Wednesday, March 15, 2017
Wednesday, October 26, 2016
How Sri Lanka can avoid the Middle Income Trap; foster innovation and entrepreneurship.
Post-war Sri Lanka had a significant level of optimism in terms of economic growth, but as many of you will agree that optimism was short lived. Sri Lanka was hoping for FDI to boost our economy and that never really came. To make these matters more difficult we have now got in to a Middle Income Trap where our labor is becoming too expensive to compete with developing countries (tea, garments, etc.) and where we are too poor to invest in value-added products for export (smartphone, cars, computers, etc.). The ratio of Sri Lankan exports to GDP has halved over the last few years. In such an environment, to not get left behind, Sri Lanka must take immediate action boost our economy.
What must be done?
1.) Reality Check – most export products we have depended on historically are agricultural and they are becoming too expensive to compete in the global market. So we need to adapt fast as a country to tackle this issue. I would encourage changes in policy in regards to re-allocating resources (land in this case) for more profitable ventures. Policy needs to allow for companies to utilize their land holding in a manner that maximizes returns and if this means, for example, that tea plantations should be used to grow coffee, it should be allowed. Furthermore, R&D budgets should increase in order to develop more efficient farming methods or we should learn from countries such as Isreal that has excelled in this space.
2.) Labor Policy – in the 21st century significant amount of wealth will be created through technology start-ups. Startups generally grow fast, and at times needs to hire and fire people just as fast to keep up with a changing environment. This is nearly impossible in Sri Lanka. Labor policies must reflect the needs of the modern economy.
3.) Investment Policy – regulations around investment in to Sri Lanka needs to be streamlined and loosened. Ideally all bureaucracy would be handled by one department. Policies should be clear & carried over from one regime to the next.
4.) Education System – we need to update the education system to get students to be more entrepreneurial. The current system is ill equipped to do so. This would only require a change of thinking in terms of curriculum and value system.
5.) Data usage- Internet is the great emancipator in the 21st century. We should reduce the tax burden on data that is consumed by Sri Lankan’s so they will have the ability to have access to knowledge no matter where they are in the country.
6.) Human Resources- The value of Sri Lanka is primarily in its human capital. What this means is that we should be open to having ANYONE who wants to work here being allowed to work here. We should be an immigrant friendly country. For too long Sri Lankans have left in search of better pastures, we should allow anyone who is willing to work and contribute to the growth in SL to make this their home.
All the above recommendations given will not cost the government or the Lankan taxpayer a lot of money. If action is taken we can expect great benefits to come into the island to move Sri Lanka from a lower middle-income nation to much greater heights.
The author of this article is the co-founder/CEO of takas.lk. These are his personal opinions and do not reflect the views of his organization.
Friday, October 23, 2015
Walmart announced last week that it will significantly increase its investment in their eCommerce operations. They have realized (a little late) what they should have realized a long time ago; that eCommerce will be a game changer in the retail landscape and now they are trying to play catch up. This will end up costing them US $ billions more than if they had either invested or bought over an eCom player sometime back in order to address the balance of power in the retail sphere.
It was not long ago in 1999 when Amazon’s top line was a paltry US $ 1.6 billion compared to Walmarts US $ 138 billion (NY times Report). Around the same time an Amazon market cap was at US $ 20 billion to Walmarts US $ 260 billion (Wiki Inest). I am fairly sure that Walmart saw Amazon as little more than a nuisance, even perhaps a house of cards that was bound to fail. They probably waited for that outcome, but it never came.
Over the last 15 years Amazon has been gaining more and more of the total retail market and now dominates the online market place. This is reflected, now more than ever, in the stock price of each company with Amazon’s stock market value surpassing Walmart’s for the first time in July and now exceeding Walmart’s by more than US $70 billion. Amazon’s stock is up more than 80 % this year. Walmart’s has declined 30 % (NY times Report), and for those who want to invest and make money the better bet has been Amazon for some time now
What does this mean for Sri Lanka? It essentially is a clear sign of things to come in the total retail space in the island. What happened in the US took 15 years, in Sri Lanka this will happen in 5 and here is why.
Smart phone penetration this year is growing at a staggering 30%, with mobile data and access becoming more and more common. What this means is that more people will have easy, cheap access to the Internet than ever before. Mark Mahaney, who covers Internet retailing for RBC Capital stated that in the US market the factors that aid in selling are price, convenience and choice (NY times Report), which are factors that come as a natural advantage for an eCommerce company compared to traditional retail. In Emerging markets I would add ‘Trust’ to be another factor that determines purchase patterns for consumers, which is quickly being established by some of the more entrenched players in the Lankan market among the consumer base. eCommerce will have price, convenience and a choice advantage compared to their brick and mortar competitors.
Some may argue that in mature markets eCommerce has become the norm in retail, whereas in emerging markets such as Sri Lanka eCom continues to be a distant alternative. This may be true today, but times are changing; the eCom players who will weather the current storm in terms of ‘time’ will prosper in the coming years beyond all expectations.
