Can AliExpress Unlock Ethiopia’s E-Commerce Potential?

It’s official—AliExpress has officially entered Ethiopia, marking a significant milestone in the country’s evolving e-commerce landscape. Two weeks after Shega broke the story of the imminent entrance of the Chinese e-commerce giant, an official commercial launch ceremony was held at the Ethiopian Airlines-owned Skylight Hotel on Thursday. In an atmosphere pulsating with palpable excitement, various stakeholders from Ethiopia’s public and private sectors gathered for a day of presentations, panel discussions, and case studies.

“This is not just a new chapter for Alibaba but also a new beginning for the Ethiopian e-commerce sector,” heralded Yeshurun Alemayehu (PhD), State Minister, Ministry of Innovation and Technology, during his opening remarks.

He highlighted how the entrance of AliExpress presents significant opportunities for local businesses to participate in global commerce and scale up their operations. However, lingering legislative bottlenecks like the National E-Commerce Strategy, which is awaiting approval from the Council of Ministers, could present indications of an underdeveloped enabling environment.

Inadequate digital infrastructure, logistics challenges, and limited access to digital payment systems remain critical challenges in the e-commerce landscape. Unresolved, these obstacles hinder consumer trust and adoption, which are vital for e-commerce growth.

With around 45 e-commerce licenses registered by the Ministry of Trade & Regional Integration as of December 2023, the sector is filled with small, mostly ephemeral startups that pop out of business in a few years.

Nevertheless, Ethiopia’s massive population of 130 million people and rapidly expanding telecommunications coverage represent significant potential for e-commerce expansion.

Ethiopia’s Growing Relationship with Chinese Ecommerce Platforms

Many sellers in Ethiopia, particularly in the women’s clothing and apparel industry, source a significant portion of their merchandise from Shein, the Chinese fast fashion giant. The affordability and trendy styles of items sold on Shein have made its clothing a popular choice for Ethiopian consumers.

Topics such as “How to order from Shein in Ethiopia” and “How to navigate customs when importing from Shein” are frequently discussed by content creators. Additionally, several companies have emerged that take orders from local clients and import items from Shein, adding a markup to the original price. Often, customers are required to send a screenshot of their desired items and pay half of the total cost upfront.

Alibaba’s entry into the Ethiopian market marks the latest development in this ongoing relationship between the two countries. Once everything is in place, Ethiopian consumers will be able to purchase items from sellers worldwide through AliExpress.com, using Ethiopian Birr. The items will then be shipped and delivered to their doorsteps.

On the other side of the equation, Ethiopian businesses will also have the opportunity to sell their products to a global customer base.

But How Will This All Unfold?

AliExpress is entering the Ethiopian market having already partnered with the largest aviation group in Africa through Ethiopian Airlines for a logistics network to ship its products. Bolstered by Ethiopian’s new logistics facility capable of handling 150,000 goods annually, the partnership will play a crucial role in addressing some of the existing challenges. An Africa-first AliExpress warehouse is also part of the partnership.

The e-commerce giant has also onboarded local private sector partners as well as set up a one-of-a-kind showroom around the Wollo Sefer neighborhood in Addis Ababa.

Geoffery Jiang, Director of African Business Accounts for AliExpress, provided an overview of the platform’s features, which include a B2B wholesale model offering personalized sourcing services, rapid account setup, quality assurance, and customs clearance. He also highlighted the B2B2C drop shipping model, which allows businesses to operate without inventory, facilitating website construction, product selection, small order delivery, and easy returns.

“Currently, AliExpress supports payments with international payment methods such as Visa and Mastercard,” Jiang noted.

The director indicated that the platform has already integrated local payment systems in some African countries, such as M-Pesa in Kenya, while it has yet to integrate Ethiopian birr into its platform.

“There are plans to integrate and introduce local payment gateways in the near future,” Jiang told Shega.

The account director also hinted in his presentation that the e-commerce giant is already in discussions with local fintech firms, including the state-owned telebirr, to integrate local payment options. Although Geoffery did not disclose which fintech startups are in contact, a reliable source confirmed that there is an opportunity for all local payment solution providers to be integrated by mid-October at the latest, or by December, enabling local currency transactions.

Solomon Damtew, Director of Payment and Settlement Systems at the National Bank of Ethiopia, emphasized the importance of establishing a seamless payment system while discussing strategies to boost e-commerce in Ethiopia. This discussion included panelists from AliExpress, the Customs Authority, the Digital Transformation Association (DTA), and local business leaders.

Solomon also mentioned the readiness of the National Payment Gateway, which is a key component of the National Digital Payment Strategy of Ethiopia (2021–2024). It targets the promotion of digital payments in Ethiopia as part of simplifying online payments for consumers and businesses.

Chapa Financial Technology, one of the leading Ethiopian fintech firms, is ready to capitalize on Alibaba’s entry into the country. Nael Hailemriam, cofounder and CEO of the company, says their vision of connecting Ethiopia with the global economy through simplified purchasing capabilities from anywhere in the world is complemented by AliExpress’s entry.

“Our vision has aligned with AliExpress in that regard,” Nael told Shega, exuding excitement.

Chapa’s mission includes fostering cross-border transactions by integrating payment systems. The CEO is convinced that local businesses can rapidly scale their international reach through the AliExpress window.

Tigabu Haile, Founder and CEO of Eshi Express, welcomes AliExpress’s entry.  He also expressed interest regarding Ethiopian Airlines intentions to partner with local last-mile and courier companies to facilitate trade.

“We have held conversations, but there are no concrete plans or partnership agreements in place yet.” Tigabu confirmed

The stars seem to have aligned for AliExpress and some local companies, as significant headway has already been made in setting up fertile grounds for its success.

Markos Tilahun, Founder and CEO of MKTY, the official AliExpress business partner, stated that with the showroom now open, the next steps will focus on preparing exporters and customers, building websites, and raising awareness to encourage more Ethiopian businesses to sell on AliExpress.

He initiated partnership negotiations with Alibaba while he was studying in China as a recipient of a scholarship offered by the retail giant.

Pending developments include a reunion event and masterclass in Addis Ababa on September 24, hosted by the Alibaba Global Initiative (AGI), the Digital Transformation Ethiopia Association (DTEA), Alibaba Cloud, Ant Financial, Alipay, and AliExpress.