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European Journal of Applied Sciences – Vol. 10, No. 5

Publication Date: October 25, 2022

DOI:10.14738/aivp.105.12882. Gelata, F. T., Gemada, S. C., & Han, J. (2022). Review on the E-commerce Business Models in Ethiopia. European Journal of Applied

Sciences, 10(5). 48-58.

Services for Science and Education – United Kingdom

Review on the E-commerce Business Models in Ethiopia

Fikiru Temesgen Gelata

Assistant Professor of Agribusiness and Value Chain

Management. Department of Agribusiness and Value Chain

Management, Ambo University, P.O. Box: 19

Ambo, Ethiopia. PhD scholar in Agricultural Economics and

Management at Nanjing Agricultural University, China

Semarawit Chaka Gemada

Senior lecturer and researcher, at Ambo University

Department of Agricultural Economics, MSc scholar in

Climate Change at Pan African University Water and

Energy Science including Climate change, Algeria

HAN Jiqin

Professor of Agribusiness. Nanjing Agricultural University

Dean, College of International Education, China

ABSTRACT

E-commerce plays a significant role in the economic and social development of a

country. We everyone know how much E-Commerce is important in many aspects

of human life but we also know how much risky it is. In e-commerce, more than two

parties interact with a given e-commerce platform. The review initially embarks on

explaining the distinction among the fundamental concepts of e-commerce, e- readiness and e-commerce readiness. It then reviews some of the major e- commerce readiness studies conducted and models developed both at the regional

and international level. From among such models, the Asia-Pacific Economic

Cooperation (APEC) self-assessment tool is selected as an appropriate instrument

for adoption and development of a measure for e-commerce readiness in Ethiopia.

It also presents the current trends of E-commerce in Ethiopia and the challenges

that are faced in developing the E-commerce business model in the Ethiopian

market with future scope. The various challenges which are highlighted are the

Delivery Challenges, Payment challenges, After-sales Service challenge, and

challenge of Consumer’s Behavior in adopting these kinds of businesses.

Keywords: Electronic Commerce, Online business, Payment security, consumer behavior.

INTRODUCTION

The world continues to witness a revolution in the way business is conducted, and the

uncharted area of e-commerce presents many opportunities and challenges to a newly

emerging world economy. E-commerce is an inevitable reality as the prime promoter of

commerce & trade, and become one of the most essential components for current international

trade; it greatly changed the ordinary manner of international trade (UNDI, 2003).

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Gelata, F. T., Gemada, S. C., & Han, J. (2022). Review on the E-commerce Business Models in Ethiopia. European Journal of Applied Sciences, 10(5).

48-58.

URL: http://dx.doi.org/10.14738/aivp.105.12882

Electronic commerce looms large on the horizons of tomorrow, and it promises to transform

trade and industry in ways not yet imagined or comprehended. For several countries it

continues to be perceived as a double-faced blessing one promising and the other threatening

(Singh, 1999). Organizations are embracing e-commerce as a means of access or expanding to

global markets, improving customer service, reducing costs, and enhancing productivity and

efficiency (Wenninger, 1999). However, the range of benefits offered by e-commerce to

transactional businesses has also given rise to key issues, especially on privacy of users and

security of information shared online. These issues emerged because of the wide accessibility,

openness and interconnectivity as innate features of the Internet (Smith et.al., 1996).

Straub (2010) pointed out that developing countries have fallen behind in the early stages of

technology acquisition because of inefficient use of related knowledge, lack of investment

within firms to acquire technology, lack of promotion policies that develop these technological

areas and high costs of importing technology. Moreover, recent technological developments

such as the introduction of digital signatures may widen the gap in the use of ecommerce

technologies. Developing countries have poor telecommunication, poor transport systems,

poor electronic payment systems, no security, and no skilled workforce (NBE, 2015).