However, this will not take place in a vacuum; to get the ball rolling and for the eCommerce industry to flourish in Sri Lanka it will need a favorable policy to continue to attract investment from here and abroad, and policies that aid in the process of online transactions taking place. I believe from the discussions that I have had with frontier market Venture funds that in time to come eCom will be one of the top attractions for FDI in Sri Lanka.
Further to this the current nascent industry will also be greatly strengthened by the backing of entrepreneurial and industry heavy weights.
What is inevitable however is the rise of eCommerce as both a viable and strong player in the retail fabric of Sri Lanka for the foreseeable future.
All views expressed in this article are the personal views of the author, Lahiru Pathmalal, who is CEO/Co Founder of takas.lk
NY Times Report
Thursday, February 12, 2015
#Sundaying#Saturdaying #Tuesdaying why I do it?
Whenever I run in to someone I know these days, people always make a comment about if I work or not. “Lahiru, you are always #Sundaying#Saturdaying #Tuesdayingwhen do you everwork?”, the reality is that I work all the time and for the last year and a bit I have not taken a vacation ( otherthan public holidays, and weekends) but if someone was to look at my FB wall it will be full of pictures of my #Sundaying#Saturdaying #Tuesdaying… how is this possible? And why do I do it?
Its possible because I live in Sri Lankaa island that is fairly spectacular. Where most locations that you might want to run off for a break is just a few around the corner. Its easy to drive up to a lovely beach, or get up to the hills. So if you want to do it, the only person whose stopping it is you.
And why I do it because I love to, and as a CEO your generally under a lot of preassure; and as any CEO knows that you have to find your own little way to unwind. Driving a few hours for a night to be at a place that I love helps me deal with work related stress, and this helps me be a better CEO, friend and a overall nice guy.
Also a firm beliver in livinglife to the fullest, so try to do things that I love to do with the free time I have.
Dr. Douglas McKenna, an industrial and organizational psychologist who help establish Microsoft’s executive and management development group in the 1990s, stated that its super important to to deal with stress in an effective way (which could be different things for different people); if they continually manage to do this they can more easily start thinking and reasoning clearly, free of stress responses (FrobesArticle; Stress Management for the CEO)
Making use of the free time you have to relive stress is critical in handling pressure when push comes to shove. This end of the day makes you better at dealing with both your work and private life. So if your not doing it already take the time to figure out what works for you! And encourage people around to take some time off and do what they love! It will make them a lot more productive and help you reach your targets much sooner..
Shakya Lahiru Pathmalal is the co-founder CEO of takas.lk
Thursday, September 11, 2014
eCommerce the great equalizer
It was not too long ago that the electronic retail market was controlled by the big 3 retailers in Sri Lanka;Abans, Singer and Softlogic. While the 3 major players still control the lion’s share of the market there is fierce competition being created by the emerging eCom players in the island. Takas.lk has been one of the players that has played a role in creating direct competition with the traditional retail players for a share in the market. It is certain beyond any doubt that in the next 5 years the retail landscape will be re-drawn and one if not two major ecommerce firms will figure at the very top.
It’s expected that by the end of this year there will be 5 million internet users in Sri Lanka, this represents a growth of double digits in the last few years, and the pace of internet coverage will only grow. It’s predicted that the whole world will be online by 2030 and our little island will be wired far earlier. The cost associated with being online is also coming down dramatically, data is now cheap and the devices that are used to access data are becoming more readily accessible at dramatically dropping prices. Thus, the total number of people who will have the capability of doing online shopping is an ever increasing pool! Even if other externalities are controlled for (economic growth/incomes).
eCommerce is aided by search engines, mainly Google. Customers have far more information at their fingertips today than they ever had before. They are able to carry out market research by performing a few clicks. Thus the ability for huge marketing machines to push products at big margins for certain firms are becoming ever more difficult. This has enabled competitively priced eCommerce companies to capture customers. It has also led the bigger retailers to be far more price competitive. This trend will only continue in the future.
Why Sri Lanka?
Sri Lanka has one of the biggest rural populations in the world, and compared to the region SL also boasts a high income level. However, the rural community does not have the same level of access to products that individuals in the urban areas have due to the retail chain network being highly concentrated in urban areas. This has been the greatest driver for sales and penetration for takas.lk and its growth in the recent past. This will also be the reason that eCommerce will be a far more profitable, and viable business than in other areas in South Asia.
