Pol­ish­ing up city’s e-trade brand

E-com­merce group chief Joseph Yuen tells that lo­cal tra­di­tional re­tail­ers must get to­gether to beat the hur­dles in the boom­ing e-com­merce sec­tor.

China Daily (USA) - - HONG KONG - Con­tact the writer at so­phiehe@chi­nadai­lyhk.com

The boom­ing e-com­merce in­dus­try is fraught with chal­lenges and un­cer­tain­ties, and Hong Kong’s tra­di­tional re­tail­ers must be ready to face them when tak­ing the plunge in the sec­tor, warns Joseph Yuen, chair­man of the fledg­ling Hong Kong Fed­er­a­tion of E-Com­merce (HKFEC).

To this end, re­tail­ers should broaden their hori­zons while fo­cus­ing on brand build­ing, Yuen told China Daily in an in­ter­view.

The HKFEC — a non-profit or­ga­ni­za­tion cre­ated last year to boost on­line re­tail­ing in the city — aimed to get large tra­di­tional re­tail firms in Hong Kong, even com­peti­tors, to­gether and dis­cuss who should de­velop e-com­merce busi­nesses.

“As I used to work for China Post, I had been in con­tact with many re­tail­ers. I no­ticed that lo­cal tra­di­tional re­tail­ers are very ea­ger to ex­pand into the e-com­merce field, but many of them found that de­vel­op­ing e-com­merce is pretty dif­fi­cult, which is why we be­lieve we should be or­ga­nized and do it to­gether,” says Yuen.

The fed­er­a­tion’s cur­rent mem­bers in­clude Chow Tai Fook, AEON, Man­nings, Wat­sons, HKTV­mall, Ja­pan Home Cen­tre and Zalora.

“We have three cat­e­gories of mem­bers — en­ter­prises, in­di­vid­u­als and stu­dents. We have more than 300 en­ter­prises, while any Hong Kong res­i­dent who’s in­ter­ested in e-com­merce can join us and, cur­rently, we have more than 2,000. We also have many stu­dent mem­bers as we en­cour­age stu­dents to learn more about e-com­merce.”

Through sem­i­nars, work­shops and ex­change tours, mem­bers can lever­age in­dus­tries and other coun­tries’ suc­cess sto­ries to up­grade their knowl­edge and ex­per­tise in or­der to en­hance and pro­mote their e-com­merce de­vel­op­ment, ac­cord­ing to the HKFEC.

Yuen started his ca­reer in the tele­coms sec­tor af­ter grad­u­at­ing from col­lege. He worked for Nor­tel Net­works, help­ing the com­pany sell its equip­ment and tech­nol­ogy to Chi­nese tele­com op­er­a­tors. Af­ter quit­ting Nor­tel, he joined New World Telecom­mu­ni­ca­tions and be­came its gen­eral man­ager of mar­ket­ing.

He was with China Post for a few years dur­ing which time he helped many Hong Kong com­pa­nies en­ter the Chi­nese main­land mar­ket by send­ing their prod­ucts to the main­land and pro­mot­ing them across the border through China Post.

Many tra­di­tional re­tail­ers, Yuen says, are ea­ger to take up e-com­merce, while e-com­merce en­ter­prises like HKTV­mall are in­ter­ested in ex­pand­ing their oper­a­tions.

Hong Kong should be a great place to de­velop e-com­merce but, due to its highly de­vel­oped re­tail mar­ket, the in­dus­try is con­fronted with many chal­lenges, ac­cord­ing to Yuen.

Peo­ple now pre­fer to shop on­line be­cause, firstly, it’s dif­fi­cult to get the prod­ucts they de­sire from nearby stores, while shop­ping on­line is cheaper. But, since Hong Kong is a small place with a highly de­vel­oped re­tail sec­tor, peo­ple can eas­ily get what­ever they need from phys­i­cal stores. Be­sides, com­pe­ti­tion among lo­cal re­tail­ers is fierce, so it’s also easy to gain ac­cess to cheap prod­ucts, Yuen ex­plains.

Hong Kong’s sit­u­a­tion is quite sim­i­lar to that of some de­vel­oped coun­tries like Sin­ga­pore, com­pared to third- or fourth-tier cities on the Chi­nese main­land where peo­ple find it’s not con­ve­nient to get ev­ery­thing they want from nearby stores.

“So, the HKFEC helps our mem­bers to fo­cus not only on the Hong Kong mar­ket but be­yond. Our re­tail­ers should sell their prod­ucts to the Chi­nese main­land and over­seas, while sourc­ing from other re­gions so that lo­cal on­line shop­pers can buy things they don’t nor­mally find in phys­i­cal stores.”

The fed­er­a­tion is also telling its mem­bers to be ra­tio­nal about the mar­ket on the main­land al­though the mar­ket is enor­mous and could be very com­pli­cated. So, be­fore even en­ter­ing the mar­ket, lo­cal re­tail­ers need to get ad­e­quate in­for­ma­tion, ad­vises Yuen.

Hong Kong’s tra­di­tional re­tail­ers also need to change the way they man­age their on­line stores and in­te­grate their on­line busi­nesses into their tra­di­tional busi­ness.

“From what I know, many tra­di­tional re­tail­ers in Hong Kong use e-com­merce as one of their sales chan­nels — it’s like they have 200 phys­i­cal stores and e-com­merce is the 201st store. They have not in­te­grated their on­line sales with tra­di­tional sales even though on­line sales gen­er­ate much larger profit mar­gins for them, and they are putting in enough re­sources to boost their on­line busi­ness.”

Re­tail­ers also give their sales peo­ple com­mis­sion fees as an in­cen­tive for them to sell prod­ucts so, it’s un­der­stand­able that they work harder in phys­i­cal stores to earn their com­mis­sion.

Thirdly, in terms of prod­ucts sup­ply, Hong Kong re­tail­ers are used to sep­a­rat­ing sup­plies for phys­i­cal and on­line stores. So, when pop­u­lar prod­ucts are sold out at on­line stores, phys­i­cal stores will not pro­vide these prod­ucts to on­line stores.

“HKFEC mem­bers can talk and learn from each other and try to solve these prob­lems.”

In Yuen’s view, brand­ing is very im­por­tant to Hong Kong re­tail­ers who want to do e-com­merce as many lo­cal re­tail­ers sell their prod­ucts through e-com­merce plat­forms like Alibaba, eBay or JD. As a re­sult, they may eas­ily over­look the im­por­tance of build­ing up their own brand.

“But, at the end of the day, it’s your brand that de­fines whether you will be suc­cess­ful or not.”

Com­par­ing lo­cal on­line re­tail­ers with those on the main­land, Yuen reck­ons that Hong Kong re­tail­ers need to in­vest more in cus­tomer ser­vices, lo­gis­tics and ware­hous­ing, so it’s very dif­fi­cult to com­pete with main­land prod­ucts in pric­ing, and this makes brand value even more im­por­tant.

“Re­tail­ers need to con­tinue en­hanc­ing their brand as we be­lieve that, in the fu­ture, e-com­merce is not just about plat­forms. Cus­tomers will be more loyal to the brands they know.”

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