With Sri Lanka becoming the number one travel destination according to The Lonely Planet rankings, the success of the novelty gift and souvenir industry, which is one of the major developing categories in tourism, is thus far stabilized. One could say LAKARCADE’s entry into the industry is well-timed, and it is the view of LAKARCADE CEO and Managing Director Anil Koswatte that it is here to cater to the demanding market, by setting up its flagship store in the heart of Colombo.
LAKARCADE is one of the biggest novelty Gift & Souvenir shopping malls in Asia located in the heart of Colombo, LAKARCADE offers a wide array of authentic Sri Lankan souvenirs and novelty gift items. The fine range on display includes carefully selected teas, spices, traditional art & craft items, batiks, gems, jewelry, silverware and many more creative products.
“Sri Lanka is now focusing more on the tourism industry, and we need to exploit this opportunity as much as possible like other South East Asian countries. When you look at tourism development, novelty gift and souvenir industry is one of the major developing categories in the world that contribute to tourism. Gem and jewelry, spa products and handicrafts are subcategories in this industry,” Koswatte said.
According to Koswatte, the statistics of tourists’ arrivals are on the rise, with numbers increasing every year; Sri Lanka currently has reached a mark of 2.5 million arrivals per year. He believes that Sri Lanka has the potential to reach the heights of countries like Thailand and Malaysia, and increase these numbers up to 20 million. As a Sri Lankan entrepreneur, Koswatte states that LAKARCADE is getting ready to take up this challenge by aiding the Government as a private entity, to boost economic growth from grassroots level by increasing its service to the rural crafts community.
Koswatte says that almost all of the products sold at the store are manufactured by village- or cottage-based craftsmen, with the exception of some products being sourced by local but established manufacturers. Crafts and artefacts from Batticaloa, Puttalam and Jaffna, covering areas from North to South, are sourced by LAKARCADE.
“Products that require a quality assurance such as tea, coffee, and spa products, we have reputed and established local manufacturers who supply for us. All products are manufactured here and all resources and expertise are local; we’re not importing anything. So, the majority of the products are produced in the cottage industry,”
According to Koswatte, LAKARCADE provides the rural craftsmen the ability to demand their prices. He said that no bargaining happens on their part, and therefore the craftsmen are assured a reasonable income for their efforts. “We don’t tell them this is your price. They come with their prices and we accept.”
Koswatte added that the suppliers, the cottage industry manufacturers, are very talented, creative and efficient. However, according to certain market standards and trends, some changes needs to be made, and this is where LAKARCADE collaborates with their designers and produces an end product that has more market value. “The manufacturers are very independent people. There are as per my calculations, 3000-odd suppliers of handicraft in Si Lanka. We purchase from some of these manufacturers, either what they are producing according to their designs, or after we do our own designs and value additions.”
LAKARCADE has recruited a very famous design consultant, Senaka De Silva. His expertise is utilised into understanding current market trends, and incorporated into the products produced by the suppliers.
“Suppliers come and see the stores. They can see the consumer points, consumer behaviour, market trends, what components in their production they should enhance such as packaging and weight. It’s an exposure program for them also. This is where the manufacturer and the buyer meets. They can see for themselves how the market behaves to their products,” he explained.
With a wide range of items such as gem and jewelry, handloom, Sri Lankan batik, Ceylon spices, Ceylon tea and coffee and handicrafts, the exclusivity of a gift shop such as this is its ability to make a global presence through e-commerce, says Koswatte. “We already have the facility in place for customers to do their shopping online. We’re joining with Ikman.lk and we’re aiming to have a global presence like Amazon and Alibaba as vendors.”
“Our market segment here is 80% tourists. Some people come and order items big in size such as wooden elephants or artefacts, and we will deliver it to their doorstep through our air-freight or sea cargo,” Koswatte explained.
The team at LAKARCADE is equipped with expertise knowledge as they all have prior experience working in a similar scope. With ease, one can observe a cross-section of Sri Lankan heritage and culture at LAKARCADE.
