Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and, reputable, prominent B2B websites.
Last Published: 8/9/2017
Overview
eCommerce is growing. All commercial banks have online banking services.  Travel companies, hotels, and a few large retailers have online trading services.  Sri Lankan eCommerce companies offer customers in Sri Lanka access to millions of global products. The Government is also encouraging e-services. A main eCommerce portal for automated cargo clearance has been established. Further Government web portals for filing of tax returns, payment of taxes, renewing of revenue licences are also avalible in Sri Lanka.
 
Most of the global eCommerce sites including PayPal is available in Sri Lanka but has limitations due to an inadequate refund mechanism and inward receipts.
 
A 2.5 percent stamp duty applies to usage of credit cards issued by Sri Lanka banks for transactions converted into a foreign currency. Transactions in local currency are exempted from this duty.
 
Current Market Trends
IT related activities have seen a significant growth of about 21 percent in 2015, compared to just nine percent the year before. A significant portion of this growth can be accredited to eCommerce. Currently there is no local body which regulates eCommerce businesses in Sri Lanka.
 
Increased competition from international eCommerce sites such as booking.com and Airbnb concerns have resulted in demands by the Tourist Hotels Association of Sri Lanka (THASL) for government to consider regulating eCommerce businesses.
 
Domestic eCommerce (B2C)
Domestic eCommernce sites have seen a significant growth since within the last several years. A wide variety of consumer products can be purchased through eCommerce sites including groceries, apparel and electronics. It is noted that most delivery of goods from these sites are limited to Colombo and its suburbs.
 
Cross-Border eCommerce
Cross border eCommerce is limited to purchases of products from popular overseas sites such as ebay and Amazon. Numerous local eCommerce companies sell imported goods.
 
B2B eCommerce
Currently there are no B2B eCommerce sites which are operating in Sri Lanka.
 
eCommerce Services
The Internet penetration in Sri Lanka is growing, granting more people access to the World Wide Web. 2016 figures show 33.4 percent of the population have acess to the internet. This is mainly attributed to the growth of Sri Lanka’s mobile industry. The country now has a mobile penetration of 115 percent, with the accessibility of smartphones growing rapidly.
 
In 2006 the Electronic Transactions Act, No.19 was introducted which facilitates eCommerce by removing legal barriers and ensuring legal certainty both within Sri Lanka and internationally. Several other laws also support eCommerce such as the Evidence Act of No 14 of 1995, Payment and Settlement Systems Act No 28 of 2005, Payment Devices Frauds Act No 30 of 2006 and the Computer Crimes Act of No 24 of 2007. However, there are still gaps in laws relating to eCommerce.  Following the ratifcation of the UN Electronic Commissions Convention by Sri Lanka in 2015, the Government is preparing to introduce amendments to the Electronic Transactions Act to provide greater legal validity for eCommerce and eBusiness providers, and ensure international validity of such e-contracts.
 
While awareness of online shopping is growing, financial institutions are also developing the related services of payment gateways to offer reliable online payment services to support the expansion of eCommerce.
 
The Government is currently using an e-service gateway to streamline certain Government services. The Inland Revenue Department has recently enabled filing of tax returns through the Inland Revenue web-service portal. Vehicle revenue licenses can be renewed online.
 
eCommerce Intellectual Property Rights
eCommerce Intellectual Property Rights are protected under several laws:
Evidence (Special Provisions) Act No.14 of 1995; The Intellectual Property Act No. 36 of 2003; Electronic Transactions  Act No. 19 of 2006  and the Computer Crimes Act No. 24 of 2007.
 
An infringer who offers counterfeit products for sale online could be held liable under the Intellectual Property law.
 
Popular eCommerce Sites
Online Payment
  • Cash on Delivery: The most commonly used payment method in Sri Lanka. As per estimates, more than 95 percent of eCommerce users in Sri Lanka prefer the cash on delivery (COD) payment model.
  • ezcash / mcash: Some eCommerce websites also prefer these payment models for transferring small amounts of mondy through a mobile service provider.
  • Credit Card: Most of the eCommerce websites in Sri Lanka have merchant accounts integrated on portals to facilitate credit card transactions. This is the preferred method for overseas purchases.
Mobile eCommerce
Mobile eCommerce is still in its initial stages. With the growth of smartphone usage mobile eCommerce is expected to grow in the near future.
 
Digital Marketing
The use of text messaging is increasing in Sri Lanka. Due to high mobile phone penetration at 115 percent, rather than cold calling, sending a text about a product or brand is becoming more widely used in Sri Lanka. A recent survey shows that marketing through Facebook has influenced 79 percent of the users to purchase the products.  Social media marketing is expanding as well.
 
Major Buying Holidays
There are no major buying holidays currently in Sri Lanka. Most popular shopping periods include local New Year during  April and Christmas holiday period in December.
 
Social Media
Facebook is very popular in Sri Lanka. As per the statistics provided by Sri Lanka Police, Sri Lanka has over 1.2 Facebook users. Twitter, Instagram and LinkedIn are also used by Sri Lankan, however, not to the extent of Facebook.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Sri Lanka eCommerce Industry Trade Development and Promotion eCommerce