Businesses Utilizing the Platform to Boost Sales
The 21st century has been characterized by various developments, shifts and changes worldwide. Many of these changes, especially within a marketing context, have been fuelled by the nowadays omnipresent Internet and all the platforms and tools found within. With the growth in number of internet users, and the use of smart phones, promoting products through social media sites, mainly Facebook, is becoming a preferred way for businesses to build relationships with customers in Ethiopia. Yet, this comes at cost as many of the businesses that sells their products via social media networks are trading items under the informal market and beyond the tax system of the country, as EBR’s Tiruneh Assefa writes.
Zekarias Fekadu, 25, is a retailer who promotes his goods over widely used social networking sites such Facebook and Twitter. He sells items he imports from Dubai, both new and used. Even though he sells clothing as well, he prefers selling electronics.
“I have a degree in electrical engineering,” he explains. “So I know a little more about what makes quality electronics. That is what my customers rely on me for.” For Zekarias, who has up to six customers a day at his small outlet located near Bole International Airport in Bole District, Facebook has proved to be a great marketing tool to uplift his sales turnover. “It’s very popular, which means I can reach more people without too much effort,” he says.
Zekarias’ opinion is shared by Emebet Negash, 26, who started selling traditional clothes through Facebook while she was employed at a traditional clothes shop. After seeing how popular traditional clothes were getting, she quit her job and started selling them through social media full time.
“Loyalty matters to my customers,” explains Emebet. “I have a lot of customers on Facebook, but they also care about the quality of the product they are buying. Business is going well, so I think I might open my own shop soon.”
It is not only consumer goods such as electronics and clothes that are being advertised on social media. Rather, higher value products like rentals and properties up for sale are traded with the help of social media. Yohannes Ayele, 24, who used to be a sales associate at Ayat Real Estate, is one of the individuals exploiting the Internet and all its platforms. He started posting the properties he had for sale on Facebook and saw customers increase, which led him to leave his job at Ayat and start a full time property advertising and brokering social media business. “I get from 10 to 15 calls a day,” said Yohannes. “I’m even considering opening an office with some friends.”
Yohannes uses Ethiopia Online Market, a Facebook group that has over 31,160 members, which promotes properties, mainly apartments. “Such marketing mechanisms help me to reach more people at once for less money,” he said, explaining why he prefers Facebook as an advertisement platform.
Social media marketing is a process that allows individuals and companies to promote their products, or services through online social channels so as to commune with much larger group of people that may not have been available by the use of traditional advertising channels.
Andreas M. Kaplan, Professor of Marketing at the ESCP Europe Business School who specialized in the areas of social media, categorizes social media into six groups based on the level of social presence and self-presentation. These are collaborative projects, blogs, content communities, virtual game worlds, virtual social worlds and social networking sites.
Collaborative projects, which have low social presence and low self-presentation scores, enable the creation of content by users. Platforms such Wikipedia and social bookmarking applications like Delicious, can be mentioned as example. Blogs, a platform where the author often shares lots of personal information, have a high self-presentation score but a low social presence. Similarly, content communities such as Flickr and SlideShare have a medium social presence but a low self-presentation score.
On the other hand, virtual game and social worlds, which are platforms that replicate a three-dimensional environment where users appear in the form of personalized avatars and interact with each other in the same way aas in the real world, has high social presence scored but low self-presentation level.
Social networking sites such as Facebook and Twitter have high social presence and self-presentation scores, which makes them the most efficient social media marketing tool. Utilizing social media in marketing strategy is one of the best ways for businesses to primarily spread awareness of their products.
Amongst all social media sites on the web, Facebook is the biggest, both in name recognition and number of active users, which reached 2.2 billion globally, accounting for a quarter of the world population. First launched in 2004, Facebook has grown from a simple chatting website for students to a globally accepted social platform where any person can connect with friends and loved ones. Not only that, it has become a viable way to market services, products, and boost brands, adding to its advantage to directly connect with customers.
