Growing Gift Delivery Business

Businesses that deliver gifts are growing in Addis Ababa. First, it started as a service mainly used by the diaspora community. But lately, the locals are also embracing it. While this has become a source of revenue for many, it has helped individuals save time and strengthen social ties with their loved ones. EBR’s Ashenafi Endale explores.

Ananas Solomon, 28, an accountant who looks after five family members, was worried about how she and her family would celebrate the 2012 Ethiopian New Year holiday. Her worry was due to the escalating prices of food items especially during Enkutatash. As she and her younger brother were about to leave home for the market on the eve of the holiday, two people arrived at her door with a medium-sized sheep and a Johnnie Walker Red Label whiskey.

“I thought they had mistaken our house for another, but when they clarified, we realized it was a surprise from our brother who is living abroad,” she tells EBR.

Like Ananas, many Ethiopians are now experiencing such a trend due to the growing number of companies engaged in the gift delivery business. Even though gift giving is a culture in Ethiopia, the small industry at the moment is evolving the way it is delivered.
Of course, gift delivery is a well specialized business segment in developed societies where time is expensive and social relationships are weak. Yet, for long it was not well-practiced amongst Ethiopians. However, the Ethiopian community living abroad especially in the USA, initiated such businesses, since 2007, in order to surprise their relatives at home or at their work place.

Currently, there are 10 gift delivery companies operating in Addis Ababa and, many are aware of its benefits in terms of saving time and as a source of revenue. “The number of people requesting for the service is increasing,” says Hanna Yemaneh, one of the four founders of Ge’ez Gift Delivery. The 22-year-old businesswoman established the company two years ago after being surprised with a gift of flowers at school.

“We initially started it as part-time work, promoting the company and the service on Facebook and Telegram. It was simple for us as I had adequate knowledge from working at a décor company while I was also attending accounting class,” she says. “But when the delivery order increased substantially, it kept us busy.”

The first order Ge’ez received two years ago was for a bunch of flowers. “I remember we contributed ETB40 among us to buy and deliver the flowers. But after that, the business expanded to larger orders, up to three per day and cutting across regional towns,” says Behria Nuredin, another partner at Ge’ez. “I will never forget the expression on the person who was so surprised that they stood still for over 30 minutes on the road after we delivered a gift ordered from unexpected relative.”

The gift delivery service can be divided into several segments which include; A surprise order, non-surprise, occasional or holiday gift. Surprise gifts usually require designing of special packages and extraordinary delivery mechanisms of which the gift sender is expected to give the phone number of the receiver to the delivery company.

The cost and delivery vary based on the package, delivery mechanism and location of the receiver. But most of the delivery packages in Ethiopia are whiskey, large cakes from big hotels like Sheraton, bouquet of flowers and some items bearing the name of the receiver. “It is a very good and amazing trend. The profit they take is also reasonable. They arrive on time and solve problems you cannot address physically,” Ananas tells EBR.

Gift delivery businesses offer distinctive assortment of gifts that are artistic, in unique atmospheres and occasions. The business can be started at a small, medium or large level, based on the packages, coverage area, and facilities available as well as the product outsourcing mechanism. There can be a wide range of options within a single package. For instance, it can be a medium-sized sheep accompanied with a large cake and wine, or a large-sized sheep accompanied with a medium cake and whiskey, or beer. The alternatives are wider when it comes to flowers, clothes, household items, and items that can reflect a particular concept.

The gift can also be a unique item ordered from the manufacturer with the name, birth year, or other memorable tags printed on it. “Gifts are usually related to pardon day, valentine’s day, and other cultural holidays. For instance, you might abruptly remember today is the birthday of your best friend, and you cannot reach the person shortly. You can simply call us with the order and we will deliver it within two hours, if it is in Addis Ababa,” adds Hanna.

The sender deposits 75Pct to 100Pct of the total cost in the account of the delivery company prior to the event. The profit margin for the delivery companies reaches as much as 50Pct. However, some have a different policy in this regard. “We don’t take a profit margin of more than 20Pct of the total cost of the delivered package,” says Asnake Tibebu, managing director of Angels Gift Delivery, who started the business in 2015 and currently delivers up to five times a day. “Gift delivery is more about solving somebody’s problem. It can be a mourning time, celebration, prisoner visit, on behalf of somebody or a special event.”

Asnake started it as a small business with a small capital but he and his partners are in preparation to scale it up by injecting capital of between ETB2.5 million and three million Birr. “The expansion includes having our own vehicles, new modalities and package designs, with wide varieties as well as delivery coverage to regional towns,” he says. His company works in collaboration with a number of foreign gift delivery companies. If the gift sender is living abroad, he or she contacts the gift delivery companies nearby and the latter contact Asnake’s company. If any package needs to be bought from Amazon or any other market places abroad, the partnering company would facilitate for the local delivery business.

Although the gift delivery business is doing very well so far, even without any promotion except on social media, there are various challenges that drag the existing businesses from undertaking expansion. “The gift delivery business involves many sectors and it can grow into many industries. We are considering evolving into logistics, packaging, branding, event organizing, IT, and e-commerce. But there are no support structures to nurture such small businesses,” Hana says. “We are also studying the trends in other countries. For instance, we want to have a wide range of gift packages designed and readily available at our shops. This is to make it easier for customers to access them faster and directly, rather than going to the market after an order.”

Mekdela Mekuria, consultant and marketing lecturer at St. Mary University, says the rise in the number of gift delivery businesses can be seen from the producer, logistics, consumer and price angles. “First the sale of a product increases when it is brought near to the consumers’ door. The second is igniting the demand of a product by delivering it in a unique way and making the consumer think about it more. The third is gift products are sold more than the average sales when they can be accessed at one spot,” he says. “Therefore, producers can provide their items for gift delivery companies with ample commissions, to boost sales.”

More to that, Mekdela says it can contribute to the country in terms of earning more hard currency. “Better money transfer modalities and a reliable network encourages the diaspora community to rely on such companies and pay in hard currency. Gift companies in Addis Ababa can also solve the e-commerce problem by using available e-payment systems like Amole or M-birr.”

However, the lack of online marketing and a weak telecom network has a big impact in nurturing such small yet innovative businesses to the next level. This is why Hanna says availability of a network is an important pillar in the gift delivery business. “I remember once failing to deliver on time due to the absence of the telecom network. The problem is especially worse outside Addis Ababa where delivering on time becomes a big challenge. Precise timing and connection are critical to find the receiver and arrive timely on the spot, otherwise the surprise is spoiled,” she says.

Mekdela, on his part, underlies the future is bright for gift delivery companies. “This means gift delivery companies will have ample time ahead to specialize, scale up, diversify, and go closer both to the consumer and the producer with their own artistic and catchy value additions.”

8th Year • Oct.16 – Nov.15 2019 • No. 79