E-COMMERCE SECTOR
COMMERCE ONLINE
Compiled by Yamini Sequeira
GIVING E-COMMERCE A HAND
Rakhil Fernando believes that trading on the internet will help boost sales
Here in Sri Lanka, e-commerce is a relatively new sector; but it will be critical for the country’s economic recovery and growth. Its expansion is driven by the island’s relatively strong internet and smartphone penetration rates.
There are approximately 11.3 million World Wide Web users in Sri Lanka with internet penetration at about 52 percent and smartphone penetration at around 60 percent of the country’s population.
The adoption of e-commerce has been rapid – with 60-70 percent of households outside the Western Province having completed at least one e-commerce transaction or online payment. Low entry and exit barriers further incentivise sellers.
GROWTH SPURT Commenting on how e-commerce has changed from pre to post-COVID-19 times, Rakhil Fernando asserts: “The pandemic deepened the e-commerce trend and fast tracked its growth, as more buyers and sellers learned about its benefits, and people’s trust and confidence in e-commerce and digital payments increased.”
He reveals that ‘essentials’ was a category that “many e-commerce businesses needed to focus on to ensure the sustainability of their enterprises and meet the demands of consumers.”
The unprecedented volume of buyers and transactions meant that e-commerce operators or online sellers needed to implement immediate changes to their technologies and operations, and expand their ability to deliver positive shopping experiences on time to various locations across the island.
Additionally, the pandemic brought new users to the e-commerce sector, which required businesses to invest in educating consumers on how to shop online. Some of the other challenges included managing the uncertainty of the pandemic, and dealing with abrupt disruptions to operations caused by curfews and lockdowns.
BEING RELEVANT Import bans and restrictions that followed the pandemic further depleted the product assortment that e-commerce brands could offer consumers. This inability to access the materials needed to develop products for sale online slowed the sector’s growth.
Fernando explains: “In the current economically stressed environment, e-commerce players definitely need to innovate to stay relevant and build a resilient business model. Many e-commerce brands are developing new technologies or features and marketplaces are expanding their product offerings or pivoting to new categories.”
For example, the Daraz app has a feature called ‘Daraz Live’ where sellers can communicate in real time with potential customers and explain how to use their products, as well as clear any doubts they may have.
PickMe launched ‘PickMe Pass,’ which is a monthly subscription service that offers value to app users in terms of reduced delivery charges on food, groceries and essentials on a monthly basis.
Platforms such as Ikman, which primarily focussed on property and vehicle sales, pivoted their offerings to include recruitment services. Flower shops such as Lassana Flora and Shirohana Flowers began selling groceries online, to address demand and consumer needs during the lockdowns.
Cloud kitchens are also mushrooming in Sri Lanka as businesses turn to more scalable solutions to meet the demands and needs of a digitally savvy consumer market.
MARKET ENTRY “E-commerce is an equaliser. Anyone from any location can set up an e-commerce business in minutes. The e-commerce sector can’t rapidly expand without micro, small and medium-size (MSME) businesses,” Fernando avers.
He adds: “Obstacles to MSMEs expanding in e-commerce are related to a few factors such as low digital literacy or e-skills, the lack of exposure to global e-commerce trends and inadequate access to technology devices that are needed to run an e-commerce operation.”
Fernando believes that more education and awareness should be generated about the e-commerce sector.
Sri Lanka’s artisans and entrepreneurs need to learn more about the demands of the market – both locally and globally. They also need to understand how supply chains can help them leverage their skills and knowledge into launching profitable e-commerce businesses.
E-commerce in Sri Lanka is also limited by laws and regulations, which are related to imports and foreign exchange transactions. Mobilising business chambers and forums, to conduct stakeholder consultations and enable better frameworks for e-commerce, will incentivise more artisans and entrepreneurs to plug into the sector’s ecosystem, and create new business opportunities.
“For e-commerce to reach its full potential, businesses must begin exporting, and logistics will play a key role in that effort. Enabling more cost-effective logistics solutions to facilitate e-commerce exports will help take Sri Lankan goods to new global consumer markets,” he asserts.
SUSTAINABILITY A drop in disposable incomes poses a threat to consumption and e-commerce.
Fernando explains: “In today’s economic environment, it is important for businesses to cater to the immediate demands and needs of their customers. This can be achieved by monitoring and tracking consumer behaviour to ensure that you are targeting the right audiences for your business, and using epic brand building strategies to stay relevant.”
“If you have great content, you can do more with less. Utilise technology, and the diverse range of content creation tools and channels available, to convey your unique selling proposition – and build lean and agile teams,” he urges.
Sustainability of resources is becoming a priority for businesses and nations alike; and if Sri Lanka’s e-commerce sector is to build a sustainable ecosystem, it needs to focus on three key areas – viz. energy, logistics and packaging.
Since e-commerce doesn’t require brick and mortar stores, it helps reduce the carbon footprint of online businesses. However, storage depots or warehouses and order processing facilities should be environmentally-friendly in terms of using solar power, recycling water or harvesting rain water.
Moreover, logistics is a key component of e-commerce, and pivoting to sustainable logistical solutions will enable the sector to be more sustainable.
Looking ahead, Fernando says that “e-commerce will depend on a number of factors this year. Sri Lanka has faced several unprecedented challenges that have arguably stifled the enormous growth that the country could have seen through the introduction of e-commerce.”
“For e-commerce to succeed, economic and political stability are necessary. To get e-commerce back on a proper trajectory, Sri Lanka needs to seek lower levels of inflation and normalise trade (imports and exports), review and amend archaic laws and regulations, and create a business environment that is open to innovation and change,” he concludes.
