product or without interacting with the buyers [or sellers] in person” (p.37). They refer to the challenges of connecting rural producers to e-commerce in China, but these transactional barriers are likely to be present for small informal firms in other countries and even in urban settings. In fact, in their study in China, they find that the expansion of e-commerce has had no effect on producers and the only positive effects have been for richer and younger consumers who benefited from access to lower priced goods and services. This is another example of the potential polarization from the digital economy.

In sum, it is not obvious from the existing evidence whether the rise of e-commerce increases existing gaps between incumbent larger formal firms and informal ones, or it helps ‘level the playing The new empirical evidence from Chaldal and Daraz sellers’ data, the two case studies in this paper, is mildly positive. As reported by the firms selling on these platforms, the main reason for joining the platform is to access more customers. Most of these sellers report an expansion in their business after joining the platform. They also report an increase in their incentive to register their business and in their visibility to tax authorities. Other, less widespread channels of impact reported by firms include the adoption of new or improved business practices and technologies, better access to finance and greater flexibility in balancing home and work life.

The businesses selling on these platforms range widely in terms of size and other characteristics, and many of them are micro, small and medium-sized. In general, the reported impacts do not vary significantly by firm size and degree of formalization, suggesting that even micro and small informal firms that have joined e-commerce platforms can benefit from the greater market access facilitated by the platforms. However, firms using e-commerce, even the small ones, are from a selected group: they are owned and managed by individuals who are more educated and younger than the owners and managers of more typical firms.

The findings on the two case studies of this paper are encouraging as they seem to tilt the balance of evidence towards a positive impact on small, informal firms. That being said, these results cannot be easily generalized given the selective use of e-commerce among firms. While many small firms are using e-commerce platforms to reach a larger consumer base, the vast majority of them are still reliant on traditional brick and mortal retailing. Potential causes of this selective adoption of e-commerce include limited access to digital infrastructure among small firms and their target customers, informational barriers to the adoption of new technologies by firms, and limited capability of firms to profit from e-commerce. Understanding these causes better will be important for designing policies to broaden the development impact of e-commerce.

The rest of the paper is organized as follows. Section 2 describes the two e-commerce platforms examined in this paper and the key descriptive characteristics of the surveyed firms, which sell on them. Sections 3 and 4 discuss the main results of the analysis of the surveys of sellers operating on Chaldal and Daraz. Section 5 discusses how the sellers are a select group of firms. Section 6 concludes the study.

# **2 Setting and Data**

## **2.1 Two Digital Platform Models**

Chaldal is an online grocery service operational in four cities in Bangladesh. Established in 2013, it offers 1-hour delivery on over 6,000 products. Chaldal is currently operational in 4 cities. Chaldal operates its own warehouse system in each city to guarantee timely supply to the platform. Chaldal 4