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How To Start An Ecommerce Business In Sri Lanka (Updated 2020)

How to start an ecommerce business in Sri Lanka (Updated 2020)

If you have been daydreaming about starting your own online business and not knowing where to start or what to do, this post is for you. It doesn’t matter if you want to sell cupcakes or male underwear. As long as you want to start an online business, this post got you covered.

Starting your online store sounds daunting. I get that. But there isn’t a better time to start an e-commerce business in Sri Lankan than now.

From coming up with an idea to selling your first product, everything you need to know is covered in this post.

And yes. It’s a long post. What do you expect? If you don’t have the patience to read 3000 words, forget starting a business and do whatever you were doing. But if you’re serious, like super serious, you’ll thank me later.

What is an ecommerce business?

Forget every definition you learned about e-commerce in university. You don’t need to know the definition to start one. If you’re going to sell something online, that’s an e-commerce business. That’s it.

This post is all about selling a physical product online. But if you’re planning to offer a service as a product, you can still use the concepts here.

Why start an ecommerce business in Sri Lanka?

I think there isn’t a better time to start an e-commerce business in Sri Lankan than now. Look around you. How many ads, messages, and emails do you get asking you to purchase something online every day? Whether you like it or not, shopping is shifting from physical stores to online stores and if you’re ready to reap the benefits, now is the time.

Some benefits of starting an e-commerce business in Sri Lanka

  • You don’t need a store (so no rent, no electricity bills, no employees and no maintenance cost)
  • All you need is a laptop, a decent internet connection, and patience to sit and work alone
  • Starting up cost is super low
  • You don’t have to be in the business 24/7 (so that you can do something else while owing an ecommerce store)
  • You can work from anywhere in the world (I’m currently in Bali sipping a cocktail. No that was a lie. I’m in Malabe!)
  • You can work in your undies and no one will notice!

If you’re still not convinced, stop reading right now. This one is not for you. Go and live your same old life and be prepared to regret in your deathbed. But if you’re convinced and if you actually want to work from Bali, read on my friend, because this is the post you’ve been waiting for.

ecommerce business in sri lanka

Who is this article for?

This article is for anyone who is thinking about launching an ecommerce business in Sri Lanka. It can be an online cupcake business or it can be a handmade jewelry business.

This post is also for any business that doesn’t have an online store. If you have a physical store somewhere in Sri Lanka and thinking about selling your products online, this post is for you too.

And this post is for anyone who has no idea how to start any business in Sri Lanka. You don’t have to know coding or anything technical. You don’t even need a business degree. I don’t care if you have studied Latin dancing or French. You still can start your own ecommerce business if you have the patience to read this post.

One more thing before I forget. You don’t need million rupees to start an ecommerce business in Sri Lanka (unless you’re going to start the next Kapruka.com or Takas.lk).

Who am I to talk about ecommerce?

I love reading. I really do. Mostly I read to improve myself (there goes Fifty Shades of Grey and Twilight Saga). I mostly read non-fiction personal development kinda stuff.

The problem was I couldn’t find some of the bestselling books in traditional Sri Lankan bookstores. My only option was buying from Amazon.com but sometimes the shipping charges are higher than the book!

I figured there must be others who are facing the same problem. So I started an online bookstore that sells nothing but books that can improve your life. And I called it (drum roll…) Jump Books (that’s the extent of my creativity. Jump.lk and Jumpbooks.lk. Get it?).

It’s not a multimillion business. It’s a small online book business. But we have a super loyal customer base and most of all; we have one of the best book collections in Sri Lanka.

I started this purely from the ground up. I built the website. I found the suppliers. When the books were held at customs, I “cleared” them myself. I did the delivery for a while until I found a delivery company. I did bookkeeping (I feel your pain accountants!), I designed bookmarks, I did digital marketing. Basically, I created an ecommerce business in Sri Lanka from nothing.

I made so many mistakes. Some of them had the tenacity to break my business. But I somehow kept at it. If I were to do it all over again, this is the guide I would read before starting.

Here’s everything that I learned.

Step 1 – Coming up with a business idea

If you know what you want to sell, forget this step. But if you don’t have a business idea, you need one!

Coming up with a business idea is not that difficult. You can check out my latest video where I breakdown the process of coming up with a business idea. Or you can read our guide on coming up with a business idea here.

One thing to keep in mind. Don’t overthink your idea. It doesn’t have to be earth-shattering and groundbreaking. All you need is a product that people want. That’s it.

Here’s an example. What’s groundbreaking about Jumpbooks.lk Nothing! It’s just an online bookstore. If your idea is not revolutionary, that’s fine as long as you’re passionate and willing to put in the work.