Koswatte says that unless marketing linkage is provided, the village- or cottage-based craftsman doesn’t get reasonable prices for their efforts. He states that the backward integration in the business, from buyer to manufacturer linking, is one of its main goals. Therefore, the sustainability of this business in the long run with adequate income to the craftsman is promised when market facilities such as LAKARCADE is available in the Centre of Colombo, aiming the tourists.
“As a marketing linkage institution, LAKARCADE does not produce any items sold at the store. All these are produced in the village level, either in the cottage industry or either in a rural level craftsman-owned business. Most of the products come from the cottage industry,” Koswatte explained.
Sri Lanka has a significant advantage on gem and jewellery, being one of the major countries manufacturing gems and jewellery, in addition to tea and spices, according to Koswatte, and he further added that Sri Lanka has the competitor advantage, with the ability to demand higher prices in these categories. “If the consumers aren’t happy with our product, including our gem and jewellery, they can return it and we can pay back. We have the money-back guarantee as well.”
Koswatte says that from the point of country, LAKARCADE plays the part of brand-building or destination-marketing for Sri Lanka, and that it is their corporate responsibility, objective, vision and goal.
“The tourism industry should sustain with a good image and attractive campaign and we are part of it. Our Sri Lankan authentic products should enhance the total value of the Sri Lankan brand. I believe LAKARCADE plays a major role in providing this assurance,” Koswatte elaborated.
LAKARCADE truly Sri Lankan with a vision “To become the global representative of authentic Sri Lankan Novelty Gift & Souvenir items by preserving our heritage”.
E-commerce was an industry fairly unknown in Sri Lanka. But over time it has slowly made its
way into our houses, showing us the ease of life of ‘shopping online’. The lockdown may have
even channeled it into our front pocket. As crowned retail giants struggled to meet demands
while following COVID19 safety regulations, e-commerce platforms got their time in the
limelight. Online shopping has firmly secured 1 percent of the market share to date, and there is
no doubt it will continue to grow rapidly even as we enter the “new normal”. We spoke to the Managing Director of Daraz.lk, Rakhil Fernando to find out how the industry is evolving in the wake of the pandemic.
How did Daraz face Covid19?
Our first priority was to support the government and really help fight the virus itself. As a group
globally, we invested in deploying testing kits and masks and tried to get it to our respective
governments as soon as possible.We donated 20,000 test kits and 100,000 masks to the Sri Lankan government. Our next goal was to help the e-commerce ecosystem. We were relying on so many small entrepreneurs to build our platform and sell on our platform. The government also needed these kinds of enterprises to restart the economy and keep it from collapsing. So, we really felt this was the area we needed to focus on and invest in.That was the goal behind launching the Seller Stimulus program in May. To further subsidize sellers, we decided not to charge them a commission, while providing them free shipping, and free packaging to help them get their business up and running at no extra cost. We now have about 4,000 SME’s that have come on board the platform within the last 30 days.How is business after the pandemic?
Business is growing tremendously well. Between last year and this year, we grew about 200
percent and we’re looking to grow at least another 150 percent from this year to next year. We are also looking to exceed our Rs.15 billion in sales this year. We are very excited about the prospect; COVID19 has really changed the e-commerce landscape in Sri Lanka.
There’s been an increase in the number of people who are willing to shop online, some of whom had little choice but to shop online during the curfew. Initially, they were looking at buying groceries online but now they’ve started buying other things as well. Currently, we have around 100,000 people visiting our site every day as unique visitors and that number keeps growing.
What does Daraz bring to the table?
E-commerce in general has many interesting players. The local e-commerce platform
unfortunately hasn’t been able to expand as much within the past few years. We’re one of the
first companies that has the capacity to sell island-wide. In terms of the items we have on sale
and our reach in terms of where we can deliver, I think it’s really becoming the golden era for e-
commerce in Sri Lanka with regard to the efficiency of the platforms and delivery platforms.
During these times you also see third party logistic companies coming out to provide services to
e-commerce companies during this very critical period. “So it’s an interesting time”. I think it’s
the right time for Daraz to be here and invest in Sri Lanka.
