Almost 90% of Hong Kong consumers have purchased at least one product online within the last three months, according to statistics. All the other available data shows that the potential for online business in this area is astonishing. The spending power is on the rise, the internet usage is among the highest in the world, and the region is leading in various different industries. But what is the reality?
At the moment, online business platforms in Hong Kong are still on a relatively low scale. However, this is by no means a bad thing for entrepreneurs. It seems that the e-commerce floodgates could open at any time.
This article will look into the recent statistics and trends of e-commerce in Hong Kong and explain why you should consider starting a company at the centre of the Greater Bay Area.
Statistics and Trends
There’s a growing rate of online transactions in Hong Kong during the last few years. This shouldn’t be surprising as the internet usage is at a staggering 82% and should reach 84% by 2021.
Almost the entire young adult and middle-aged population of Hong Kong (aged 19-55) browses the internet daily. Since this is the demographic that mostly purchases products and services online, and the GDP is in constant growth, you should expect the trend of e-commerce to grow significantly in the upcoming years.
When it comes to Hong Kong online shopping statistics, according to research, the following are the factors that are motivating Hong Kong-based consumers to shop online:
• You can shop at any place and at any time.
• E-commerce is more secure.
• You can track the product.
• The product usually arrives on time.
• Refund processes are simple.
• You can purchase cross-border.
• You can often come across great discounts.
At the same time, e-commerce is still trying to earn the trust of the buyers, seeing as the two most often cited downsides are shipping fees and uncertainty about the product quality.
Currently, most of Hong Kong’s online buyers purchase their products using their desktop computers (over 74%). Over the next two or three years, there should be a rising trend in shopping with smartphones, too (currently around 16%).
Hong Kong E-commerce Examples
In 2018, Hong Kong consumers mostly searched for Taobao and Amazon, both very popular online shopping platforms. Following the two giants were Carousel and Zalora. All of these platforms are based outside of Hong Kong, which seems to imply a lack of online shopping platforms in the country.
Currently, the biggest and only prominent e-commerce platform is HKTV Mall. This is a Hong Kong-based e-commerce company which sells cosmetics, groceries, produce, and various other household essentials.
Apart from HKTV Mall, there are 320 more e-commerce companies according to Crunchbase. For such a well-developed and technologically advanced country, there’s little chance that the number doesn’t grow notably in the not-too-distant future.
In recent years, logistics and storage e-commerce companies came into spotlight in Hong Kong with websites such as Buyandship and Redboxstorage. Strawberrynet is another notable Hong Kong-based platform for buying cosmetics, and it recently celebrated its 20th birthday.
Since the e-commerce trend is still on the rise globally, there’s a big chance that we’ll see a rise in online shopping platforms in Hong Kong. The market is still quite young and up for grabs.
Why Should You Set Up an E-commerce Business in Hong Kong?
Considering all this, it is clear that there are plenty of e-commerce opportunities for industries in Hong Kong. The data from Statista shows a profit of almost US$4.5 billion from e-commerce in the country.
There is a wide range of factors that are pointing to the abrupt eruption of online platforms in Hong Kong. Some of them include the following:
1. Yearly growth: In 2017, UNCTAD’s Business to Consumer index ranked Hong Kong as the 16th most e-commerce-ready country in the world. In 2018, it rose one place. The trend is expected to grow even further. The GDP per capita is increasing, as well as the number of internet and smartphone users, which will simultaneously lead to an increase in online spending.
2. Favourable taxing: The businesses that are based in Hong Kong but earn their revenue abroad won’t be taxed. This did wonders for the country’s economy and notably reduced the poverty rate. With this law, a business can outsource goods and services from the country and sell them anywhere in the world without paying anything. This is a good way to start earning profit at the very beginning.
3. Internet penetration: As already mentioned, most of the potential buyers in Hong Kong are already online and spend more than 24 hours a week just browsing the internet. This stat, combined with the fact that there’s still a small number of e-commerce platforms, shows that this is still a young and untapped market.
A Great Business Opportunity
With all this information in mind, it seems like starting an e-commerce platform in Hong Kong is a low-risk, high-reward type of deal. The online market is growing, but the competition is still relatively low. What’s more, the GDP is on the rise, so there is a high spending potential.
The taxes are low, the investments can be relatively low as well, and the e-commerce trends are constantly improving. If you’re an entrepreneur who is thinking about starting an e-commerce business in Hong Kong, now is as good a time as any to finally do it.