Digital-Physical Drive: Bangladesh’s Online Businesses Opt for Physical Retailing

In what is an interesting strategic shift, growing internet companies in Bangladesh are increasingly setting foot in the physical world.

From e-commerce giants to edtech innovators, agri-tech players and digital healthcare companies, a growing group of digital companies are opening offline experience centers and service delivery hubs. This trend, which started a few years ago with pioneers like Khaas Food and Pickaboo, has now become a significant strategic shift across sectors.

Some of the notable digital players that have entered the physical world in the recent past include:

1. Truck Lagbe: The digital trucking services platform has launched service centers across Bangladesh
2. Khaas Food: Started as an online safe food brand and then expanded to offline stores. The number of the company’s offline stores is approaching 20.
3. Pickaboo: Started as an e-commerce company focused on mobile devices and gadgets and has since evolved into an omnichannel player with a growing number of offline stores.
4. iFarmer: started as a solution to provide farmers with access to finance, then evolved into a comprehensive platform with a long list of solutions. The company has since launched offline centers.
5. GoZayaan: Last week, the country’s leading OTA launched its first offline services hub.
6. Shikho and 10 Minute School: Two leading players in the edtech market in Dhaka have launched offline learning and experience centres.
7. Drutoloan: SME-focused fintech player has launched a series of SME hubs, partnering with existing retail stores
8. ISHO: The next-generation furniture brand has built a successful omnichannel business.

These are just a few of a growing list of companies exploring what is increasingly being called omni-channel operations.

The charm of what is material

At first glance, the move seems counterintuitive. Why would digital novices, born in the frictionless land of bits and bytes, willingly accept the limitations of atoms? The answer lies in the unique characteristics of the Bangladeshi market and the changing needs of its consumers.

Bangladesh, even though it is digitizing rapidly, remains a country where trust is built through personal interactions. The tangibility of a physical presence serves as a strong signal of trust, especially important for companies handling sensitive transactions or services. For fintech players like Drutoloan, which recently launched offline SME centers, a physical touchpoint can be the difference between a skeptical prospect and a loyal customer.

Likewise, an offline presence combined with an online presence can dramatically expand market opportunities for many of these players. While digital commerce across industries has seen significant growth in the country, offline commerce continues to dominate economic activities. For edtech companies, for example, online reach is visible.

Moreover, these offline centers serve as hubs for experiential marketing. In a market where product awareness and digital skills are still developing, hands-on demonstrations can be much more effective than digital advertising.

For example, GoZayaan’s offline experience center lets would-be travelers explore virtual previews of destinations—a tangible experience that no amount of online browsing can replicate.

Strategic account

This shift from digital to physical is not without strategic reasons. On the other hand, offline centers can significantly increase the visibility and credibility of a brand. They are a living, breathing advertisement, potentially reaching customers who may never have encountered the brand online.

For edtech players like Shikho and 10 Minute School, offline centers can complement their digital offerings with on-site tutoring and study spaces. This hybrid model could prove particularly appealing in a culture that still values ​​face-to-face learning.

However, this move is not without risk.

Establishing and maintaining physical locations incurs significant fixed costs, potentially undermining the lean operating model that gave these digital startups an initial advantage.

There is also a danger of brand dilution if the quality of the offline experience does not match the quality of the digital offering.

Many homegrown online businesses expand offline, expecting it to expand their market and bring new growth. However, prematurely expanding into a complex operation, such as running a physical operation, can create new operational challenges. It can also dilute focus and misallocate resources. At the same time, the mover also opens these businesses to a new competitive landscape.

Furthermore, startups are typically resource-constrained organizations, and sharing limited resources can result in lower return on investment.

Trying to do too many things at once is rarely a good strategy.

That said, expanding into the physical world is a pragmatic strategic move for many of these companies given the market realities in Bangladesh, some of which we have discussed above. Risk is an inherent part of every strategic decision. Companies that can manage and execute these risks well will certainly benefit from this move.

Wider implications

This trend reflects a broader awareness in the technology world: the future is not purely digital, but rather a complex dance between the online and offline spheres. This is a tacit acknowledgment that while digital platforms offer unparalleled reach and efficiency, there remains an innate human desire for tangible experiences and face-to-face interactions.

For Bangladesh’s digital economy, this hybrid approach can accelerate technology adoption. By providing physical touchpoints, these companies are essentially creating digital onboarding centers, easing the transition for customers who may be unsure about pure online services.

The move also signals a maturing startup ecosystem in Bangladesh. As these companies expand beyond their original niche, they are adopting more complex, multi-channel strategies to gain market share and build sustainable businesses.

Looking to the future

As this trend continues to deepen, we can expect to see more diverse implementations of the hybrid online/offline model. Companies will leverage data analytics to optimize the locations and offerings of their physical centers, creating a seamless omnichannel experience that leverages the strengths of both the digital and physical worlds.

We may also see interesting partnerships emerging. For example, edtech startups could partner with traditional educational institutions to create innovative learning spaces that combine digital curricula with physical infrastructure.

The success of this strategy will ultimately depend on execution. Companies that can maintain their online advantages while effectively managing their physical operations will be well-positioned to dominate their markets.

The move of online businesses in Bangladesh offline is more than just a trend – it is a strategic evolution that reflects the unique characteristics of the market and the enduring importance of physical experiences in the digital age.

As these companies navigate this new terrain, they are not just expanding their reach; they are transforming the very landscape of Bangladesh’s digital economy.