Step 2 – Finding a supplier or manufacturing your product

Once you have an idea for a product, it’s time to look at how you can source the product. If it’s something like cupcakes, the process is simple. You and your sister are going to bake them.

But what if you want to sell t-shirts online? Do you need to buy sewing machines and open a small factory? No. You don’t need to do any of that. All you need to do is find a supplier who manufactures what you want. That’s how everybody does it.

If you’re going sell something that’s manufactured by someone else, time to find suppliers. If you want to start an online Batik store, you can Google suppliers. Just search for “Batik suppliers in Sri Lanka.” Then start calling them and get answers to all your questions. The cost, minimum order quantity, delivery etc.

What if your suppliers are not from Sri Lanka? Don’t worry. Importing a product is not difficult either. First, find a supplier. A simple Google search will do. One thing I want to emphasize is, don’t be scared to call them. I was so scared to find book suppliers in the beginning so all I did was email them. I was too scared to call. But nobody replied to my emails. Then I started calling them. That’s how I found my suppliers.

In the start, you’re not going to know much about their agreements and how they supply products. That’s completely OK. You’ll do some stupid mistakes in the beginning but believe me, that’s how you learn.

Step 3 – You need a website

You can sell your products on Facebook and other social media. But when you’re on someone elses field, you’ll have to play by their rules. Facebook and Instagram changes their rules from time to time. This can harm your business. I’m not saying selling on social media is bad. Even I do it. But you need to have your own independent identity in the world wide web. That’s going to be your website. No matter what happens, you will have direct access to your customers if you have a website. That’s the greatest benefit of an e-commerce business.

Think of your website as a house. Every house has an address. That’s going to be your domain name. You can either get a .lk domain or something common like a .com. That depends on the availability and what you’re going to sell. If you’re purely targeting Sri Lankan customers, I recommend starting with a .lk domain. If you’re planning to sell internationally, you need to buy a .com domain.

Once you have the address, it’s time to build your house. There are so many ways of creating a website (WordPress, Squarespace, Shopify, Wix, Coding from ground zero). In this post, I’m going to recommend WordPress because that’s how I created my e-commerce business plus you need zero technical knowledge.

You can either create your own website or hire a web developer. But this post is for people who want to do it themselves so I highly recommend WordPress. If you want to learn exactly how I created my website, read our step-by-step guide on starting your own website here.

Also you can check out my latest video where I take you throgh all the steps by creating an actual website. Click here right now.

Step 4 – Registering your business

When I started my book business, I didn’t register it. But the first time I imported books, customs caught them. That’s when I realized that an individual can’t import anything unless it’s for personal use.

To set up a Facebook page or even to create a website, you don’t need a business registration. You can even start selling products without business registration. But without registering your business, nobody will accept it as a “legal business entity” in Sri Lanka.

What do I mean by that?

Imagine you want a bank account name under your business name. You can’t do that without a business registration. Imagine you want to accept online payments from your customers. You can’t do that without a business registration. Whatever the income you earn will be considered as your personal income. It will not be your business income until it’s registered as a business. You might say it’s a business but in a legal context, no one will accept it as a business. That’s the problem.

So the best thing you should do once you validate your idea is to register it. There are different methods of registering a business in Sri Lanka. I’m going to touch on the two most popular methods.

Sole-proprietorship 

If you’re going to start a one-man or one-woman business, you can register it as a sole-proprietorship. The registration process is super simple. Go to your provincial secretariat. Get the forms. Fill them and get them certified from your Grama Sevaka officer and hand them over to your provincial secretariat. You’ll have to spend about Rs.3000 as the registration fee and that’s it.

Pros

  • You can open a bank account name under your business name
  • Registration process is simple and cheap

Cons

  • Any income you earn will be considered as your personal income
  • You can’t bring in investors because it’s a one-person business
  • In case if your business bankrupts (let’s hope not) you will have to bring in your personal money to pay off for parties your business owe.

Private limited

This is the most popular method of registering a business in Sri Lanka. Even if you want to start a business on your own or with two or more people, you can choose a private limited. You can do the registration on your own but the best is giving it to a company that does it. Why? Because it’s not as simple as registering a sole-proprietorship. There are so many companies that offer this service at different price points. Market average is about Rs.33,000 but keep in mind that you’ll have to spend at least Rs.50,000 to finish the registration.

Pros

  • Private limited companies are considered as “legit” businesses
  • Limited liability – In case if the company bankrupts, you don’t have to bring in your personal money to pay off to others
  • You can bring in investors down the line
  • Banks will trust you more when it comes to business loans
  • They are scalable. You can bring in more shareholders and directors

Cons

  • Registration is expensive

What about partnerships?

