Sri Lanka’s e-commerce transactions reach record high in Q1
The Morning: Sri Lanka’s e-commerce transactions recorded a quarterly high as transactions value reached Rs. 85 billion in the first quarter indicating the continuous rise in e-commerce values, Central Bank data showed.
According to the payment bulletin of the Central Bank of Sri Lanka (CBSL), the first quarter e-commerce transactions value stood at Rs. 85.5 billion, a 40.6% year-on-year (y-o-y) increase. The transaction volume increased by 30.1% y-o-y to 28.5 million.
The data also showed that out of the total transaction value for the first quarter, Rs. 32.6 billion was carried out on credit which is also a 22.1% increase y-o-y.
The last quarter of 2023 saw a transaction value of Rs. 56.3 billion, thus the first quarter showed a quarterly increase of 51%. The total transaction value for 2023 stood at Rs. 288.5 billion, the highest yearly value recorded so far.
According to global e-commerce analytics platform E commerce DB (ECDB), Sri Lanka’s e-commerce revenue is expected to show a compound annual growth rate (CAGR 2024-2028) of 5.4%, resulting in a projected market volume of $ 3,017.8 million by 2028. With an expected increase of 11.5% in 2024.
Seven markets are considered by ECDB within the Sri Lankan eCommerce market. Electronics is the largest market and accounts for 24.4% of the Sri Lankan eCommerce revenue. It is followed by hobby & leisure with 19.9%, fashion with 18.9%, furniture & homeware with 11.8%, grocery with 9.8%, care products with 8.0%, and DIY with the remaining 7.1%.
Research released by Daraz.lk last year collating data from their own platform indicated a 1.5X y-o-y growth of active users with a 2.5X growth in number of orders last year.
The Western Province owns the largest online order share with 50% whilst Central and North Western Provinces follow with 10% and 9% order shares respectively. Colombo and Gampaha lead the district wise order share with 31% in the former and 15% in the latter.
The concentration in these locations mirrors the population density of the country. However, there is an indication of an expansion from key cities of Colombo, Gampaha and Kandy towards developing towns such as Kurunegala, Kalutara and Gampaha.
OSL take:
Sri Lanka’s target of becoming a hub in the South Asian region has resulted in local authorities focusing on transforming the country into an e-economy. This decision has resulted in the prioritization of digitalization programmes covering all key economic sectors in the state as well as private sectors. The increase recorded in e-commerce transactions this year in Sri Lanka is indicative of the growing space for transforming the country into an e-economy. All this has resulted in the expansion of Sri Lanka’s ICT and digital infrastructure development sectors creating new business/investment opportunities for foreign businesses/investors. The growth and business potential in these sectors are evident by the growth and profits recorded by businesses that are already engaged in digitalization programmes in Sri Lanka. Foreign businesses/investors could therefore explore the expanding business/investment opportunities in Sri Lanka’s ICT and digital infrastructure development sectors while also looking at forming collaborations with local businesses with the aim of expanding existing operations.