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Why 2019 is a Good Year to Start an E-commerce Platform in Hong Kong

  • With stats reviewed from Statista showing a revenue of US$4.4 billion on e-commerce alone in 2018, it’s only fitting that 2019 is a good year to start an e-commerce platform with the expected increase of revenue by 2023.
  • Hong Kong has a large domestic sector which provides long term opportunities, an attractive option for entrepreneurs, availability of formation agents, tax laws lower than other countries and not to mention the high web traffic.
  • The consumers behaviour towards the virtual and physical stores is a challenge which most e-commerce start-ups face as some consumers tend to cling to the traditional way of purchasing goods but nonetheless, great opportunities still awaits.

E-commerce is a revolutionary platform for the world of business. This platform provides a bridge between businesses and consumers which helps to fill the gap that traditional business practices lack. Statista states that the practice of e-commerce in Hong Kong had bloomed in a way that the revenue gained from e-commerce alone is expected to garner US$4.4 billion in 2018.

The statistics reviewed, had also predicted an increase of 8% which is approximately US$6.4 billion of revenue on e-commerce platforms by 2023. This shows that there is a US$2 billion worth of revenue still up for grabs which is a great indicator for not only e-commerce start-ups, but also the mature platforms to gain a piece of the action.

Still not convinced? Here are 5 concrete reasons why 2019 is the best time to set up shop in Hong Kong’s internet economy.

  1. Large domestic sector that has a considerable annual growth rate

Hong Kong is known to have a large e-commerce sector which caters to a variety of segments from electronic goods to media and other segments. These segments includes opportunities like personal related needs such as toiletries, care products and investment opportunities from B2B transactions to vast market segments from Hong Kong’s 5.5 million users based on the reviewed statistics from Statista.

According to the UNCTAD B2C E-commerce Index 2018, it is found that Hong Kong is ranked number 15 which is quite impressive compared to other Asian countries. This shows that Hong Kong’s economy is rapidly growing beating other developing countries. This rank also shows that e-commerce provides the greatest influence towards the economy development of Hong Kong.

Therefore, this is a clear indicator for e-commerce platforms stating that the potential for online retail stores in Hong Kong is significantly increasing which entrepreneurs are likely to take advantage of.

Taken from UNCTAD.org

In other words, the poverty rate for Hong Kong decreases thus giving them a higher purchasing power which makes 2019 a great year to get into e-commerce in Hong Kong.

  • Tax is lower compared to other countries

This is a sense of low-text area where Hong Kong would only tax on the profits that businesses earn within Hong Kong’s jurisdiction. In other words, earnings which are direct activities and incomes earned by the business in Hong Kong itself will be taxed, while businesses who deals in Hong Kong but earns their income away from Hong Kong’s jurisdiction will not be taxed. Hong Kong does so because e-commerce platforms had propelled their economy thus reducing the poverty rate which provides opportunities for both the locals and for the entrepreneurs.

Based on a research by “GuideMeHongKong”, Hong Kong’s taxation jurisdictions are on the “territorial principle” which entrepreneurs tend to take advantage of as they are able to gain higher profits by sourcing goods from Hong Kong and selling them overseas. This technique can easily be adopted by start-up e-commerce entrepreneurs which can help them make a quick buck as soon as they are operational.

  • Low Investment cost and an attractive option for entrepreneurs

E-commerce present a great opportunity for businesses to compete globally. Although the entrepreneurs are relatively a pawn in the game, forming an e-commerce platform is encouraging and affective in a way that it does not only help the businesses to be born global but also bypasses the gradual steps which traditional businesses face before implementing their strategies. For example, market knowledge and competition scanning.

With the e-commerce platform, information like culture, target segments and present competitors’ information can easily be accessed at a touch of a button. According to Laurie Chen from “China Business”, Hong Kong is a destination gold mine for entrepreneurs not only of the low risks but mainly for the dynamic environment.

This dynamic environment is due to Hong Kong being near by the bay area known for its agriculture and also home of telecommunication giants Tencent and Huawei. Entrepreneurs are able to observe and perhaps learn a thing or two from the professionals in which they can apply to their businesses.