You can also register your business as a partnership but nobody really recommends this. If there’s going to be more than one in your business, everybody recommends to register it as a private limited. Once you register your business as a private limited, it is a legit business. The duties, responsibilities, and ownership of directors and shareholders are clearly mentioned. A private limited is more legally bounding than a partnership.

My recommendation

If you’re not sure about your business idea, the first thing you should do is forget registering your business and try to validate it using a Facebook or Instagram page. Once you’re sure, you can think of registering your business.

If it’s going to be a fairly small business run mostly by you, register it as a sole-proprietorship. But if there’s going to be more than one person involved, register it as a private limited. Also if you want to build a “proper” business that can be expanded in the future, you have to make it a private limited.

Can you convert your sole-proprietorship to a private limited?

No. You’ll have to register it as a new private limited.

Resources to register your business in Sri Lanka

These are few companies that register businesses in Sri Lanka. We recommend you to do your due dilligence before selecting any of them.

Step 5 – How to deliver your products

Next step is figuring out how you’re going to deliver your products. In the beginning, I did almost all my deliveries. If it was out of Colombo, I used the Sri Lankan Postal Service. Even though delivering everything by me was time-consuming, I got to meet all my customers. Getting to know your first customers is one of the best parts of being the delivery guy. That helped me to connect with my customers in a level that no other business could.

But once I started expanding, delivery became onerous. Then I decided to hire a delivery company. Whenever I get an order, all I have to do is add it to their system. They come and pick up from our warehouse and do the delivery. They even collect cash from our customers and deposit into our bank account after some time.

There are several charges involved when using a delivery company.

  • Delivery charges – This is what they charge for their delivery. Based on the location and weight, they differ.
  • VAT & NBT – These are government taxes
  • Cash-on-delivery (COD) surcharge – When the delivery company collects cash from your customers, they usually charge a percentage or a flat rate per collection.

There are several delivery companies who offer the same service. I have listed them below. I suggest you experiment with several companies to figure out the best fit for you. Consider all the delivery charges and other costs before you select your delivery partner.

Delivery companies

Step 6 – How to get paid from your online customers

When purchasing online, there are so many ways to make the payment. I’m going to cover 3 of the most popular payment methods in Sri Lanka.

  1. Cash-on-delivery (COD) – This is by far the most popular payment method. Customer pays the amount upon delivery. This is also the safest one for customers. Most Sri Lankans are still reluctant to pay online. So you’ll have to offer COD. You can easily do this with your WordPress website.
  2. Credit card/ Debit card – This is how you can get customers to pay online. To receive money online, you need to integrate a payment gateway to your website. Banks and several other companies offer payment gateways. They usually charge an installation fee and a percentage for each transaction. I’m using Payhere.lk which doesn’t charge anything for installation. Their basic transaction fee is 3.3%+ Rs.39. I’ve been using them for quite some time and I simply love them. You can easily integrate their plugin with your WordPress website.
  3. Direct bank transfer – This is a very rare occurance but some customers still prefer to make the payment directly to your bank account. You can dispatch the product once they make the payment.

Recommended payment gateway

Step 7 – Packaging

Unlike buying something from a shop, you can’t stuff your product is a sily sily bag. Don’t be silly! You need to properly pack your product because your delivery company may not be as gentle as you want them to be.

Based on your product, you can decide how you’re going to package them. There are so many packaging companies in Sri Lanka. Most of them will have a minimum order quantity to get a good price. Negotiate with them and try to get the best price possible.

Don’t forget the environment when you’re selecting your packaging material.

Here’s a hack to find a great packing supplier. Whenever you see a package you like, check the back of it. Usually, you’ll find the manufacturer’s contact details. That’s how I found my packing supplier. If you want to know what I use, go ahead and order a book from Jumpbooks.lk.

Step 8 – Marketing your online store

It doesn’t matter how good your product is if no one knows you exist. If you’re going to start your own e-commerce business, be prepared to market it as well.

You don’t have to spend any money in the beginning to market your store.

There are so many ways of marketing your product online. This article isn’t enough to cover everything. But let me give you an overview so you know what to do when you start.

When you’re marketing something online, you need to know what digital marketing is.

Digital marketing consists of SEO, Email Marketing, Social Media Marketing, Content Marketing, and Relationship Marketing. I’m gonna touch on these. It’s your job to learn more.

SEO (Search Engine Optimization)

If you haven’t heard of this yet don’t worry. Whenever you Google something, this is how you get the results. If you’re selling pineapple cupcakes and if someone Google “buy pineapple cupcake in Sri Lanka” your website should come on top in Google search results. SEO does that.

ecommerce business in sri lanka

When I started my business, I didn’t know sh*t about SEO. But if you Google any book that’s listed on Jumpbooks.lk my site is going to rank top for Sri Lankan results. That’s because I have done my SEO. Do not ignore SEO.

