E-commerce is not new to the world, but it is relatively new to Sri Lanka. There have been global e-commerce market players who have been serving the needs of some Sri Lankans but that was not enough. The need of the people, the emptiness that existed in the market and some skilled entrepreneurs made it possible for the eCommerce business to emerge in the country. Local players are still in their early stages.
Considering the global e-commerce market, the Sri Lankan market is quite small. This is one of the great facts that are in favor of local players. If it was something like the Indian market with several million customers for e-commerce, the local players would have been snatched up by the international players. However, the fact is that the Sri Lankan eCommerce market is still considered by many international players.
It is well known by Sri Lankan businesses that the future of Sri Lankan e-commerce business is very positive and hopeful. Some people in the highest management levels of these companies think that now is just the tip of the iceberg. There is much to experience in the future.
It is true that the market has not been reached by local players. In fact, not even five percent of the market has been reached by all the local players combined. Within the market reached, around ten percent is covered by international players. What this means is that although international companies are not making a significant effort to continue targeting the Sri Lankan market, they still have an impact on it. One of the reasons for this trend could be the expansion of Sri Lankans living all over the world. These people have a presence all over the world, so they order products through internationally renowned e-commerce companies to send them to their friends and family in Sri Lanka. This in turn gives exposure to people residing locally who then start moving on.
Sri Lanka is one of the developing countries in Asia. Especially post-conflict conditions have favored companies to show up at an exponential growth rate. If you had visited Sri Lanka in the last two years, you might have witnessed new construction projects everywhere; especially in the capital city, Colombo.
People are moving from a third world state to a more advanced state. People’s lifestyles are changing drastically. For a country that has been plagued by internal conflict for more than half a century, the literacy rate is surprisingly high, at 92 percent. This is another important factor that makes e-commerce more than possible. These people are moving towards a more technologically advanced lifestyle. Furthermore, the global impact of technology has made it possible for people to literally carry the entire Internet in their hands. People can simply place an order online from their phone while on the go. Someone may not be rich enough to own a car in this country, but still place an order while riding a public transport bus.
One of the other main reasons why e-commerce will boom in Sri Lanka in the coming years is that the country’s businesses have developed enough to bring new products to the local market. There have been many restrictions in the last decade for imports. Now that the country has come out of the internal mess, international business is more than welcome there. There have been many foreign commercial suppliers that have placed their products on the market with quite a few successful commercial histories.
Sri Lanka does not have a graying population unlike most developed countries. This is another opportunity for the nation to adapt to new trends. It is relatively difficult for older people to adapt to new trends. Young people are instinctively inclined to adapt to new trends. Since the Sri Lankan population consists of a higher proportion of young people, it is clearly visible that their fashion would shift towards an e-commerce market rather than a traditional shopping venue. This is already happening in the country, but e-commerce is not perfect yet.
The market has not been fully reached because most of the insiders are beginners and do not have sufficient funds to cover a larger portion of the market. In addition to financial concerns, local e-commerce businesses don’t have enough experience to learn and then adapt to new tactics. Despite the lack of adaptation of local e-commerce companies, customers change service providers. This is one of the indications that not all customers are satisfied with a single service provider. It is common for almost all Sri Lankan e-commerce companies because they are indigenous and do not have a place to build a business model based on. They cannot simply copy international companies and their business models because the conditions on the ground are not similar to those that existed when the international players started their business.
It is a unique field where early movers in the right position will reap more than half of the potential e-commerce market in Sri Lanka. There won’t be much competition between the first-tier service provider and the second-tier service provider. This is due to the smaller population in the country and trust is mostly built by word of mouth in the culture. Once the first ranking service provider reaches the first rank; people will spread the word.
It is a peak time now in Sri Lanka more than ever. As mentioned, the market was very open and very neglected in the past. Now local players are beginning to attend the market. In the process, people experience firsthand and for the first time. This is very important as service providers must maintain their reputation. If a customer visits an e-commerce business for the first time and the first experience is not satisfactory, the customer is more likely not to use that particular provider again. Therefore, the real competition among local players now is not to increase their sales volumes, but rather to increase their reputation by fulfilling each order according to the highest expectations of the customers.
Once the customer base is built, the sales volume will automatically take over. If the customer base is destroyed, the effects will be long term. A not so satisfied customer will always be spreading negative thoughts. Humans have a tendency to listen and worry about negative things. This will drive potential customers away from service providers.
The exponential growth of eCommerce business will be there for a while until there is no one left who has never heard of eCommerce business. There are enough people in Sri Lanka who have no idea what an eCommerce business is. It is these people who are the potential customers for exponential growth. Once all these people are reached, exponential growth will cease. Taking into account the media, campaigns by local e-commerce companies, and the population of Sri Lanka, this would continue until the first quarter of 2017. That is the possible timeline in which the exponential growth will cease.
After that time, it would be impossible to change the qualifications of the service providers. Whoever leads at the time exponential growth ceases will remain the market leader. The reason is that even if the second-leading provider put enough effort into it, there won’t be a new customer base to support growth. There would still be growth, but not exponential. It is now that everyone in the e-commerce business must build their reputation to become a leader in two years and then stay that way almost forever.