E-com­merce gives life­line to sink­ing HK re­tail sec­tor

Slump­ing, hes­i­tant busi­nesses pon­der ways to ex­tend off­line ad­van­tages to on­line chan­nels

China Daily (USA) - - BUSINESS - By CHAIHUA in Hong Kong grace@chi­nadai­lyhk.com

This Sin­gles Day (Nov 11), Chi­nese main­land on­line mar­ket­places such as Taobao and Tmall did some­thing un­usual: they ex­tended their pop­u­lar an­nual shop­ping fes­ti­val toHong Kong’s con­sumers.

That’s just as well, said re­tail in­dus­try ex­perts — be­cause, cross-border e-com­merce is, for all prac­ti­cal pur­poses, a life­line the drown­ing lo­cal re­tail sec­tor can clutch to stay afloat.

The sec­tor has been slump­ing for the last 19 months, forc­ing des­per­ate in­dus­try op­er­a­tors, es­pe­cially small and medium-sized re­tail­ers, to search for new busi­ness op­por­tu­ni­ties.

To be sure, the Hong Kong re­tail sec­tor’s sales have been fall­ing. But, An­son Bai­ley, head of con­sumer markets at KPMG in Hong Kong, doesn’t be­lieve main­land shop­pers, for long the main­stay of lo­cal re­tail sales, have lost in­ter­est in­Hong Kong.

But he does ad­mit they now have more des­ti­na­tions out­side the main­land as al­ter­na­tive shop­ping op­tions.

Agreed Joseph Yuen, chair­man of the Hong Kong Fed­er­a­tion of E-Com­merce. Cross-border e-com­merce, he said, also pro­vides main­land shop­pers more shop­ping op­tions.

Yet, Hong Kong has some­thing go­ing for it. That is, much of goods sold by the main­land’s ma­jor cross-border e-com­merce plat­forms are sourced fromHongKong, he said.

So, he be­lieves lo­cal re­tail­ers should be able to gen­er­ate new de­mand via e-com­merce, es­pe­cially from sec­ond- and thirdtier cities on the Chi­nese main­land.

It is a viewthat Thomson ChengWai-hun, chair­man of theHong Kong Re­tailMan­age­ment As­so­ci­a­tion, con­curs with. Cross-border e-com­merce is the new op­por­tu­nity for small- and medium-sized re­tail­ers in Hong Kong to reach out­side markets, he said. More so be­cause sales growth has been ei­ther slow­ing or fall­ing in re­cent years.

De­spite such per­ceived op­por­tu­ni­ties on­line, most re­tail­ers in Hong Kong are a hes­i­tant lot these days, said Vin­cent Lau, as­sis­tant man­ager of Shi­uHe­ung Yuen Bak­ery, a lo­cal food chain store.

Sens­ing huge po­ten­tial, Lau has been con­sid­er­ing open­ing an on­line store for main­land con­sumers, es­pe­cially af­ter dis­cov­er­ing that some Daigou (over­seas shop­ping agents) are al­ready sell­ing his prod­ucts on Taobao.

fee charged for a store to be rec­og­nized as a “flag­ship store” on Taobao’s e-com­merce plat­form

How­ever, he is hold­ing back due to high in­vest­ment re­quired to make a new on­line shop suc­cess­ful.

For ex­am­ple, open­ing a store of nuts and snacks on Taobao is free of charge; but it takes a fee of 100,000 yuan ($14,513) for such a shop to be rec­og­nized as a “flag­ship store”, a la­bel that in­di­cates to shop­pers that it is an au­then­tic or autho­rized store for a brand. With­out such a la­bel, on­line busi­ness be­comes a dicey propo­si­tion, he said.

That’s not the only fee. On­line stores need to shell out 30,000 yuan to­ward tech­nol­ogy fee and 2 per­cent of sales as ser­vice fee to Taobao. The cor­re­spond­ing fig­ures for other non-Alibaba plat­forms such asJD.com, Sun­ing and Gome are com­pa­ra­ble.

But all these fees are worth their cost as HongKong­brands gen­er­ally en­joy high equity in sell­ers’ minds, said a re­tail ex­pert.

Aim­ing to help small re­tail­ers to ex­ploit Hong Kong’s ad­van­tage in this re­gard, GS1 HongKong, a non­profit stan­dards or­ga­ni­za­tion, this month started to pro­vide a spe­cial ser­vice.

It will au­then­ti­cate prod­ucts and ver­ify in­for­ma­tion for re­tail­ers on Hongkong Post’s e-com­merce plat­form ShopThruPost.

Hong Kong brands, mer­chants and SMEs that join the pro­gram will be given a logo on their on­line shop for con­sumers to rec­og­nize. The an­nual cost of this ser­vice is HK$50 ($6.45) per item and a com­mis­sion on each prod­uct sold.

Jessie Ting Yip Yin-mei, Hong Kong’s post­mas­ter-gen­eral, said the plan could help SMEs and star­tups to ex­tend their sales to e-com­merce chan­nels with min­i­mum up­front in­vest­ment.

GS1 said it also plans to co­op­er­ate with other on­line plat­forms in fu­ture.

The Hong Kong Re­tail Man­age­ment As­so­ci­a­tion also will launch a “qual­i­fied e-shop ver­i­fi­ca­tion” ser­vice for lo­cal re­tail­ers with au­then­tic prod­ucts in off­line chan­nels, so as to help them to ex­ploit their strengths and suc­ceed on­line as well.

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