Tuesday, September 3, 2013

Why e-commerce will explode in SL in the very near future!

I have been asked the question of if e commerce will work in SL. My answer have always been that e commerce will explode in SL in the very near future and here is why. The number of internet users in Sri Lanka has grown exponentially in the last few years, at present 4 million Sri Lankans have online access. Sri Lankans using the internet to purchase online is also on the increase. The current retail market in Sri Lanka stands at approximately USD 7 billion, while the e-commerce market has a smaller share, or USD 25 million. However, if we expect the same growth patterns e-commerce has experienced in India to transpire here, Sri Lanka should expect phenomenal growth in this area. The total e-commerce market in 5 years will be close to USD 700 million.

Looking at the Indian e-commerce growth story, what is to come will be very exciting. Indian e-commerce grew at 100% year on year from 2012 -13, largely fuelled by major players like Flipkart investing heavily in the area. The industry is expected to grow at 60% for the next 5 years and be one of the fastest growing markets in Asia. We can expect the same here in Sri Lanka, and it’s a bit strange that our growth has not exploded already. Internet penetration in SL is higher than in India, furthermore the average income of Sri Lankans is higher than that of India. For instance the average order value for an e-commerce company in India is approximately LKR 4000, while from our experience at takas.lk the order value is twice that amount.

Furthermore, e-commerce just makes sense. Why? At takas.lk we have more than 3,000 products under one roof, but we don’t warehouse anything, and unlike many other ‘e-commerce’ companies in SL we don’t have a retail space, which means we save a lot of money on expensive real-estate. With growing internet penetration e-commerce companies will also have a much larger reach than traditional retail business. For instance we regularly deliver to places like Galle and Trincomalee where customers don’t have access to the same range of products. In time these fundamentals will also affect the more brick and mortar retailers, as customers demand lower cost products. This will leave e-commerce as one of the most viable alternatives to keep costs low and reach a very large customer base.

Thus to sum up, traditional retailers will have to start thinking about investing in e-commerce very soon, if they have not already, in order to survive in the retail sector in the future. The ones who master the e-commerce space will master the retail space in years to come. 

The Writer is the CEO of www.takas.lk which is Sri Lanka's Largest Online Electronics Mall