What does this all mean?
eCommerce will explode in Sri Lanka as it has in the developed world, and I am confident it will become a profitable business in a shorter period of time than for our neighbors (India/Pakistan). But the greatest change will be experienced by the Sri Lankan Consumer. The Lankan consumer will be able to get the best possible price for the goods and they will have the greatest convenience ever experienced. Furthermore, and perhaps the best thing about eCommerce is, no matter if you live in the heart of Colombo, or in the central hills of Haputalle, you will be able to get your hands on any product you want at anytime. J
Monday, May 19, 2014
The flip side of the coin (Entrepreneurship)
Recently I read an article by Sir Richard Branson called “Welcome to the Dark Side” essentially out lining seven things that they ‘don’t tell people’ when they get in to entrepreneurship. (bit.ly/1nYuOz1) I was meaning to write something on the topic myself and the article was just what I needed to organize my thoughts and put something down on paper. Here are my five points:
11.) Entrepreneurship can be a very hard livelihood to be in. Making money is not easy, never easy, no matter how many people talk about how lucky people have been. There are of course exceptions to the rule, but the general rule of thumb is you need to work very hard, extremely hard, in order to make money, or to make it work. The more you put in, the more you get. It’s very much connected.
22.) Entrepreneurship can also be a very lonely place. Generally while your friends and family are there to support you, you generally have to do things by yourself. If you fail, the responsibility falls unto you. Thus, don’t ever expect sympathy from the people around you, no matter how hard you work.
33.) You social life WILL suffer. This is very much connected to the first 2 points. Your business will take most of your time. I used to have a regular nine-to-five job, weekends off, poya days off, sick days off, but once you’re the person who’s responsible, this all changes. Your work days become much longer, which means that you will have less time for pretty much everything. Taking days off at a time will also be a challenge, even when you’re not feeling great. In the words of Bruce Almighty: “This is how the cookie crumbles.”
44.) As Sir Branson states in his article, entrepreneurship leads to you being unhappy. My wife knows this all too well. I am constantly unhappy no matter what takas.lk achieves. When we raised the second round, at a great valuation, I was down, since I was already thinking of the challenges that lay ahead, and no matter how much we do in sales, I am generally not upbeat since I am constantly thinking how to replicate and make revenues grow month no month. End of the day though, this is what drives entrepreneurs to excel.
55.) Finally, with the added stress and long work days, your diet and exercise routine will suffer. I like to think this is why I have put on weight in the last 18 months J
So why do it? Because the rewards of entrepreneurship outweigh the downside more times than not and you get to do what you love.
Tuesday, December 3, 2013
At takas.lk we recently did a customer survey to figure out what we have been doing right and what we have been doing wrong. Bill Gates once said: “Your most unhappy customers are your greatest source of learning.” As a start-up we firmly believe in what he said. From the word go,we at takas.lk have strived to provide our customers with three core services. Firstly, great customer service, secondly convenience and thirdly choice. According to our customers’ responses it seems that we have done well in all three areas, and our customers have responded very positively to these three priorities. What they have now asked us to do is to provide them with better pricing, and this is exactly what we intend on doing in the future. I wish to share with you some of the positives from our survey, and lessons learned.
Our survey comprised of 10 questions aimed at evaluating customer satisfaction.
In regards to the question of ‘How happy are you with takas.lk?’ 70% of the respondents said that they were either extremely happy or very happy and none of the respondents stated that they were not happy.
In regards to the question of ‘How convenient is our website to use?’ 82.5% of the respondents stated that the site is extremely or very convenient to use. In regards to the question of ‘How responsive is our service team to your needs?’ 81% of those who responded stated that the takas.lk team was either extremely responsive or very responsive to their needs.
Needless to say we were very heartened by what we heard back from our customers.
We attribute our current success to doing a few things right in regards to servicing our customers, and here are some of the practices that may help you build up your business.
11.) Be honest- never try to make a sale, but try to win a customer. We are at times under extreme pressure to hit targets/make sales and are at times forced to bend the truth. Try to avoid doing this, be honest with your customers. Once a customer can trust you they will keep coming back to you for more business. You break that trust you may lose the customer forever.
22.) Never make promises you can’t keep- sometimes a customer will call and ask if we can deliver the goods on the same day. While it’s tempting to say yes in order to make a sale, we are always honest about the time frame that they can expect a product delivered. This helps build trust between the customer and yourself and you avoid disappointments.
33.) Always listen to the customer and deal with their complaints- my father always says:“The customer is the king/queen. So treat the customer as such. They can be our greatest source of learning.”
44.) Take that extra step- smile on the phone when you talk to a customer, even though they can never see your face they will always know. When making deliveries be friendly and helpful.
55.) Finally TRUST your customer! There are always a few bad apples in the world, but this doesn’t mean everyone is out to get you. So don’t make business decisions on the few who can cause you some harm on the expense of the many good people out there. For instance, takas.lk was the first to introduce Cash on Delivery (COD) in SL. Most of the eCommerce companies in SL thought it was too ‘risky’. We chose to trust our customer’s right form the onset and they have not disappointed us. And everyone else followed us after.
I wanted to write this piece on from the human angle of business since lately much of the conversation revolves around the technological aspects. At the end of the day we are providing services to people, the human angle should always be kept in mind.
The writer is the CEO of takas.lk and holds a BA from the University of Maryland, and a Masters from the University of Queensland, Australia.