The same trends holds true in Ethiopia, where there are over 16.5 million Internet users, accounting for 15.3Pct of the population. As of now, there are no less than 3.6 million active social media users in Ethiopia, of which almost half use Facebook while 18.8Pct and 18.1Pct of them use Pinterest and Youtube, respectively, according to Statcounter, a web traffic analysis tool owned by a company based in Dublin, Ireland. The remainder are users of Twitter and LinkedIn.
This makes social media one of the burgeoning marketplaces in Ethiopia. Retailers post pictures and descriptions of the good they would like to sell on their social media pages, as well as the prices and their own contact information. Customers then contact the seller directly, place an order and pay, most of the time through bank transfers. Some retailers offer delivery services of the purchased goods.
From the perspective of the consumer, social media provide unique benefits since consumers can get a feel for the product and services from their social media outlets before they even set foot in a store. The emergence of social media also shifts power away from sellers toward consumers because through the platform consumers can interact with each other and converse to hold sellers accountable for their products and services.
It is not only individual users (sellers and consumers) that use social media to market. Many big companies such as Coca Cola, Ethio telecom and commercial banks are have already adopted social media marketing as a strategy to reach their customers and promote their brand.
In fact, businesses are increasingly seen utilizing social media to meet their marketing objectives such as customer care, advertising and commerce. Studies have affirmed that social media sites are the best sites for businesses to engage with customers and practice social commerce. It enables people, both buyers and sellers, to participate actively in the marketing and selling of products and services in online marketplaces and communities, according to a study published by marketing scholars Tracy Tuten and Michael Solomon in 2017.
But there are concerns despite the blossoming results. Dawit Nehemie, an IT and marketing expert with almost a decade of experience, believes the popularity of marketing products on groups or pages on Facebook arises from the unavailability of online sales. “Although it’s the best way to promote one’s product, it is not going to develop as quickly as in the rest of the world and become sustainable, since there is no platform to make online sales in Ethiopia. As a result, it still requires physical contact of buyers and sellers, unlike the trend observed in other countries that are advanced in online marketing,” he said.
Even though many consumers enjoy sourcing and buying products on social media, there are those who are dissatisfied with their social media purchases. Biruk Tekie, 22, is a law student in his final year. He bought a wireless mouse from a Facebook retailer for ETB500 after hearing about the group from a friend. “I couldn’t find a wireless mouse on the market,” he said. “The one I found on social media was cheap.” However, he now acknowledges that a cheaper price doesn’t necessarily mean quality. “I regret buying the mouse from Facebook. I feel like I lost ETB500,” he explained.
Nonetheless, although many find it difficult to fully implement this in Ethiopia, chiefly due to the unavailability of an electronic payment system, it is helping established sellers branch out in their business. Abraham Kassaye, 37, has been living in Dubai for a long time when he learned of the trend of sales on social media. He currently owns a shop that sells kitchenware on Mauritius Street in Addis Ababa. He has four employees. He underscores the help that social media gives small businesses in competing with larger outlets. “People prefer this kind of retail because the prices are cheaper and it is more convenient, as they have the option of delivery. It gives us an edge over traditional retailers,” he says.
However, as the popularity of buying and selling using social media spreads, concerns such as taxation of such transactions begin to come to the forefront. Even though the Ethiopian Revenue and Customs Authority (ERCA) is responsible for collecting tax in the country, businesses, which promote their products on social media and transact without even having an outlet, are falling through the cracks. As yet, there has not been any concrete framework that sets out the way businesses conducted on social media should pay taxes.
“Unless the government starts following up on such businesses, it encourages unfair competition and paves way for illegal businesses to thrive,” argues Dawit. “To avert this, the government should draft a law to govern online marketing and sales.”
A director at ERCA affirmed that there is no systems put in place to include social media retail businesses in to the tax bracket in Ethiopia. “We do know of such businesses, but the Authority has not implemented any measures to ensure that they pay their fair share of tax,” he said.
In the thick of worries, nonetheless, unregistered small retailers such as Zekarias and Emebet keep posting their products online and benefit from the gain reaped due to the popularity of social media sites.
6th Year . May 16 – June 15 2018 . No.61