The e-commerce industry in Sri Lanka has seen a rapid development over the last year, with a large percentage of shoppers venturing on to the digital platform. 

An increase in confidence on available products and online payment gateways has supported the change of perception towards e-commerce. As the largest online marketplace in Sri Lanka, Daraz specifically saw an immense growth in terms of orders and net merchandize value in 2019 together with a successful 11.11. campaign that over-achieved its revenue target, partly reflecting the route in which local e-commerce is growing. 

Collating data from their own platform, Daraz released an e-commerce index that indicates key demographic, consumer behavior and purchasing trends of online shopping in Sri Lanka. The numbers indicate a 1.5X YoY 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 percent whilst Central and North Western provinces follow with 10 percent and 9 percent order shares respectively. Colombo and Gampaha lead the district wise order share with 31 percent in the former and 15 percent 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, Kaluthara and Gampaha.

Who buys online?
Out of the total online shoppers in Sri Lanka, 85 percent claim to have shopped on Daraz with 94 percent using the Darazonline shopping Mobile App, which is present on both the popular mobile OS platforms. 

Daraz mobile application is considered to be the best Android online shopping mobile app and also the best Apple iOS online shopping mobile app especially in Sri Lanka. The shoppers fall into 3 broad categories with diverse shopping behavior. The ‘young online shoppers’ within the age of 18 to 24 years are recreational shoppers who enjoy shopping for the latest trends. They are tech savvy, loyal to brands, and less price conscious. 

The ‘well informed shopper’ consists of the age category 25 – 30 years, whose decisions are affected by quality and reliability. Though brand loyalty is present, this category also looks for the best deals and flash sales, with a majority shopping for personal and home items. Those within the age group of 31 to 35 years make the ‘settled adult shoppers’ who shop according to the needs and stay within their budget. They are quality conscious, less experimental and expect fast delivery.

What do they look for?
The Daraz e-commerce index uses two metrics; the percentage share of total net merchandizes value and the percentage share of orders. In 2019 the average order value has increased by 27.27 percent. In terms of category, LED TVs, Audio/Video, and Gaming Consoles has continuously maintained its growth with Health and Beauty products online coming a 
close second. 

All categories show an increase in both sales revenue and order numbers in the months of November and December with the biggest 11.11 sale in Sri Lanka followed by Black Friday in Sri Lanka and the seasonal Christmas sale taking place in these months. The local online shopper thus follows global trends, indicating a positive direction for e-commerce. 

Electronics and fashion related products are the most searched items online. Mobile phones,smart watches, power banks, blue tooth speakers and laptops and notebooks lead the category while handbags and shoes are the most searched for fashion items. Electronics, fashion, groceries, lifestyle along with mobiles and tablets are the most bought categories. 
Online payment gateways through top local banks have increased and taken over the cash on delivery option drastically. Commercial Bank, HSBC, Sampath Bank, Hatton National Bank and NDB Bank lead in their partnerships with Daraz contributing to the Credit and Debit card payment growth throughout the last year. 

How did COVID -19 impact e-commerce industry?
Having no option than to resort to online shopping during the lockdown period, the public began to shift on to the digital platform more than ever before. Purchases in the FMCG category have doubled in March 2020 and are expected to grow from 20 percent to 70 percent. 

DFresh, the fresh fruit and vegetables online store on Daraz, records a 7X growth in orders while orders for hand wash and liquid sanitizers in Sri Lanka has doubled. The search patterns were highly concentrated on protective clothing andgear such as face masks, hand sanitizers, and medical surgical masks in March this year.

The Daraz e-commerce index reflects novel trends in retail shopping and the behavioral changes of shoppers that will shape the course of retail in the country. It will help understand the market and establish standards that benefit the expansion of the online shopping industry.