encourage and support registered local e-commerce businesses.
  • Focus on online display of accurate information, data protection, and fair trade practices.

The growth potential of e-commerce in Bhutan is evident, but challenges such as privacy concerns, lack of awareness, and transparency issues need immediate attention. Regulatory bodies like the OCP should play a crucial role in monitoring and ensuring fair practices. Educating consumers and supporting local businesses can contribute to the sustainable growth of the e-commerce sector.

As Bhutan’s economy evolves, the study anticipates a continued shift towards online shopping, prompting the need for robust consumer protection measures and regulatory interventions in the burgeoning e-commerce landscape.

By Kinley Yonten