Many new platforms have entered the e-commerce ecosystem, as a market leader do you see this as a threat?
Not at all. I think, for us, our biggest competitors in the last couple of months in terms of what
has popped up would be the FMCG grocery segment; mainly the likes of Uber and PickMe.
They sell online and get people their groceries in a short period of time. Now what we see, is
that we can do what a lot of our competitors probably find difficult. For an example if you buy a
Rs.1,000 worth bundle, you get a fixed set of vegetables, a set of cooking items or
confectioneries. These platforms sell these bundles because it’s easy for sellers to have a
packed bundle ready to hand over to the Uber or PickMe rider to deliver to the customer. But it
becomes very complex when you want to have a mixed order. When you scale that to 15,000
orders that are very different it becomes very complex because it takes a long time to find the
items, put them together, and make sure the order has the correct items and they aren’t mixed
up. It’s the kind of scale we operate in. We project our orders to reach about 30,000 orders a day in the next couple of months. So, in that sense, we think that we can provide a more
scalable solution to a vast number of customers looking for different types of products that exist
on e-commerce platforms. Now there’s room for us to exist along with new e-commerce groups
like UberEats and PickMe. But I think we fulfill two very different types of orders, not the type of
customers; the orders we get are actually very different.
Is e-commerce a Colombo based market or has it diversified around the island? We do around 15,000 orders a day and most of those orders come from out of Colombo. About 70 percent of the orders come from outside the Colombo district. That’s interesting
because most people think e-commerce is centralized to Colombo but in our experience, there’s
a lot of demand from outside Colombo. Cities like Jaffna, Kandy but also in rural provincial
areas as well. So that’s a good sign, it shows there’s an increasing demand and purchasing
power for people who are looking for the right items, at the best price and happy to use e-
commerce to get them.
What is Daraz doing to integrate e-commerce in rural communities?
We have a concept called “Daraz stores”. We have engaged with about 400 to 500 Branded Daraz stores. These local shopkeepers are our representatives. How this initiative works would be, the shop keeper a village or town level will encourage and get his local shoppers, local customers to order on Daraz. We want to introduce e-commerce to the local community. A lot of people don’t shop online because they’re afraid to give their credit card details or they fear they may not receive the item they purchased online. We look at Daraz stores, as having a local representative, somebody you trust, somebody you deal with every day, they can be the person you trust to help you order online for the first time, so we work with these stores that help us get local customers online. The goods also get delivered to the shop so they know there’s a physical place that they can go to, make a complaint, return the item, and collect it. The advantage is that essentially, right now, the shop is restricted to items they have in store to sell. We make available for the shop to have a million items they can sell and they get a commission of 10 to 15 percent for the sale which is a decent commission.
Do Sri Lankan buyers get internationally listed products?
About 30 percent of the products on our platform are foreign sellers. Daraz and Alibaba Express are connected to the same supply network. We list some of those sellers also on our platform. We’re looking to increase foreign goods to create a bit more variety, especially now that there’s the limitation of importation of goods and available products. We want to make sure that there’s a good assortment still available on the site. But overall the site now lists about a million products of about 700,000 local sellers.
Do Sri Lankan sellers get to list their products internationally?
Not at the moment. Sri Lankans can sell on Alibaba as a B2B platform. But direct customer, Daraz is still a local base. It’s mainly only local customers that can order and get products delivered. That’s something we’re looking to grow and maybe do in the next couple of years.
What is the future of e-commerce in Sri Lanka?
It’s an incredibly bright future for e-commerce in Sri Lanka. I think over these weeks e-
commerce has really evolved and people have looked to online channels get all their shopping
needs. Right now, the demand is there but the sellers are still catching up and it’s up to a
platform like Daraz to really come through in terms of offering products, in terms of the service
level, and in terms of the technology. Now we see e-commerce growing by 3 percent in the next
2 to 4 years. So the potential should be 4 times the size we see it right now in the next 2 years.
