In 2021, Bhikhabhai’s e-commerce website became fully operational, four years after the plan to go online was originally hatched.

One of Fiji’s largest and oldest family-owned manufacturers and wholesalers of Indian sweets and snacks now offers its products online to a growing local and international customer base.

The online store supplements the company’s five physical stores around Fiji, including two in the capital, Suva.

Established in the 1930s when Fiji was still a British colony, Bhikhabhai is a household name in the South Pacific nation’s culinary industry, now catering for a more digital-centric and inter-connected customer base.

The task to lead the company’s e-commerce innovation fell to Viraaj Lad, the company’s CEO and Executive Director who is based at the Bhikhabhai headquarters in Ba.

Mr Lad says the motivation to go online was to tap into the sizeable Fijian diaspora in Australia, New Zealand and USA who still hold deep cultural and familial bonds in the homeland
The strategy has borne fruit, with sales on the website increasing considerably since the Internet Payment Gateway (IPG) was activated in 2021.

“We were overwhelmed at the level of response when we launched the payment gateway as the value of sales in the first year of launch was 10 times more than the pre-e-commerce website days,” he said.

Company data shows that over 50% of sales were derived from either customers abroad buying gifts for family and friends living in Fiji or locals purchasing products online for their own consumption.

Placing an order on the website is a straightforward process: Customers can add multiple products to a virtual cart and upon checkout choose the delivery destination.
The charges are inclusive of shipping costs and customers can pay with credit/debit cards or Vodafone Fiji’s mobile money service, mPaisa. The website has a live chat feature to answer customer queries in real-time and customers do not need to register to place an order.

E-commerce provided business continuity for Bhikhabhai at a time of physical distancing and store closures, and, as COVID gradually subsides, an additional revenue stream and access to new markets.

But the journey to this point has not been entirely smooth sailing.

Despite having the financial, technical and human resources of a big market player, it took Bhikhabhai four years to establish an online store due to delays with the banks. The company is also facing ongoing challenges with high shipping costs.

The company’s e-commerce experience provides important insights that could inform interventions in this space across the Pacific region, where e-commerce has been identified as a potential driver of economic growth if certain conditions are met.

The first part of the journey involved establishing internal procedures, training and hiring 30 staff specifically for e-commerce activities, designing the website and pricing and showcasing the products. The company had total control over these aspects and accomplished them with relative ease.

Challenges to accept online payments
The challenges began with trying to set up an IPG on the website to be able to accept payments using bank cards, such as VISA and MasterCard. This required “cumbersome” paperwork and other hurdles at three separate banks, an experience Mr Lad described as a “sad.”.

The first bank did not offer the service, while the second rejected Bhikhabhai’s application even after the required paperwork was submitted and deposit of FJ$10,000 (US$5000) paid. The reason given was that the company did not bank with them.

The application with the third bank was on the cusp of approval but was put on ice in 2020 due to increased instances of fraud driven by skyrocketing demand for digital financial services in the wake of COVID-19.

Finally, in 2021, Bhikhabhai signed up with Australian-owned Westpac Banking Corporation as the IPG provider, a full two years after the company first applied for the service.
“Banks need to make it easier for businesses,” Mr Lad said.

“They do have their compliance and risk management – that’s all good and is supposed to be there. But the ease of entry for [e-commerce] businesses to come in is an area they can look into.”

With over 90 employees and investments across Fiji, the Pacific’s second largest economy, the company is one of the largest e-commerce traders in the region but encountered numerous hurdles while trying to go online.

While Fiji has introduced the National Payment System Act 2021 to facilitate the development of a centralised, efficient and stable payment system, no such legislation exists in other parts of the region.

Indeed, the UN Capital Development Fund’s (UNCDF) ‘The Opportunity for Digital and E-commerce Payments in the Pacific Region’ report identifies the lack of a well-developed payment infrastructure as a major impediment to e-commerce in the region.

This is in addition to weak policy and regulatory environments, general infrastructure challenges and low inter-operability on cross-border payments due to the lack of a centralised regional payment system.

While e-commerce has been hailed as a potential equaliser between small and large businesses in the region, Mr Lad said most micro, small and medium enterprises (MSMEs) would not have the resources to overcome the challenges Bhikhabhai faced.

Many would not be able to afford paying the FJ$600-$1000 (US$300-500) annual cost of hosting an IPG, he added.

Pacific Digital Economy Programme
UNCDF recognises the challenges of creating and managing e-commerce websites and, through the Australian government-supported Pacific Digital Economy Programme (PDEP), is supporting aggregator platforms onboard more MSMEs.

PDEP has partnered with Fiji-based startups, Cyberfood Fiji and Solved Fiji, to enable MSMEs to migrate their businesses and trade online at no cost, all part of efforts to reduce the Pacific’s digital divide.

Similar support has been extended to the Maua app in Samoa and Bulkshop in Solomon Islands, with more e-commerce projects lined up in the future.

“We do recognize the financial risks due to fraud and charge backs that banks incur when dealing with small and medium sized businesses that would like to accept online payments. Therefore we really see a role for UNCDF to support banks, payments service providers as well as the small and medium sized businesses to be able to accept e-commerce related payments. De-risking is key here; both financially as well as through technical assistance.”

Shipping
Another major ongoing challenge for Bhikhabhai is the exorbitant shipping costs that increased at the height of the COVID-19 pandemic.

According to company data, shipping costs amount to 55% of the value of goods purchased online at a rate of FJ$30 (US$15) per kilogram.

“Small island nations do not enjoy lower shipping rates due to low economies of scale,” Mr Lad said.

“By reducing cost of courier charges, the potential for e-commerce growth in Fiji to export overseas is great. Courier companies can also work to grow this market to help small Pacific Island nations.”

He added that there was a need for international agencies, national governments, and the private sector to collectively lobby for reduced shipping costs and address the digital divide.

“Businesses also require technical expertise in ensuring local websites are in line with service expectations and have user friendly interfaces,” Mr Lad said.

“Funding for research to share with local businesses on new trends and demands overseas for business-to-consumer (B2C) markets would also be welcome.”

Bikhabhai’s persistence to venture into e-commerce reflects the broader increase in the demand for digital financial services in the Pacific region, especially payment solutions, in the wake of the COVID-19 pandemic.

Shopping online is fast becoming second nature to Pacific Islanders. Online businesses are creating jobs and generating economic activity within and beyond national borders.

However, while Pacific e-commerce has potential, the challenges that hold it back need to be addressed on a consistent basis.