Hong Kong retailers turn to staff-run online shops to boost sales hit by protests, Covid-19 pandemic
- Platforms like Boutir and Shopline that enable vendors to set up and run their own online stores have seen a big surge in business in recent months
- The nascent model enables sales people from a particular vendor to individually set up their own online stores selling the company’s products
Hong Kong retailers, hit hard by the coronavirus pandemic and last year’s social unrest, are turning to platforms that allow their sales people to set up their own online shops to rescue their business.
This nascent model of online commerce allows sales staff from a particular vendor to individually set up their own online stores selling the company’s products. They can earn commissions on the products they sell, but the profit still goes to their company, which controls pricing and delivery.
It particularly suits traditional retailers of higher value products whose customers usually buy only after trying them out at their stores and take weeks to decide, according to Eric Ng Ka-ka, co-founder and CEO of Boutir.
The five-year-old Hong Kong firm has helped over 85,000 merchants set up online shops via its mobile app.
“For traditional retailers, it is not easy to deviate from their entrenched practices, but due to the retail slump, many have been forced to try new methods,” he told the Post, adding it is close to signing up a major cosmetics retailer.
Around 70 per cent of its merchants are from Hong Kong and the rest mostly from Southeast Asia.
Some are well known brands such as health and wellness products distributor OTO Bodycare and its strategic shareholder Mabelle Jewellery, but the majority are small and medium-sized retailers.
“Our merchants do not need to use complicated computer programs, they can start an online shop with a mobile phone app, simple enough even for my mum to do,” Ng said.
Hong Kong retail sales in record 44 per cent decline
Hong Kong’s retail sales plunged by a record 44 per cent year-on-year in February. Sales of jewellery, watches, clocks and valuable gifts dived 79 per cent, as people stayed away from public places.
Boutir’s platform saw the number of newly registered merchants jump to 5,000 in March from 2,000 in January, Ng said. Around 10 per cent of them pay subscription fees, ranging from US$100 to US$600 annually.
Top-tier merchants face no limit on the number of transactions they can do, and have access to customer-purchases data and promotion campaign services provided by Boutir.
It is not the only Hong Kong company tapping into rising demand for online shops set-up services. Larger rival Shopline, set up in 2013, said it has 200,000 merchants in 10 Asian nations.
OTO Bodycare, which previously sold online through marketplaces like HKTV Mall and Yahoo Group Buy, in December joined Boutir’s platform, with its sales staff setting up 23 online shops. They pick different products for each shop to suit their customer base.
“With last year’s social unrest and this year’s virus, people make fewer shopping trips,” said OTO’s managing director Charlie Yip Chee-lai. “Our staff can now send e-catalogues to potential customers’ mobile phones after they tried the products in our shops and follow up with them online, and they can purchase via their phones.”
The online shops have recorded a combined “six-digit” Hong Kong dollars’ worth of monthly sales since they were launched, which Yip said was “satisfactory”. He said it may curtail its physical shops if rents remain high when lease renewal time comes.
OTO is a unit of Hong Kong-listed Tempus Holdings which also runs a logistics business.
Tempus expected to post an unaudited pre-tax loss of not less than HK$80 million last year, compared to a loss of HK$25.4 million in 2018, because of the US-China trade war and Hong Kong’s social unrest.
It booked HK$61.4 million of retail sales in Hong Kong in last year’s first-half, during which online sales accounted for 5 per cent of the total, compared to 73 per cent from shops.
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Having built a sizeable merchants base, Boutir will seek to generate more revenue by offering them in June a “precision online advertising” placement service, based on data collected by its partners, Facebook and Google, Ng said.
Boutir will collect 15 per cent commission on its merchants’ online advertising spending.
Cassandra Chan, director of snacks seller Savour Life which opened an online shop on Boutir’s platform two years ago, said a recent two-week trial of the data-driven advertising placement showed it could rake in more than double the revenue per ad dollar spent compared to Savour’s own ad placement effort.
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