That’s encouraging, that’s a huge opportunity. But you need platforms like Daraz to really set
the standards and be able to sell to everyone in the country.
“We are trying to reach all the customers in the country because everyone deserves to have any product they want, not just the products that are available on the high street. We want to reach out to the whole island and make e-commerce accessible to anyone, anywhere in the island”.
A JOURNEY FROM TRADITIONAL WEAR TO WEARABLE ART: By David Ebert
Every country has its share of unique local artisans that churn out products that capture the minds of the many foreign visitors looking to take home a memento of their experience in a far off exotic land. Sri Lanka like any tourist hotspot boasts an overabundance of exceptional locally designed and produced handicrafts. These products have not only helped Sri Lanka build on its already colorful identity but more importantly, have paved the way for thousands of rural families to participate in their own economic uplifting. The tourist industry, being the country’s largest foreign revenue earner, has long given such artisans the push to innovate, create, and develop not only their craft but themselves and the lives of their families too.Today, Sri Lanka is not only known for its sunny beaches, misty mountains, wild jungle treks, vibrant cuisine, and the one million watt smiles of its inhabitants, but also for a handicraft culture spawned by the thousands of rural Sri Lankans that churn out their creations targeting the millions of tourists thronging its shores every year.
However, among these, few have made as large an impact on the country’s identity as the Batik industry. In Sri Lankan culture, its colorful hand-printed fabrics have adorned almost every traditional festivity, and have become an essential part of the Sri Lankan look. Quite an achievement for an art form that doesn’t traditionally have its roots in early Sri Lankan art.
Introduced to Sri Lanka by the Dutch, who brought the stylish fabrics from their Indonesian colony, it was embraced by the local elite who themselves became quite proficient in the art form. Since then, Sri Lankan batiks artists have through the centuries, infused their very own artistic interpretation and have today helped make batik a part of the country’s unique cultural landscape. Sri Lankan Batiks today are in a class of their own, with a clear differentiation visible between them and any other.
FOCUSING ON WHAT’S IMPORTANT:
In his policy document Vistas of Prosperity & Splendour, President Gotabaya Rajapaksa has identified the country’s local textile industry as a sector that requires much-needed attention. The government says that it is committed to creating a new ‘Made in Sri Lanka’ apparel industry. This resulted, after the recent local government elections, in the appointment of a State Ministerial portfolio for Batik, Handloom, Fabric, and Local Apparel Products, that will focus solely on promoting local production of textiles. Further, with the imposition of restrictions on textile imports, including Batiks and other handlooms, the government is now expecting to save almost Rs.1 billion annually by replacing imports with locally manufactured alternatives.
The government’s path is clear and, in all intents and purposes, the right way to go. Right now no one knows what the ‘new normal’ will be. With so much uncertainty surrounding the global landscape in the midst of a pandemic that looks to make permanent changes in how people and businesses operate, being self-reliant and reducing import dependency is beneficial in more ways than one. Developing Sri Lanka’s local manufacturing capability can not only save the country much needed foreign exchange but also open up new opportunities while reducing its trade deficit as well.
State Ministerial portfolio for Batik, Handloom, Fabric & Local Apparel Products, Dayasiri Jayasekara, recently tabled a proposal that will encourage state sector employees to embrace Sri Lanka’s Batik and local textile culture with a mandatory Batik day at least once a week. For local Batik producers, this move could compensate in some way for the dearth of tourist dollars they’ve faced in the past year.
PROBLEMS & SOLUTIONS:
However, the issues faced by local Batik producers are many. Their chief gripe remains in the lack of standardization in the raw materials required for the process. These include the dye, fabric, and wax for which quality varies, and information remains vague. The lack of clear product information is a huge deal when it comes to sustainable manufacturers like Buddhi Batiks, where clarity on the source and its environmental impact plays a huge role in adding value to their creations.
