Polishing up city's e-trade brand

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.

Cheaper online shopping

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."

Sales incentive

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."

Contact the writer at

sophiehe@chinadailyhk.com

(China Daily USA 09/23/2016 page5)