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by: The Beat Asia
May 13, 2022
It’s no surprise to us that online shopping has skyrocketed when the pandemic hit. Whether it’s due to boredom or necessity, we’ve ordered something online at least once when were stuck at home.
Businesses already know that going online is important, but the last two years have made it clearer that e-commerce is taking over. Let’s take a look at how the COVID-19 pandemic affected e-commerce in Hong Kong, how it changed to keep up with demand, and what its future is going to be like.
The PayPal Hong Kong Merchant Survey: From New Normal to New Growth revealed that COVID-19 has hit Hong Kong businesses real hard, making more than half of them worry about the sustainability of their enterprise. About 77% of business owners said they suffered revenue loss, while 52% said they lost over 20% of their business in the first few months of 2020.
The impact of the pandemic was felt immediately at the front- and back-end of e-commerce businesses, with logistics (86%) suffering the most due to lockdowns and border closures. Interruptions in the supply chain meant stocks aren’t being resupplied fast enough, causing prices to soar due to higher demand and businesses losing reputation due to customer complaints such as late deliveries (95%) and product availability (37%). Other areas that were affected were sales (52%), customer relationships (48%), and cashflow (43%).
With the quick rise of e-commerce, merchants placed extra focus on improving customer payment experience to make sure that consumers will proceed further in their purchase after clicking “Checkout.” Their efforts paid off, though, as more consumers are now open to making card payments and using alternative payment solutions such as Alipay, WeChat Pay, Apple Pay, and PayPal.
Cash on delivery (COD) and Buy Now Pay Later (BNPL) options have also increased in demand, with the latter allowing consumers to pay for their items in low to no interest instalments.
Another change that took place during the pandemic is how businesses present their products. While product photography is important, a percentage of buyers return their orders because the item they received looks different than what was posted online.
A nice photo doesn’t cut it anymore, and the frustration of being deceived has led to many consumers demanding an actual product sample before buying. As a result, businesses started to adopt a livestreaming business model where consumers can watch an actual person (usually a celebrity) test a product in real-time. It has been effective so far as consumers can leave a comment and have their questions answered right away.
According to an analysis by data and analytics company GlobalData, Hong Kong’s e-commerce market is set to grow at a compound annual growth rate (CAGR) of 9.9% from 2019 to 2024. If consumer spending doesn’t change and the shift from in-store to online spending continues, it’s possible to reach HK$226 billion (or US$29 billion) by 2024.
This e-commerce growth is not only good news for businesses wanting to sell products and get a head start, but also to emerging logistics companies that have given jobs to those who were affected most by the pandemic.
As GlobalData’s Banking and Payments analyst Nikhil Reddy said, “[The] Hong Kong e-commerce market is expected to continue its uptrend over the next few years, even beyond the pandemic.” With a growing consumer preference, the “emergence of new online shopping models and availability of customised payment solutions” will be a good driver for growth.
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