The coronavirus pandemic has helped to create thousands of small online businesses in Hong Kong in the past few months as consumers spend more time online than in shopping malls, but this does not mean the end of physical stores, according to an e-commerce enabler.
A fifth of online merchants served by Shopline considered setting up a physical presence —such as pop-up stores—as a key plank of their marketing strategy, said Plato Wai, Hong Kong general manager of Alibaba-backed Shopline, citing interviews with over 100 Hong Kong merchants conducted recently.
“Omni-channel market presence—whether online-to-offline or offline-to-online—will be mainstream,” said Wai, a former Lehman Brothers investment banker. “In the future, even with the passing of the pandemic, offline will still be a key part of some companies’ marketing strategy, especially for products where experience and trial use are important for purchase decisions.”
The seven-year-old start-up claims to be Asia’s largest platform that allows merchants to build their own online shops. It has so far helped more than 200,000 merchants, mostly in Hong Kong and Taiwan, start new ventures.
Its customers include Lemon King, a third-generation preserved fruit snacks retailer, and condom brand Durex that set up its own online shop in 2017 to obtain consumer behaviour data not captured by convenience stores and supermarkets.
Omni-channel marketing uses multiple online and offline customer points of contact to enhance sales and service efforts. An integrated strategy is important for online retailers to differentiate themselves in a crowded market.
“While opening online stores has become a trend, competition is fierce and the market is increasingly saturated,” Wai said. “Just over half of Shopline merchants also have physical stores.”
Shopline last year launched a service giving merchants access to online and offline consumer behaviour data and analysis.
Clients pay between HKD 6,996 (USD 900) and HKD 13,750 a year to use Shopline’s software to create online shops, manage orders, inventory, and run customer membership systems. For additional fees, they also get help with digital marketing, advertisement placement and software customization.
Also serving the needs of Hong Kong’s online entrepreneurs is five-year-old Boutir, which has helped over 85,000 merchants set up online shops via its mobile app, its CEO Eric Ng Ka-ka told the Post in May.
Some traditional retailers—such as health and wellness products distributor OTO Bodycare—have asked their sales staff to set up their own online stores using Boutir’s app to better serve customers and drive sales.
Hit by lower tourist traffic and street protests, Hong Kong’s retail sales of HKD 461.4 billion (USD 59.5 billion) last year was 3.6% lower than that in 2014. But e-commerce sales have risen at an average annual compound rate of 9.7% in the five years to 2019, according market research provider Euromonitor International.
The share of online shopping in the total retail pie has grown to 5.2% from 3.2% in the same period.
The pandemic has acted as a catalyst fuelling the growth of online commerce, Wai said.
During this year’s first quarter when the first wave of the pandemic hit, Shopline’s merchants saw transaction numbers increase over 50% month-on-month, while new subscribers grew over 70% quarter-on-quarter, he said.
With 300 staff in Hong Kong, Taipei, Ho Chi Minh City, Shenzhen, and Kuala Lumpur, Shopline is mulling another office in Thailand, he added.
Shopline was co-founded by Fiona Lau, a former retail investment analyst at Goldman Sachs, and former software engineer and entrepreneur Tony Wong.
Some 42% of its store owners are between the ages of 26 and 35, 56% are female and 37% are fashion and apparel sellers.
It raised USD 20 million from Nasdaq-listed live-streaming social media platform Joyy and its venture capital offshoot Engage Capital in January.
This followed a USD 2 million funding early last year from CDIB Capital Group and Alibaba Hong Kong Entrepreneurs Fund, a not-for-profit initiative of Alibaba Group Holding and owner this newspaper.