So far the government seems to be clued in and willing to get onboard in reducing the factors that stifle the industry. Pledges have been made that standardization will be pushed through, and environmental impacts will be reduced. However, when it comes to an industry such as Batik, where the main by-products are the dyes it uses, the need of the moment is safe water treatment and disposal. The environmental impact of the haphazard dumping of chemical dyes into the country’s rivers by large industries cannot be underscored enough. Hence, the road ahead for the government is long and winding, and what remains to be seen is whether the Batik industry will see the change that it expects.
GIVING CREDIT WHERE DUE:
Much of the credit for popularising the Batik culture in the country has to be attributed to local artists such as Buddhi Batiks, spearheaded by its iconic Managing Director, and former National Craft Council Chairman, Buddhi Keerthisena.Having made a name for itself as far back as the 70s with its range of traditional Batik clothing targeting the tourist market, the brand has witnessed a renaissance of sorts in the past 15 years. The beginning of which came about with the changing of the guard at the helm of its operations.
With the business having hit a stagnant patch during the 30-year civil war and the resultant low tourist numbers, Darshi Keerthisena, the company’s heiress apparent knew that the road to recovery lay in fresh ideas and injecting a new outlook. A restructuring of its core design ethics was vital, not simply for the long term survival of the company, but for the many rural craftswomen that had spearheaded its production efforts since its establishment.
Taking over in 2006, Darshi’s journey has taken Buddhi Batiks from Sri Lanka’s best known Batik house to a fashion powerhouse, that has taken it to places no one ever expected the art form to reach. These days Buddhi Batiks designs can be seen on everything from saris worn by top Bollywood cinematic sirens to high fashion clothing worn on international catwalks.
What used to be restricted to traditional wear has now become Sri Lanka’s contribution to international fashion, with its new collections being the most highly anticipated and looked forward to at exclusive events such as the country’s haute couture centerpiece, the Colombo Fashion Week.With Sri Lanka currently experiencing its second wave of COVID-19 infections and a mega cluster putting the curbs on what was expected to be a post-pandemic recovery process, we spoke to batik savant, visionary entrepreneur, and vocal advocate of female empowerment in industry, Darshi Keerthisena, on the impact on her business, and her hopes and expectations in these uncertain times.
What were the early days of Buddhi Batiks like?
I grew up in the back yard of Buddhi Batiks, taking my home-cooked lunch and swapping it with the home-cooked lunch of the artisans. We used to play carrom and ‘elle’ after eating together. There I would make clothes for my dogs and my dolls, and try my hand at creating batiks. I learned from the best local artisans, as well as Central St. Martins fashion graduates. Buddhi Batiks was a booming business back then.
What was it like bringing change to a traditional business as it was back then?
When I took over the business in 2006 it was not the booming business we had back in the 80s. With the civil war and the decline in the tourist industry, the batik industry had become a very monotonous handicraft still stuck in the 80s with no one creating anything contemporary. I wanted to create fashion and textiles that I would want to wear. Thinking different to the norm was something I learned from my parents. I too started looking at the Batik business differently, in how I could update it and create a contemporary product.
How difficult was it to reposition your business into one that focuses on empowering individuals; especially women?
I didn’t have to reposition it. It was always the guiding light of Buddhi Batiks. We always had women from our village working with us and over the years they grow in the team or they eventually become entrepreneurs themselves.
What more does the country need to do to increase women’s participation in the country’s development drive?
The lack of safety in the workplace is the biggest issue for the lack of women in the workforce.
Sexual harassment in the workplace and also during travel to work is one of the main reasons women are reluctant to enter the workforce.
Support from the family is also essential. Especially if you are a married woman with kids, the husband’s support is essential in managing the work at home and kids.
Just because the husband says, it’s ok you can go to work too isn’t enough. He needs to actually engage in support and sharing the responsibilities of the kids and managing the household.
Apart from that not having anyone responsible to leave the young kids with is also a reason why women stay at home after having kids. Encouraging workplaces to have a daycare center for the young kids will be helpful to solve this issue.
Flexible working hours will also be helpful.
Where does Sri Lanka’s Batik industry stand now?
“With the civil war and the decline in the tourism industry, the batik industry had become a very monotonous handicraft still stuck in the 80s with no one creating anything contemporary.”
