E-commerce paving its way in the Untapped Ethiopian Market

Ethiopia is rapidly growing its communications infrastructure, with broadband fiber optic cables and 4G networks rolling out internet in Addis Ababa to popularize e-commerce among other services.

E-commerce in its simplest sense is trading electronically. E-commerce brings the benefits of cost effective product promotion, timely and consistent information, better customer service and relationships, customization of products, competitive advantages, and convenience, decreasing the physical communication. From beauty products to clothing and household items, the internet has it all and people can actually purchase a variety of items through the internet.

Over the past couple of years the online businesses started to have flashes of realization in Ethiopia, using websites and social media platforms to reach out to buyers. Although the path to profitability would be long, e-commerce is making its path awaiting the approval of the draft e-commerce law aspiring to add up economic growth.

In the absence of the legal framework, credit card and the public full trust online companies have been closing almost as fast as they have been opening. Attracted by this untapped potential, virtual service providers such as Kaymu and Jovago are gearing up to introduce innovative ideas bringing emerging trends to Ethiopia and Africa, to connect traditional ways of doing business into paperless tech-based transactions. Trying to cope with the modern trend of internet transactions, local retailers are also preparing themselves to serve this new generation of consumer, breaking down the trust barriers and demonstrating simplicity. In order to attract more buyers, companies have opened up to social media and mobile trends as well as same-day-delivery and new technologies which make it easy to order, purchase and search products and offered services.

Although banks continue to introduce new services, lack of credit card payment options still hinder the progress of e-commerce in Ethiopia. However, demand based developments are seen with the state and private banks which are at the forefront of improving and using technology to introduce new payment transfer methods. Over the last five years banks have been using electronic and telecommunication networks to provide networked services including ATM, Internet Banking, Mobile Banking, SMS banking along with traditional banking services.

The virtual commerce highly depends on the development of information communication technology as a vital tool. Shifting from traditional transactions technology is creating flexibility and speed. This can facilitate the country’s efforts to enhance operations that lead to substantial economic growth, as well as increased competitiveness and efficiency through reliable transactions.  On the other hand, online businesses create commercial records and access the banking system, generating transactions which can be traced for tax purpose, thus increasing state revenue.

Once Ethiopia enacts legislation that deals with e-commerce including enforceability of the validity of electronic contracts, digital signatures and intellectual copyright and restrict the use of encryption technologies; virtual commerce is anticipated to make its easy way in Ethiopia, transforming the nation into modern way of doing business. Experts are certain in pointing out online shopping will increase export especially to other African countries, increasing the internet contribution to the GDP.

By Eden Sahle

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