REDEFINING E-COMMERCE IN SRI LANKA: PROSPECTS POST COVID-19

The COVID-19 global pandemic is likely the defining event of the decade, if not more and its implications are expected to change the way we work, socialise and behave. Rapidly evolving consumer buying behaviour and the pivot to online shopping is one such outcome of the pandemic and its associated social distancing measures.

SL’s US $ 450-500mn opportunity

Currently, the global online retail market is valued at US $ 3.5 trillion (2019) and this is expected to reach US $ 5 trillion in 2021. Growth will be led by Asia, with the region already accounting for more than half of global sector revenues.

In Sri Lanka, online retailing penetration is still less than one percent and there is plenty of room for disruption. Asia Securities estimates the Sri Lankan online retail market to be a US $ 450-500 million opportunity over the next five to six years.

Sector still largely focused on electronics

While the local online retail sector has, thus far, focused largely on consumer electronics, new categories like fashion, healthcare and groceries are emerging. Social platforms are also fast proving to be a powerful distribution channel for small businesses, which are leapfrogging the web and going digital with ‘social-first’ models.

Sri Lanka’s 6.2 million active social media user base and the rising number of Internet users and mobile broadband connections mean that businesses are increasingly dependent on social media for customer acquisition.

Asia Securities’ 2019 Online Retail survey indicates that ~73 percent of respondents were influenced by social media to make an online purchase. Local brands must, therefore, up their digital game and provide their consumers with mobile-optimised platforms and sites to fully tap into the opportunity that social commerce offers.

Closing e-commerce gap

Payments and last-mile logistics are the greatest challenges to e-commerce growth.