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E-tail therapy
Though many are skeptical about the future of electronic shopping in Hong Kong, a select few have proved the bricks and mortar crowd wrong. Emma Dai reports.
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n a Thursday morning soon after Lunar New Year, office worker Joey Chui clicked buy on the webpage of a Guangzhou retailer during a break in her routine. A budding fashionista with a penchant for high heels, Chui was looking for some orthotic insoles arch supports recommended by physiotherapists for the relief of foot and heel pain an indispensable accessory for all glamorous fashion victims. Such products cost at least HK$100 at Dr. Kong, a local health-driven footwear chain, and Chui was aghast to discover similar products tagged at just 2 yuan on Taobao. Its more than 50 percent off even including the delivery fee, Chui said. Furthermore, some stores are selling such products for just 1 yuan. Since discovering online shopping three years ago, Chui has been an e-votee of Taobao, the mainlands e-commerce giant, founded by Jack Mas Alibaba Group in 2003. On average, she spends over HK$200 monthly at Taobao, and her expenditure can top HK$1,000. Her majority purchases are dresses, handbags, necklaces and ear rings, which sometimes include essentials like laundry bags. They are such great bargains I cant resist grabbing them, Chui says, giggling at the recollection of her purchasing pleasure. There was a time when Hong Kong people grimaced at the mention of online shopping especially in connection with mainland websites which gained reputations as sources of cheap knock-offs. But that was then, this is now. Today, Hong Kongs e-shoppers cant kick-up their heels fast enough to get online with mainland emporium Taobao. It is the eighth most-visited website by the citys netizens, according to information database Alexa.com. Alibaba Group announced last December that the number of Hong Kong-registered Taobao users surpassed 1.2 million some achievement for the city of seven million. A 2012 MasterCard survey illustrated the growing importance of online shopping to Hong Kong consumers, showing 58 percent shop online and that threequarters of that number will continue to e-shop in the next six months, reflecting the potential ahead. In the past two years, Hong Kong consumers have been very active, said Daphne Lee, director of Taobao International Business. Compared with other markets, Hong Kong buyers have fewer problems with payments and shipping, as
Online shopping spending percentage of total the city is the closest overseas market to the mainland and cross-border monthly spending financial services are easier to combine.
To lure more locals, Taobao introduced more payment channels. Alongside the ubiquitous Visa, Master and JCB cards in the city, Taobao launched the Alipay card its version of PayPal via convenience store chain 7-Eleven late last year, which lets users without credit cards recharge their Alipay accounts. In January, it partnered with PPS, a local electronic payment service with a user base of 1.5 million. We see users of this new method rocketing, said Lee. Shipping headache One big headache for online transactions is shipping. Cross-border shipping is complicated, Lee said. We are working with mainland and Hong Kong logistics firms to simplify and speed up shipping procedures. We want to provide more information to vendors so they will find it easier to cater to Hong Kong buyers. We are integrating information online and offline to make delivery processes more efficient and easier for customers to track, thereby reducing shipping fees by more than 20 percent. To make the website more user-friendly, Taobao is localizing its offerings too. Not all of our six million vendors and 800 million items online are suitable for overseas markets, Lee said. So focusing on popular categories, we send out invitations to vendors and select a batch of matured goods for promotion. Following Hong Kongs calendar, we run special promotions and seasonal campaigns. While the female-to-male ratio of Hong Kong users on Taobao is roughly 6 to 4, Lee says young office ladies dominate the fashion sector. Accessories for personal electronic products such as iPhone covers and handicraft packages also sell strongly, while young mothers are another group who enjoy a vast choice of baby products and intelligent toys. According to MasterCard, many Hong Kong people still like to touch and feel what they buy, so traditional bricks and mortar stores continue to be a key competitor to online purchasing. Thats a feeling Chua Chengxun, managing director of Singapore-based virtual fashion chain Zalora which operates in
Less than 5% Between 6% and 10% Between 11% and 25% Between 26% and 50% Between 51% and 75%
Source: Nielsen
more than six Southeast Asian countries and launched in Hong Kong last June, knows all too well. For a lot of Hong Kong people, shopping is not the end, but part of their lifestyle. People meet their friends in a shopping mall, have a coffee, see a movie and take a walk around. Thats the pleasure. That culture is hard to break. But hes trying, by giving Zalora which sells garments, shoes and accessories from more than 300 brands added-value twist. One very common thing in the US and Europe, but not in this part of Asia, is a no-questions-asked return policy, Chua said. Its challenging when you buy things online. You cant try it. That is one of the biggest barriers to online shopping. We try to make it simple for people to return. While delivery is free, return isnt. The firm tried pick-up, which didnt work, so now 50 percent of returns are dropped directly at their Tsim Sha Tsui office. Its the most convenient way for our customers. We try to be as flexible as we can. Market growth potential According to Chua, while 58 percent of Hong Kong people are happy to shop online, the rate is much higher in other developed economies in the region. About 90 percent of Koreans are planning to shop online in the next six months, he said. Though Hong Kong consumers dont have that plan, they can always change their mind. I dont see any reason why in coming years Hong Kong will not catch up. In Hong Kongs current online market, a smaller, added-value boutique offering can succeed by creating its own niche. When Joshua Lau, founder and CEO of YesAsia Holding Ltd, was discussing his idea of building an online wine cellar in the companys Kwai Chung office, a winetasting session was going on next door. In less time than it takes to pop a cork, Lau
launched YesWine.com in January 2011, which features introductions to about 900 kinds of wine. The website works monthly with a luminous wine taster Chris Chow of three Michelin-starred Jol Robuchon, Macao fame introducing customers to new wines specially selected for Hong Kong. It also operates a temperature-controlled logistics system from warehouse to delivery vehicles. The environment, especially the lighting, in supermarkets is not good for storing wine. We are the choice for those who want quality products. Lau says average value per order is HK$1,000, and the website offers a 10 percent discount for orders of six bottles or more. With several thousand users to date, Lau anticipates faster growth this year as more locals get acquainted with e-tail. He also cites an added advantage of his virtual emporium. In recent years rent soared for lots of retailers and so have prices of wine. We dont suffer from that. This sharpens our competitive edge. And smooth progress. The number of wine drinkers in Hong Kong is rising every year, Lau said. Yet there arent a lot of online networks selling wine. We think if we have a good platform and work professionally, we will be popular.
Netrepreneurs: Partners Donald Sun and Jonathan Leung launched OnlineBuy.com, a cyber community for Hong Kong people to share online shopping experiences.