Hong Kong retail is legendary, thanks to its thriving tourism, tradition of unique local shops, and voracious local shoppers. A longtime spending mecca, Hongkongers and visitors alike consider shopping a ‘must-do’ activity. Therefore, it is only natural that ecommerce would be embraced and celebrated by these retail sophisticates.
In a city where the morning commute or taxi queue has become a shopping opportunity, consumers are using their smartphones to compare prices, place orders, and arrange deliveries around their busy urban schedules. Price comparisons happen in real time, with consumers shopping online and offline simultaneously and ordering additional items for home delivery and store pickup at the point of purchase.
Many of these purchases are happening through large retailers with a robust online and bricks-and-mortar presence. However, UPS’s 2018 “Pulse of the Online Shopper” global study found that more than half of Asian consumers are choosing small online stores over large retailers, because they “want to support the small business” and “want to support the founder or the owner of the business”. This is a major opportunity for Hong Kong’s small businesses.
Hong Kong ecommerce revenue is projected to amount to US$4.4 billion¹ in 2018, and is also expected to show an annual growth rate (CAGR 2018-2023) of 8 percent, resulting in a market volume of US$6.5 billion¹ by 2023.
However, small businesses run the risk of being easily subsumed by sudden demand increases which ultimately disappoint customers. Being prepared for an onslaught of Instagram-driven orders during the holiday season can make or break an emerging brand.
So how can small businesses prepare themselves for greatness in this brave new world of ecommerce opportunity?
- Offer an easy shipping and smooth return policy
Providing fast, low-cost or free shipping is critical for online merchants as Asian shoppers will only pay for shipping 15 percent of the time, the lowest percentage globally.
A convenient and transparent return policy is also a way to increase sales and build crucial customer loyalty. Only 31 percent of Hong Kong consumers were satisfied with the clarity of retailers’ return policies, compared to 62 percent of Europeans, and 67 percent of Americans. Keeping it simple is one way to address a regular customer headache.
In fact, Asian shoppers uniformly gave the least satisfied responses to other returns-related statements, such as “Ability to process a return/exchange online”, and “Ease of shipping product back to retailer for return/exchange” – even though only four in 10 have actually returned an online purchase in the past year. The process can be simplified through services such as UPS Returns®, which provides pre-paid and pre-addressed return labels in the box with delivery. This substantially reduces the amount of effort required by customers who wish to send their purchase back, and potentially turns a one-off customer into a long-term patron.
- Give customers flexible delivery options and alternate delivery locations – it will encourage shoppers to buy more
Consumers in Asia want greater control over how, when and where they receive their packages. Roughly four in 10 respondents indicated that they had used services such as shipping to a retail store in the last year, and 59 percent plan to use it even more in the coming year. This is another potential win for retailers as not only is it a chance to improve customer service, but 60 percent of survey respondents that used ship-to-store services made additional purchases when they went to pick up their packages.
Today, ecommerce deliveries no longer follow the classic path “from retailer to your home” – 81 percent of consumers across the region, particularly millennials and urban shoppers, are interested in shipping packages to alternative delivery locations that provide extended delivery hours with reduced fees, such as convenience stores and e-lockers.
In fact, Asian shoppers’ preference for this delivery flexibility has grown considerably from 46 percent in 2015 to a projected 59 percent of orders in 2018. Solutions such as UPS’s Alternate Delivery Locations (ADLs) in Hong Kong help online businesses cater to this demand for greater flexibility by allowing customers more control over where and when they receive their packages.
- Create an excellent smartphone shopping experience
More consumers than ever are using their smartphones to make purchases in Asia – 77 percent of Asian shoppers recently placed orders on their phones (the highest percentage globally), up from 55 percent in 2015. To remain competitive, businesses must ensure that their online platforms provide a mobile friendly and intuitive shopping experience.
In Hong Kong, four in 10 customers indicated that they plan to shop more on their smartphone over the next year. These trends have emerged alongside the rise of “omni-channel” retailing, where consumers switch between online and offline stores, and use a variety of smart devices to search and compare things in the customer journey before making purchases. It is therefore more important than ever to invest in a fast, secure and user-friendly mobile platform that works across devices.
In ecommerce, the Golden Rule really sums it up; treat others how you want to be treated. All of us are consumers at the end of the day.
Small businesses who take the time to provide a 360-degree, quality and convenience driven customer experience tailored to Hong Kong’s 24/7 shoppers stand a much great a chance of reaping the rewards of growth and loyalty.
Managing Director, UPS Hong Kong and Macau