The only resource you need to learn about SEO – Backlinko.com

WordPress plugin I use for my SEO – Yoast SEO

Email marketing

Those emails that you get from different companies every day; that’s email marketing. Most Sri Lankan companies think that no one reads emails but I’m a huge believer in email marketing. Trust me on this one and start email marketing from the very beginning. You’ll see the benefits soon.

There are so many tools for building your email list. Following are my favorite tools for email marketing.

Mailchimp – This is what I use to create all my email lists. Mailchimp is free until your first 2000 subscribers.

Sumo.com – This is free and got so many tools to grow your email list. It also integrates with Mailchimp.

Social Media Marketing

Any marketing activity that deals with social media falls here. That includes Facebook, Instagram, Twitter, LinkedIn, Snapchat, WhatsApp and YouTube. When you are starting, don’t engage in everything just because they exist.

If you’re starting a clothing shop, it doesn’t make sense posting on LinkedIn. What you need to focus is on is Instagram and Facebook.

Don’t try to be on every social media platform. Try to master one and if it makes sense, move on to the next. There are so many resources online to learn about social media marketing but the best teacher is doing everything yourself.

Recommended resources

Learn Social Media – Social Media Examiner

Social media planning tool – Hootsuite

Content marketing

They say content is king. I believe it. Content marketing is everything that you generate as content to market your business. It involves blogging, videos and whatever that you put out to tell your story.

Content marketing complements every aspect of digital marketing. Content is what you’re going to share on your email and social media marketing. Content is also what you’re going to align with your SEO strategy.

Generating content around your business is totally up to you. If you’re running a cupcake business and decide to write a post on 10 crazy cupcake flavors, that’s content marketing. Then you can share that post on your blog, email newsletter and social media. That’s how content marketing works. You’ll learn this as you go

Relationship marketing

This is where everything you have heard about “networking” comes in. Imagine someone who has a huge following shares your video or post? Or an Instagram influencer recommends your cupcakes. That’s relationship marketing. Your job is to harness the power of relationships by meeting and getting to know different people.

But keep in mind that spamming and being a pain in the ass is not going to help you build great relationships. You have to be generous first. That’s how you’re going to build great relationships.

Other tools that I use for Digital Marketing

Canva.com – This is a free online tool you can use to create anything from flyers, posters, proposals, email headers etc.

Hootsuite.com – Posting things every day on social media is time-consuming. With Hootsuite, you can schedule your posts so that you can do it at once and forget it. This made my life super simple.

Step 9 – Do everything yourself

When I started my book business, I did everything from delivery, bookkeeping, pricing, designing, branding, and marketing. You name it, I did it. Some can argue that doing everything by you is stupid but that’s what I had to do because I didn’t have any money to hire somebody.

Doing everything requires you to learn everything. Learning takes time but you’re going to learn about your business like no other. Having that bird’s eye view of your business is important for a founder. You can only learn that by doing everything in the beginning.

When you expand, you’re going to come to a place where you simply can’t do everything on your own. That’s the time to hire or outsource your work.

Step 10 – You got this. You can do it

Starting your own business isn’t impossible. When you break it down, it’s nothing but a bunch of small tasks. You execute them one by one. That’s how you build a business.

Knowing this, most of us live our lives not doing what our hearts desire. Why? It all comes down to your FEAR.

If you really dig deep, beneath all those “excuses” you’ll find your FEAR. Everything boils down to it.

We are afraid the world will laugh at us. We are afraid of failing. The fear of failure kills more dreams than anything else.

If you’re afraid of failing, I have a trick for you. Start your business thinking that it’s going to fail. Now, there’s nothing for you to fear.

And that’s how you start your ecommerce business in Sri Lanka.

If you liked this post, don’t forget to add a comment below and let me know.

I wrote this post to give you the overall picture of starting an ecommerce business in Sri Lanka. Of course, there are so many details that I haven’t covered. I can’t do it in a single post. But I promise you that once you start, you’ll figure them out.

Have I missed anything? Do you know anyone/company that I should list on the post? Add a comment below and let me know.

Resources to start your e-commerce business in Sri Lanka

How to Start an E-commerce Bussiness – A Beginner Workshop

If you’re ready to START your own E-commerce business in Sri Lanka, we got a workshop for you. I teach everything that you need to know before starting an ecommerce business. If you want to learn exactly how you can start a small online business in Sri Lanka, check out this workshop. It’s happening every month. Click here to learn more about the workshop. 

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Nishan De Silva

Nishan De Silva

Nishan is the founder of Jump.lk. He is a life enthusiast who loves reading and eating. His ambition is to travel 100 countries before dying (even though he hasn't been out of the country yet!)

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