  • Availability of the Hong Kong company formation agents

Formation agency are agencies which helps to guide e-commerce entrepreneurs to set up their platforms through the internet. Hong Kong provides agents which helps the entrepreneurs to make their lives easier by providing help which guides potential e-commerce start-up entrepreneurs with their questions and difficulties which eliminates some of the barriers faced by most foreign entities when trying to go global.

According to the “Low Cost Corporate Services”, an e-commerce platform agent in Hong Kong, starting up an online business platform is fast and simple with their services which includes foreign currency exchange, web creation support and transfer services.

  • High presence of web traffic

A recent study by Go Globe shows that majority of the consumers in Hong Kong spend hours of their time shopping online. It is found that consumers in Hong Kong spends more than 24 hours a week on the Internet alone.  Based on the reviewed research by Statista, the e-commerce platform had gained an average revenue per user (ARPU) of US$ 798.17 from its 5.5 million users in 2018. In 2019 the ARPU is expected to increase to US$ 871.14 followed by an increase to US$ 1,115.07 by 2023.

The considerably high traffic of internet users as well as the increase in ARPU in Hong Kong is a great indicator for start-up entrepreneurs given the low cost to start an online platform in the local market and also the ability for the entrepreneurs to penetrate the market more efficiently from the perspective time, cost and penetration efficiency.

The reason being, records had clearly shed a light on the locals purchasing power which indicates high probability of more visitors to the online retail store and the probability of someone making a purchase on the spot.

Challenges and Potential in Hong Kong’s Digital Economy

While the e-commerce potential is high in Hong Kong, it is not without big challenges. According to a study by KPMG, one of the challenges that e-commerce businesses could face when setting up in Hong Kong is the consumers purchasing behaviour. Local consumers might still adopt and prefer a more traditional approach when purchasing goods or services. Some consumers tend to prefer being physically present at the specific moment as they can experience the service or product on the spot without hesitation.

This is mainly about the matter of trust. Consumers are cautious when it comes to spending their hard earn money on a product that can help to improve on their live. Therefore, before purchasing a product, consumers tend to have the urge to test out or experience the quality of the product before making a decision.

Luckily however, more can be done by businesses and entrepreneurs to improve consumer trust in e-commerce such as improved consumer experience and customers service. This can be done by implementing additional features such as trusted payment gateways like “AliPay”, promoting its consumer protection features and initiating campaigns that promotes e-commerce’s trustworthiness.

For example, terms and conditions like a specific delivery date and time should be applied with a compensation for delivery services which exceeds the agreed time. Doing so would provide a sense of ease towards the customers and promotes reliability along with it. Furthermore, GPS tracking features is a great way to inform the consumers on the whereabouts of their order.

On the other hand, another way how e-commerce platforms are able to gain trust from the consumers are through campaigns. Campaigns promoting consumers security as they surf through the e-commerce platform is a great way to encourage them to create more visits to the online retail store.

Players in Hong Kong’s e-commerce market must work closely with search engine optimisation (SEO) specialist to create a platform that improves consumers’ trust as well. Businesses can easily engage with specialists such as the Low Cost Corporate Services for SEO assistance to optimise their websites.

More importantly, businesses must realise that the digital space is an additional marketing channel rather than a threat to physical stores.  Digitalizing their approach on shopping doesn’t necessarily mean that they should ditch physical store but rather compliments each other.

In a nutshell, a great opportunity awaits in e-commerce as it becomes a US$6.4 billion revenue industry by the year 2023. It is up to businesses to take up the opportunity to realise the industry’s billion-dollar opportunity.


About iPrice Group

iPrice Group is a meta-search website operating in seven countries across Southeast Asia namely in; Hong Kong, Malaysia SingaporeIndonesiaThailandPhilippines, and Vietnam. Currently, iPrice compares and catalogs more than 100 million products and receives more than 15 million monthly visits across the region. iPrice currently operates three business lines: price comparison for electronics and health & beauty; product discovery for fashion and home & living; and coupons across all verticals.

On a regular basis, iPrice Group releases key insights on topics pertaining e-commerce, startups, and others. Stay tuned to iPrice’s insights here: https://iprice.hk/trends/insights/


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