Though the world is using E-commerce services to a large extent, Ethiopia is lagging behind its

use. For countries like Ethiopia, E-commerce can offer a variety of options for the first time.

Internet marketing has shown a significant improvement over the past years in Ethiopia, where

the banking sector started using electronic banking as well as SMS services. These activities

help the customers to increase improved access and the increasing habit of using the internet

as a critical source of information, especially where there are more than 15 million internet

subscribers in the country. African development partners and policymakers are focusing on

making the availability of information communication technology to small and medium-sized

enterprises (SMEs) in an effort to eradicate poverty. United National Conference on Trade and

Development data shows that 60 to 70 percent of employment is in SMEs in developing

countries. That is why most of the African countries are giving priority to it. Similarly, Ethiopia

has also given priority to SMEs to create employment opportunities and to improve access to

ICT (Christopher, 1998).

Ethiopia is not fully utilizing their capacities to introduce this new paradigm, to be competitive

internationally and to exploit the benefit it offers. Additionally, this technology is not yet

applied in optimal way. At present there is low adoption of e-commerce, As well as the fully- fledged ecommerce has not yet been achieved in Ethiopia. In other words, these situations call

for better understanding by the researcher. Thus the aim is that, by understanding

opportunities associated with e-commerce, will contribute to filling the gap identified, and

thereby laid the foundation for a coherent body of knowledge, in the field, attempting to

investigate the opportunities and practical challenge of electronic commerce activity in

Ethiopia.

This review attempts to contribute some records by performing inquiries on the area by

exploring the opportunity level and benefits of electronic commerce as well as the prevailing

challenge in the business within the context of developing country, Ethiopia. The importance of

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European Journal of Applied Sciences (EJAS) Vol. 10, Issue 5, October-2022

Services for Science and Education – United Kingdom

this study is adding to the body of knowledge in the area by showing the prevailing reality, its

features and potentials to help business and enterprises in Ethiopia register growth through

ecommerce.

OBJECTIVE OF THE REVIEW

The primary purpose of the review is to find out the current E-commerce business scenario in

the Ethiopian market. The world is using several new E-commerce applications that are

increasing day by day.

The specific review is:

Ø E-Commerce offers potential in the form of enhanced participation in the

international value chain and public relations.

Ø The feasibility can be improved by providing suitable ICT infrastructure,

improving cross-country regulatory differences.

Ø This research study reveals interesting facts about the potential and opportunity

of e-commerce in Ethiopia.

LITERATURE REVIEW

Concepts and Definitions of E-Commerce, E-Business, EMarketing and Mobile Marketing

The wide range of business activities related to e-commerce brought about a range of other new

terms and phrases to describe the internet phenomenon in business sectors. Some of these

focus on purchasing from on- line stores on the internet. Since transactions go through the

Internet and the Web, the terms I- Commerce (Internet Commerce), and even Web-Commerce

have been suggested are also rarely used (Semeneh, 2018).

E-commerce has been defined in several ways depending on the context and research objective

of the author (Elizabeth and Michael, 2004, p.197). “E-commerce is sharing business

information, maintaining business relationships, and conducting business transactions by

means of telecommunications networks”. E-commerce is the business transaction like buying

selling and exchange of goods and services on the internet (Abdul, 2016, p. 19; Elizabeth and

Michael, 2004, p.197). E-commerce is an exchange of commercial information, products and/or

services. It is also comprised of main components like communication systems, data

management systems and security (Yaser, 2013, p. 190).

E-Business Vs E- commerce

Major literatures distinguish between the meanings of e-commerce and e- business. They argue

that the variation as electronic commerce or internet commerce refers to an exchange of goods

or services using the internet, and the transfer of funds and information to execute these

transactions. E-commerce is typically refers to the sale physical products online, but it can also

describe any commercial transaction that is going through the internet platform. Whereas

Ebusiness refers to all aspects of operating an online business, ecommerce refers specifically to

the transaction of goods and services. (Rodda, 2018).