Hong Kong mobile operator SmarTone joins war for e-commerce and online payment to look for new profit streams

Hong Kong mobile network operator SmarTone Telecommunications could roll out its new service called “Kiss” this December as the first batch of retailers in the city have signed up for the ambitious online-to-offline marketing and payments platform.

“We’ve already started signing up stores, including [those run by] medium-sized retailers. Some bigger retailers are looking at it, too," Douglas Li, the outgoing chief executive of SmarTone told the South China Morning Post.

Li, who had championed SmarTone’s two-year development of the Kiss platform, said the company’s leadership “should run Kiss for five to seven years to fully realise it’s value because of how uniquely focused the platform is to help retailers”.

He said there could also be an opportunity to license the technology behind the Kiss platform to telecommunications network operators outside of Hong Kong.

“It’s basically an internet business so the actual cost of implementation is not huge. The only question is how quickly it could scale up,” Li said. “If it does well in a foreign country, the sky is the limit.”

Launched early this month, Kiss will enable retailers to connect with consumers through a platform that ties together digital marketing and loyalty programs with data analytics and mobile payment.

Merchants, for a monthly fee of a few hundred Hong Kong dollars, are able to create their own mobile storefronts, directly communicate and interact with customers to gain a deeper understanding of what they want, and launch targeted campaigns.

“Retailers need to adapt to new thinking because the world has changed,” Li said.

“You need only look across the border [to mainland China] to see how online and mobile [e-commerce] are impacting the traditional brick-and-mortar retailers.”

New York-based research firm eMarketer forecast mobile e-commerce sales in mainland China would make up 10.9 per cent of all retail sales in the country next year and 55.5 per cent of all online retail shopping as the sector grew 51.4 per cent to a record US$506 billion from an estimated US$334 billion this year.

“We hope to build a critical mass of connected retailers in Hong Kong so that Kiss will have a strong appeal for consumers to use,” said SmarTone chief technology officer and interim CEO Stephen Chau Kam-kun.

Chau said SmarTone’s sales team was “working very hard to sign up more retailers”, representing a mix of merchants with “high-value, low-frequency buyers” and “low priced, high-frequency buyers”.

The Kiss marketing platform, which is operated by SmarTone subsidiary Kissco Marketing Services, includes online tools for retailers to create professional-looking mobile storefronts and messaging campaigns, a single-purpose Android tablets used as the Kiss mobile payment terminal, capabilities for customer data analytics and a Bluetooth beacon for the store.

These Kiss beacons are devices specifically configured to push notifications, such as greetings and special offers to nearby customers who have activated the Kiss app.

Consumers can also download the Kiss Wallet, a feature that allows users to store their credit card details, retailer cash credits and promotional Kiss Dollars on the online platform. With the free Kiss Pay, consumers can pay, redeem and be rewarded for purchases by simply using their smartphones to tap on the Kiss terminal in the store.

UnionPay International is the launch credit card partner for Kiss, although efforts are being made to sign up Visa and MasterCard to the platform, according to SmarTone.

Li, who was the founding chief executive at SmarTone in 1992 and led the company’s successful 3G and 4G services upgrades from 2001, said there was plenty for the operator to do to ensure the Kiss offline-to-online marketing and payment platform’s success.

“There's a roadmap that’s a mile long I have handed to the team for implementation," Li said.

He added that the next chief executive and the company’s board would ultimately decide on the direction of Kiss.