Last chance saloon for retailers in Hong Kong to join e-commerce showdown or kiss goodbye to local market, experts say
Some have already missed the boat but many more need to step up or foreign players and online retail giants like China’s Alibaba threaten to takeover
Retailers in Hong Kong must step up their e-commerce efforts so companies from other countries do not capitalise on this breach to conquer the local market, which would be detrimental to the city’s economy, according to the head of a new body promoting online retailing.
Non-local players like Chinese online shopping giant Alibaba pose a threat to Hong Kong’s service industries and general economy, especially if the company co-founded by Jack Ma Yun makes its largely consumer-to-consumer Taobao Marketplace and B2C Tmall the dominant models.
“E-commerce is not an industry anymore, it’s affecting everybody,” said Joseph Yuen, chairman of the recently formed Hong Kong Federation of E-commerce (HKFEC).
“So that’s one of the threats - if we are not [getting] on at the last station for the train,” he added, using a metaphor to describe the urgent need for local companies to sell their merchandise and services online to remain competitive.
The HKFEC was launched in September to promote online retailing, advise Hong Kong’s major brands on how to develop their own offerings, and to push the government for greater support.
Yuen said major retailers in the city need to alter their expectations of business margins and offer exclusive early offers to online shoppers- rather than using their websites simply as dumping grounds for unwanted stock.
He said no local e-commerce sites appear in the top 100 websites for Hong Kong as ranked by US-based analytics provide Alexa.
Meanwhile, Alibaba’s Taobao.com already ranks No. 7 in terms of monthly visitors and page views, controlling over 48 per cent of e-commerce traffic in the city, according to Euromonitor International.
Internet retailing stood at US$1.7 billion in Hong Kong last year, or 2.4 per cent of total retail sales. This compares poorly against a global average of 5.8 per cent, or 6.3 per cent in Asia, data by Euromonitor shows.
Hong Kong is expected to see its share edge up to 2.5 per cent in 2019, when the comparable world and Asian levels are projected to hit 8.9 per cent and 10.2 per cent, respectively.
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Shopline is one of a number of local start-ups that are working to support the e-commerce operations of local SMEs. Founded in 2013, it gives retailers the tools to quickly build online stores and handle payments. It also helps boost the market share of major brands in Hong Kong.
High delivery costs, consumer concerns about payment security and a paucity of talented digital marketers are among the factors holding the city back, according to Randal Hung, Shopline’s marketing and growth manager.
A survey by Google showed that 9 per cent of companies in the city believe their staff are well-trained in digital marketing.
For those that are less confident, Shopline holds workshops to instruct about online advertising tools like Google Ad Words and ways of advertising on Facebook.
“We don’t just provide a platform for them to build their online store, which means nothing if you have no traffic,” Hung said.
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“We also help them with the second part, which is driving traffic to the website.”
Hung said this should be added to the curriculum at local universities to bolster the talent pool.
Seeing a niche in the marker, fashion e-retailer MyDress.com said recently it has big plans to expand its fashion lines from Korean and Taiwanese products to Western brands, skincare and children’s clothing.
Last month it was acquired by SCMP Group, publisher of the South China Morning Post, in a deal the founders of Mydress.com said would give it the resources to boost its marketing and improve its all-important mobile website. In six months it will expand to Southeast Asia, it added.
Co-founder Edmund Wong said retailers are waking up to the importance of e-commerce.
Retail sales are falling in Hong Kong as mainland Chinese tourists increasingly take their spending power elsewhere. This, combined with high rents, have forced merchants to ditch earlier misgivings over selling online, Wong said.
“We started to see that those retailers are really feeling the pain right now,” he said.
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“A lot of them now are really understanding the impact of e-commerce,” he added.
“They have to find some ways to either build their own platforms or join someone like us.”
Ensuring websites work well on mobile is a preliminary step for brands looking to compete online, as 68 per cent of Hong Kong consumers research products on their mobile devices and 16 per cent make purchases on their phones, according to Google research.
MyDress sees almost 70 per cent of its traffic come from mobile. It said it is planning to invest in this area to optimise how its site appears on small devices.
Shoppers now expect fast loading speeds and the flexibility to be able to browse on one device and have their basket ready for completing the transaction on another, according to experts at web optimisation firm Akamai.
“There’s a lot of retailers that haven’t got their technology where they’re able to do that yet,” said Jason E. Miller, chief strategist for commerce at Akamai.