How to start an ecommerce business in Sri Lanka (Updated 2021)

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If you are dreaming about starting an online business in Sri Lanka but have no idea where to begin, this post is for you.

Whether you want to sell cupcakes or male underwear, 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 Lanka 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 did you expect? If you don’t have the patience to read 3658 words, forget starting a business and do whatever you were doing.

But if you’re serious, like super serious, read on and thank me later.

What is an ecommerce business?

Forget every definition you learned about e-commerce in school. 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.

While the term “online” is broad, “e-commerce” mostly means selling a physical product. Think of sites like Amazon.com or Daraz.lk. Those are e-commerce businesses.

This post is mainly about selling a physical product online in Sri Lanka. But even if you’re planning to offer a service online, 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 online business in Sri Lanka 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 (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 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 Maharagama but you get the point right?)
  • You can work in your undies and no one will notice

If you’re still not convinced, stop reading right now.

This post 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.

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 read non-fiction personal development kinda stuff.

But there was a problem.

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 were higher than the book!

I figured there must be others who are facing the same problem.

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 collections in Sri Lanka.

I started this purely from the ground up. I built the website. I found the suppliers. I delivered books myself 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.

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

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. Check out the video below where I talk more about coming up with a business idea.

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? Here’s what happened to my first online business.

Do you need to buy sewing machines and factories? No. You don’t need 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 to sell something that’s manufactured by someone else, first Google. 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.

If you don’t find any results on Google, time to get creative. Talk to people who might know how to source your product.

Now, what if your supplier isn’t based in Sri Lanka?

Don’t worry. Importing a product is not difficult either. First, find a supplier. A simple Google search will do. Then start contacting them.

In the beginning, 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.

First, order a small quantity. That’s to test the market. Once you validate the market, you can order in bulk.

Step 3 – You need a website

You can sell your products on Facebook and Instagram. But when you’re on someone else’s field, you’ll have to play by their rules.

Facebook and Instagram change 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 on 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.

Step 4 – Registering your business

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 a business registration.

But without registering your business, nobody will accept it as a “legal business entity” in Sri Lanka. Watch below video to learn more.

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 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. If you want to learn how to register a business in Sri Lanka, read my in-depth guide here. I cover everything you need to know about registering a business in Sri Lanka.

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.

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 an 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.

Read my in-depth guide on How to register a business in Sri Lanka. I have covered everything you need to know in this post. Click here.

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 diligence 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 myself was time-consuming, I got to meet all my customers.

Getting to know your first customers is one of the best part 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.

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.

Cash-on-delivery (COD) – This is by far the most popular payment method. The 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.

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 3.9%. I’ve been using them for quite some time and I simply love them. You can easily integrate their plugin with your WordPress website.

Here’s my take on the future of payments in Sri Lanka.

Direct bank transfer – This is a very rare occurrence 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 in a sily sily bag. Don’t be silly!

You need to properly pack your product because your delivery company will 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 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.

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

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.

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

Social Media Marketing

Any marketing activity that deals with social media falls here. That includes Facebook, Instagram, Twitter, Linked In, Snapchat, WhatsApp, TikTok, and YouTube.

If you’re starting a clothing shop, it doesn’t make sense to post on LinkedIn. You need to focus on 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.

Learn Social Media Marketing – Social Media Examiner

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, podcasts, 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.

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 yourself 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 that.

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.

It’s your turn

And that’s how you start your own e-commerce 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 e-commerce 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? Add a comment below and let me know.

If you don’t want to miss posts like this, add your email address below and subscribe to my weekly newsletter. No spam. No B.S. You can unsubscribe anytime you want. Try it.

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