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 21^st 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 21^st 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.

#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

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.

Why?

Trends-

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).

Reality-

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

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.

Why Customer Service Matters..(even for eCommerce)

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.

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