Since the collapse of the Batik industry in the late 80s, things have changed for the better lately. Buddhi Batiks introduced a new look to the Batik industry with the new collection reveal in 2007 at the Colombo Fashion Week. With this collection, silk satin, silk chiffon, and silk georgette were introduced to Sri Lankan Batik. We also showcased men’s Batik T-shirts, satin silk sarongs, and Batik denim as well. The bold floral designs with bright colors and pastel shades on the saris brought back the sari to the younger generation. Today the Batik industry is so popular, the government had recognized the importance of this craft and seen its potential in becoming a revenue generator in the international market too. In fact, there is a Batik and Textile State Minister for this industry.
How did the industry fare through the lock-down?
It was hard. Most factories were closed, it wasn’t possible to get raw materials, and retail outlets were closed. Since Buddhi Batiks does a lot of custom products like bridals, we continued communicating with clients and designing from home, so we had designs ready to go into production as soon as the lockdown lifted.
Being a sustainable business, are there unique challenges you face in the virus era?
As a brand that has taken the path of sustainability, we face many challenges in the batik industry. First, the lack of standardization of raw materials, may it be fabric, dyes, or chemicals. This is a common problem for any area not just during the current period. Second, sustainable raw materials like organic fabrics are expensive, as is water treatment, so during a time where there are added financial stresses caused by the virus it becomes harder to run sustainably. But it is something we have committed to and we persevere on this path.
How has your road to recovery been to you and your stakeholders?
We recovered quickly. There were a lot of pent up orders that allowed us to hit the road running. The team really came together, multi-tasking and taking on roles that they wouldn’t normally have to do. In hindsight, it made us more efficient because we also had to quickly find ways to reduce costs to survive. Now that we are facing another lockdown, we have a better idea of what we have to do to keep going.
Has governmental support been forthcoming towards businesses such as yours?
Yes. Finally, there is appreciation through having a dedicated minister for the locally produced Batik and textiles industry. The restriction on imports has helped the industry.
What would your budget wish-list be for sustainable SME businesses?
“Payment gateways to receive foreign payments are expensive and complex, requiring lengthy documentation and compliance paperwork.”
Primarily, standardization on pricing for raw materials for the batik and local textile industry. Need a cheap payment gateway that allows small entrepreneurs to get paid by credit card from foreign buyers. Indians, especially like our products, and courier charges to India are cheap. Existing payment gateways to receive foreign payments are expensive and complex (Webxpay and PayHere) requiring lengthy documentation and compliance paperwork. Also generating a payment link is complicated. Perhaps the Central Bank can develop a payment gateway where a supplier only needs to plug in a bank account and can then start doing business with the outside world. Rather than one million dollar order in one go, you can have thousands of small orders ($500-$1000 amounts) which will add up to millions.
PRICING STANDARDISATION FOR RAW MATERIALS
PAYMENT GATEWAY TO ENABLE FOREIGN CARD PAYMENTS TO SMES
Many businesses have identified new and unique opportunities in the current virus hit economy. What are yours, if any, and what has your approach been in identifying them?
We are always on the lookout for new products that we could create and introduce to the market. We spend a lot of time and resources in our research and development. You will see our new reveal in December.
What changes has this brought to your business model?
We are always ready for change, and having a team mindset for constant improvement has been very useful during this time.
Is the future bright for small industries in Sri Lanka?
With the restriction on imports and during the lock-down, we all learned to appreciate local and locally made products. The same applies to the craft and apparel industry too. This opens up a huge opportunity for the local small industries too.
Sri Lankan Batiks are now being recognized as uniquely Sri Lankan the world over. Where can it fit in when it comes to country branding and promotion?
Sri Lankan batik emphasizes hand drawing with inspiration derived from our own rich heritage in terms of motif and design. At the same time, being an island that has been always open to outside ideas, we tend to incorporate our traditional craft with worldwide contemporary trends. This is very much the case in batik apparel. It’s not just batik saris and sarongs now, we use batik on dresses, swimwear coverups, accessories, and increasingly in interior design.