Wong planning one-stop online shopping site
Updated: 2015-08-06 08:49
By Timothy Chui in Hong Kong(HK Edition)
The deep pockets of Hong Kong Television Network boss Ricky Wong Wai-kay may be the key to fulfilling his latest vow to create a truly one-stop e-commerce site based in Hong Kong.
Wong's entry into the digital marketplace seeks to develop a platform which will be equal parts Sogo- and supermarket-style e-commerce.
The task is monumental. The majority of Hong Kong online shoppers already favoring overseas websites rather than local platforms. Visa says local online shoppers are the most "international of any other market in Asia".
The mainland's Taobao is the city's undisputed leader in business-to-customer e-commerce, with roughly 3 million active users making purchases from Hong Kong.
Meanwhile, US-based Groupon remains at the top of its field. It has a more than 50 percent market share out of 40 group-buying websites in Hong Kong.
HKTV Mall offers more than 70,000 items ranging from toilet paper to diamond jewelry. But it faces challenges as it seeks to attract more customers in a tough, already well-populated operating environment.
Prior to Wong's entry, the development of a one-stop shop for e-commerce faced three serious barriers - a catch-22 situation with local investors wanting proof of the concept before investing, a market too small to attract substantial overseas investment, and already convenient clustered shopping locales - according to e-commerce entrepreneur and founder of Life Project Nishant Kapoor.
Wong's foray is perceived as the first dedicated, well-funded attempt to set up a local platform, doing away with the need to attract substantial capital. But challenges still remain in how to deal with an already compact and convenient city - nullifying one of online shopping's biggest attractions.
Having customer experience goes a long way in providing convenience, says Kapoor. He says Wong's HKTV Mall could also go the extra mile when it comes to providing a variety of products.
High rent at brick and mortar stores limits experimental shelf space, with retailers wary of taking risks. They instead rely on time-tested brands, Kapoor adds.
But middle-market goods offer huge opportunities for HKTV.
Apps, airlines, travel, hotels, coupon sites, cinema and food delivery services dominate e-commerce activity locally. Market research firm Nielson believes the online market for buying groceries is starting to show promise. Nielsen Hong Kong and Macao Managing Director Eva Leung notes that there has been a growth of 7 percentage points in Hong Kong consumers purchasing food and beverages online since 2011 - from 18 percent to 25 percent.
"For retailers, now is the time to create omni-channel experiences for consumers who are actively using both digital and physical platforms to research and purchase - as consumers increasingly don't make a distinction between the two," Leung says.
Online purchases for other consumable products are gaining popularity, with one-fifth of Hong Kong consumers seeking personal care products and baby supplies. Since 2011, online purchases of baby supplies have increased by 17 percentage points to 21 percent.
When HKTV will make a profit will depend largely on how its competitors react. Signs of a price war have already been noticed, with the price of 759 goods being slashed in response to Wong's latest venture.
Kapoor says the entry of multiple, affluent players invariably leads to a price war. He notes that it took years for Amazon to become as profitable as it is now because it was competing in an aggressively expanding sector.
(HK Edition 08/06/2015 page7)