E-commerce In Hong Kong – The Shift from Brick-and-Mortar to Click-and-Order

Hong Kong is also called the shopper’s paradise with many brick-and-mortar stores. But in the past few years (especially since the dawn of the pandemic), technology has forever revolutionised the consumer shopping experience. Hong Kong’s retail landscape has transformed from traditional brick-and-mortar shops to the convenience of click-and-order. 

GlobalData’s Ecommerce Analytics predicts that e-commerce sales in Hong Kong will experience an 8.3% compound annual growth rate, increasing from HK$178.0bn (US$22.9bn) in 2021 to HK$226.0bn (US$29.0bn) in 2024. According to Nikhil Reddy, Banking and Payments Analyst at GlobalData, this growth is due to high internet and smartphone usage, better payment and logistics infrastructure, and increased consumer trust in online transactions.

Gen Zs and consumers alike are turning to the convenience and variety of online marketplaces. The result? Brands are evolving, along with their customers’ lifestyles and expectations and this shift has made digital stores the main competitors of their own brand’s physical stores. 

The shift from brick-and-mortar to online shopping 

Over the past ten years, the HK eCommerce industry has transformed a basic brick-and-mortar retail idea into a complex shopping environment that incorporates various devices and store models. 

Both online and offline retailers are adopting multi-channel approaches and continually innovating the online shopping experience. 

Customers’ demands are increasing as they seek more convenience in areas such as customised products, mobile-friendly search functions, fast checkout processes, and seamless delivery.

Source: Statista 

The data shown in this image shows the significant shift from offline to online shopping. This change is driven by several factors; the convenience of online shopping, a wider selection of products, competitive prices, virtual try-on features, easy payment options, and more.

Traditional retailers have adapted to changing consumer behaviour and spending patterns, as more and more consumers turn to online shopping. Several brick-and-mortar retailers in Hong Kong have embraced e-commerce, either by setting up their online stores on Shopify, WooCommerce, WordPress, etc. 

For example, luxury department store Lane Crawford has a successful e-commerce platform that allows customers to shop online and pick up in-store. Fashion icon Zalora has managed to establish itself as a leading player in the region, by having a strong logistics and delivery infrastructure, a wide product range, and an easy-to-use website.

The fashion industry bags a significant share 

Hong Kong is rapidly progressing as a fashion hub as the local fashion industry undergoes a revolution. It has now become a major exporter of clothing and accessories worldwide contributing to the significant increase in e-commerce annual revenue year over year. 

The primary reason for the growth is the improvement in e-commerce operations to promote online shopping in the region. Online shopping allows retailers to adopt advanced technologies, such as Big Data analysis, to gain insights into fashion trends and user preferences. 

Moreover, technological advancements and improved logistics efficiency have led to lower logistics costs. As most e-commerce orders are small batches, logistics costs used to be high. Apparel companies in the region are now focusing on improving their logistics support to provide better customer satisfaction with deliveries. 

Current E-commerce trends in Hong Kong

In the wake of the pandemic, consumer behaviour and expectations have changed significantly, driving the need for new and innovative e-commerce solutions. 

To stay relevant, attract new customers, and drive growth in Hong Kong’s burgeoning e-commerce market, merchants must adapt to the following e-commerce trends:

1. Mobile shopping

The rise of mobile devices has led to an increase in online shopping through smartphones and tablets. Hong Kong shoppers are now frequently using their mobile devices to browse and make purchases on e-commerce platforms. To cater to this trend, retailers are investing in mobile optimisation to enhance the customer experience.

Retailers are now developing mobile-responsive websites and apps that provide a seamless shopping experience for customers on the go. This includes optimising the checkout process, simplifying the navigation, and improving search functionality. 

Additionally, retailers are also incorporating mobile payment options such as mobile wallets and QR codes for more convenient transactions.

2. Social commerce

The rise in internet usage has transformed the social media scene in the nation. Retailers are leveraging Social media platforms such as Facebook, Instagram, and Twitter to promote their products, engage with customers, and facilitate sales. Many fashion retailers are emphasising brand advertising, user engagement, and asking customers for reviews after making a purchase.

3. Personalised shopping

Hong Kong consumers are increasingly looking for personalised shopping experiences that cater to their individual preferences and needs. E-commerce retailers are using data analytics technologies to offer personalised recommendations, targeted promotions, and even customisation options for products. It includes selecting the fabric, colour, and size, to create a unique item that reflects the consumer’s personal style. 

Some retailers also allow customers to virtually try the product before making a purchase using AR/VR technology. This personalised shopping experience helps increase customer satisfaction and encourages repeat purchases. Furthermore, personalised products can lead to higher profit margins as consumers are willing to pay a premium for unique, customised items.

4. Green E-commerce

The growing awareness of environmental issues among consumers in Hong Kong has resulted in an increasing demand for eco-friendly and sustainable products. As such, e-commerce retailers are now incorporating environmentally-friendly options into their product offerings and packaging to meet this demand.

Several e-commerce retailers are now selling items made from recycled or organic materials. This includes clothing made from sustainable fabrics such as bamboo, hemp, and organic cotton, as well as eco-friendly beauty and personal care products.

5. Easy payment methods

Credit cards remain the primary payment method for e-commerce in Hong Kong, with an annual sales figure of $1.8 billion, accounting for almost half of all online payments. However, bank transfers and digital wallets are gaining popularity in the region, with a CAGR of 12% and 11% respectively. 

In contrast, prepaid methods, debit cards, and cash on delivery are losing popularity among Hong Kong shoppers, with a 27%, 14%, and 13% drop in CAGR respectively. As such, e-commerce retailers must keep up with evolving payment trends and provide multiple payment options to cater to the needs of their customers.

Hack e-commerce growth in Hong Kong with Hypabeez

In conclusion, e-commerce is no longer just a trend, but a necessity in the current business landscape. With the growing demand for online shopping and the convenience it offers, it’s time for businesses in Hong Kong to tap into this potential market. Brick-and-mortar retailers are adapting and finding ways to thrive in this new e-commerce environment by adopting effective marketing strategies. 

Hypabeez provides the perfect platform for businesses to enter the world of e-commerce and expand their reach in the digital age. So, don’t hesitate to take the leap and join the e-commerce revolution with Hypabeez today!