DRIVING THE ENGINE OF GROWTH

Fazmina Imamudeen describes a classic recipe that tantalises investors!

Sri Lanka is like a classic recipe: rich in flavour and steeped in tradition. But like any new ingredient that can elevate the taste of a dish, Sri Lanka’s economy has welcomed e-commerce to the marketplace.

This digital ingredient has added a new layer of depth and complexity, which tantalises local and foreign inves­tors. It’s not a garnish or an afterthought but a main ingredient that has transformed how businesses operate in the island.

So how has Sri Lanka fared in the ever-changing landscape of online commerce?

The country is becoming popular for e-commerce entre­preneurs and the sector has boomed even in the post-pandemic period.

Though the pandemic disrupted every aspect of our lives, it also forced us to rethink how we do things; and as a result, e-commerce grew exponentially. Indeed, online shopping has become necessary for people who wish to avoid crowded spaces.

It’s worth noting that Sri Lanka’s e-commerce market is relatively young. According to a report by the Sri Lanka Association of Software and Services Companies (SLASSCOM), the sector accounts for only 0.5 percent of the country’s GDP.

Compare that to China – where e-commerce makes up a whopping 40 percent of GDP – and it is obvious that we have a long way to go.

If e-commerce was a sport, Sri Lanka would be the underdog. While it may not be on a par with the likes of Amazon or Alibaba, it’s worth noting that e-commerce in this country has enormous growth potential.

And in the past few years, the country has come a long way and this sector is rising steadily.

One of the key drivers of e-commerce in Sri Lanka has been the rise of online marketplaces. These platforms allow small businesses and entrepreneurs to sell their products and services to a much larger market without needing a physical shopfront.

Platforms such as Facebook, Instagram and Twitter have become essential channels for businesses to connect with customers, promote their products, reach wider audiences and build their brands online. E-commerce features such as shopping carts and checkout processes make it easier for businesses to sell products directly to customers.

Sri Lanka’s entrepreneurial spirit has been a critical driving force behind the rapid growth of e-commerce in the country. The island has always enjoyed a vibrant entrepreneurial ecosystem with a culture that encourages innovation and risk taking. This spirit of entrepreneurship has now found a new outlet in e-commerce.

With its well-developed logistics infrastructure and widespread adoption of mobile technology, Sri Lanka is becoming an increasingly attractive destination for startups looking to launch e-commerce businesses.

Meanwhile, the country’s strategic location at the crossroads of major shipping routes also makes it an ideal hub for businesses looking to tap into the growing demand for e-commerce in the region.

Many local entrepreneurs are capitalising on these advantages, and launching e-commerce businesses that cater to a wide range of domestic and international customers. From niche products such as artisanal crafts and gourmet food, to mainstream consumer goods that include electronics and clothing, Sri Lankan e-commerce businesses are serving a growing market of online shoppers.

Though it is rapidly gaining ground in Sri Lanka, some challenges still need to be addressed. One of the most significant obstacles is the lack of popular online payment systems such as PayPal.

As many e-commerce businesses rely on online payment systems to facilitate transactions, the absence of PayPal can be a major barrier for enterprises that wish to operate in Sri Lanka. This limitation can also make it challenging for Sri Lankan businesses to sell their products to international customers, given that they often prefer using PayPal as a mode of payment.

Amazon’s Executive Chairman Jeff Bezos says: “E-commerce is a booming industry that presents tre­mendous opportunities for growth but it’s not without its challenges.”

“The key to success is to focus relentlessly on customers and constantly innovate to meet their changing needs. As the market evolves and new players emerge, those who are agile and willing to adapt will be the ones who thrive,” he adds.

Though our e-commerce market is relatively young and faces challenges, its growth potential is enormous.

As e-commerce in Sri Lanka continues to thrive and evolve, it will surely add a new layer of depth and complexity to the national economy – and make it an increasingly attractive destination for startups and investors.