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Ecommerce and Social Media Market in Ethiopia

Avatar: Iman Jemal
Iman JemalNovember 16, 2020
LifestyleFeaturedTechInterviewUrbanization
Ecommerce and Social Media Market in Ethiopia

Technology has evolved over the 21st century and has become such an intricate part of people's lives. A big part of this technological transformation is the creation and spread of the internet which revolutionized computers and communications in the world like never before. This opened the door to online marketing and ecommerce. Currently, after the global outbreak of covid 19,  a lot of people have been secluded to their homes so a lot more businesses designed to operate mainly over the web are emerging. Since social distancing and staying home became the new norm, online business has been booming internationally. Based on  this fact Ecommerce holds more appeal to all who can access it. 

In the Ethiopian context  in the year 2020 a significant growth of internet users were registered within 10 years' time. Statistics of the year 2000 shows that there used to be 10,000 internet users but in just 10 years it reached 20,507,255 users  showing a significant growth of 204.97%. But out of the whole population of Ethiopia only 17.8% use the internet. Out of the people who are using the internet, the number of facebook users is 6,007,000. 

Electronic commerce also known as Internet commerce refers to the buying and selling of goods or services using the internet and transfer of money and data to execute the transactions. Any type of  commercial transaction that is facilitated over the internet is considered as E-commerce but it is usually used to refer to the sale of physical products online. Ecommerce has evolved over time making products easier to discover and purchase through online retails and market places.  

E-Commerce in Ethiopia

In Ethiopia E-commerce is still  rarely used  due to the lack of IT infrastructures that can reach the entire population of Ethiopia.On top of that  the absence of a legal framework that governs Ecommerce makes it harder to develop the structure that can make the market work efficiently . Recently, the government of Ethiopia has been drafting a national law to regulate e-commerce: when approved and implemented it could boost the online market. 

Online marketing is a resource that hasn’t been utilised to its fullest capacity yet. It’s a resource that is only used by about 17% of the population. Out of approximately  115 Million people in Ethiopia there are only about 21.14Million registered users on the online platform. According to a marketing specialist named Matias Aklilu the number of people within the country would open up a great advantage to do really well on online marketing and there is still so much untapped potential. Currently the websites mostly used to shop online are Deliver Addis, Jumia, Qefira.com, Sheger.net, ShebaShopping, HellowMarket, and Delala, all of which operate as marketplaces.

Social Commerce

Social commerce or social media shopping, refers to companies selling products directly within social media platforms. It is different from  social media marketing, which uses content to drive traffic to websites. In the case of social commerce however, the entire shopping experience occurs within the social media platform. Social media marketing and social commerce is interrelated by the fact that social commerce pages need to do social media marketing to attract their customers. 

According to Matias Aklilu when social commerce first entered Ethiopia the major platforms were Viber and Facebook. “ There used to be plenty of sell and buy groups on viber until telegram became a more preferred line of communication in the country”. According to Matias, the most dominant platforms used for social commerce right now are Facebook and Telegram. Both platforms offer a different kind of opportunity for customers and service providers alike. 

Hanan Idris is  a regular customer of social commerce. When asked what she thinks about the online market she said “ The first thing that comes to mind is ease. When using social media to buy products there is no need to go to stores. I find it comfortable to search and get what I want from wherever I am.”   She also mentioned her experience with social media marketing and stated “Depending on the product you are trying to sell it’s possible to attract the customers you are looking for. Content that stands out is very important for social media marketing. You need to design content that intrigues your target consumers by making it short and convenient.” 

On Facebook businesses use tools like Facebook Page Shops and Messenger and plenty of brands have built an entire store on Facebook. Through Facebook Marketplace it is possible to add and update products, sell directly from the page, manage orders and shipping, and administer Facebook ads to promote your store. 

Edelawit is the manager of Rise And Shine leather which has both a Facebook page and Telegram channel profile. She makes bags out of leather herself and works full time on this business. In an interview with Addis Zeybe she expressed how fruitful she finds the social media market since she gains 70% of her customers from Facebook and Telegram. 

“Social media has helped me promote my brand and I have been using both Facebook and Telegram to sell my products. Facebook helps me gain more customers because I boost ads but when it comes to communicating with customers I prefer to use Telegram . I set a fixed price for each product and my customers come to me keeping this in mind and whenever they find my product unsatisfactory I can fix it for them based on their specifications.”

The Facebook Marketplace is a feature on facebook that only recently became available in Ethiopia on October 12, 2020. Currently Facebook Marketplace only works for some people but it is being rolled out in Ethiopia gradually and is expected to be available to all Ethiopians by the end of November this year. It is a convenient platform since it has a section for purchase protection that allows customers to return products and get a full refund for payment and shipping costs. Customers can also write reviews about the different vendors and the quality of their products.

Facebook Marketplace is open to individuals not businesses. Because of this, people are buying from a private seller as if you were buying from a classified advertisement on a local paper. Since facebook doesn’t verify the products for sale, it’s a good idea to check the products before handing over cash.  The principle of “buyer beware” applies so customers should adapt to checking independent reviews written by previous customers. 

A customer that prefers to stay anonymous explained his experience with Facebook marketplace as follows. “ I have used Facebook Marketplace to buy a phone, earphones, phone cases and other used products. Since this marketplace does not provide a delivery option, unless the vendor mentions on their profile that they deliver, you usually have to go to the vendors or communicate on a place to meet. Most sellers on social media  don’t use banks for payment they expect to be paid in cash in person.”

Telegram is an instant messaging social media website which has an app for both IOS and Android. In 2019 telegram has reached 300 million active users. Social commerce is conducted through groups and channels that offer different types of products like apparels, electronics, gadgets and so on. Individuals create channels and groups to sell products straight from their home or office. They reach customers by adding people that might find the content interesting. After a certain number of subscribers customers start searching for the channels they have heard of from other satisfied customers. According to Mathias Aklilu the problem with this platform is that it’s not possible to set up customer reviews or have a return policy. So it is harder to manage and maintain a business unless you can assure loyalty and reliability.

The challenge of social media commerce is that you need to be aware of the technical know how of creating content and communicating with your target audience once you have done it’s quite profitable as long as it is managed well

Payment System

The National Payment System proclamation of Ethiopia anticipates the unique features of e-commerce, e-payment and foresees the desirability of dispute settlement mechanisms that are appropriate. Article 21 of the proclamation is all about Electronic commerce. Sub article one of the same states “Where any law provides that information or any other matter shall be in writing, such requirement shall be deemed to have been satisfied if such information or matter isrendered or made available in an electronic form and accessible so as to be usable for subsequent reference.”

Payment Services that act as intermediates between payers and receivers in a market transaction in the case of online businesses are Banks. To attain this service on an online marketing platform the National bank  has to be informed according to the proclamation mentioned above on Article 23 . Ethiopian banks do not issue credit cards, and only lately the local financial institutions have started using primary internet transactions through mobile and card banking services. 

Social media based businesses don’t always set up a payment system through the bank. There is usually a physical transaction that happened after negotiations on the social media platforms. In this case the seller and buyer meet in person and exchange of goods and money takes place that can’t be monitored by a bank or any interested legal party. Mathias Aklilu explained how this creates a gap in the e-commerce system that the gov’t has set up and it also makes it harder to tax the income that the seller's gain. However the businesses are still thriving and a lot of buyers choose social commerce because of its convenience.

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A PIECE BYIman Jemal