As one of the fastest growing country in Asia and the 7th largest trading economy, Hong Kong yet falls behind in the development of a digital marketplace despite its tech-savvy and connected population, high smartphone penetration rate (73.73%) and internet penetration rate (87%).
The city has a staggering 5 million active participants in digital commerce, which is set to acquire another one million active users by 2021.
Even then, Hong Kong’s position in the Global Innovation Benchmark has fallen behind other countries, such as Singapore and South Korea, due to several factors, including high cost of customer acquisition and its relatively small market size.
According to our latest report, “Top E-commerce Cities in Asia”, Hong Kong is one of the top e-commerce cities in Asia, along with other cities, such as Jakarta, Ho Chi Minh City, Shanghai, and many more.
The report points out the significance of e-commerce landscape in Asia and its abrupt adaptation to global trends. The report defines “e-commerce city” as an urban city with interconnected infrastructure that makes up an e-commerce ecosystem that helps it to flourish.
Little incentive from the incumbent conglomerates also hinders the development of digital commerce. Moreover, e-commerce players in Hong Kong also face problems when it comes to home delivery service, as the working hour in the city is relatively long.
To add to that, convenience-store pickup point model is also not the most feasible alternate option either due to space scarcity in Hong Kong. With a cultural preference by consumers towards e-commerce, this has led to slower digital adoption by small and medium-sized local businesses. However, this has urged smaller and traditional retailers to explore novel means to revamp their e-commerce strategy.
Characterized by low taxation and minimal government intervention, Hong Kong is the first entry point of a large fraction of foreign investment entering the region, spurring the unprecedented growth in various industries. As the property and stock market began to cool off, modernization of traditional commerce has been gamering attention from both industry players and the general public in Hong Kong.
The e-commerce sales in the city will continue to represent a healthy portion of total retail spending, with electronics and media currently the leading product category, followed by fashion.
The e-commerce industry has perceived exponential growth around the world, with an astounding USD 2.86 trillion achievement in 2018 which is estimated to grow further to USD 6 trillion in 2022. Notably the Asia Pacific region market that had a 35% economic growth rate in 2018 with USD 1.8 trillion retail e-commerce sales, setting the region as a clear leader in achieving one-fourth of global e-commerce share by 2023.
The report also recommend a framework for Hong Kong and other global cities to improve their e-commerce ecosystem, providing 5 key building blocks, such as: stable and predictable regulatory environments; adequate talent; market readiness and robust infrastructure; funding to scale up the business, and global culture to empower innovative ideas, for startup ecosystem in the cities to reach its full potential.
Download the full report on E-Commerce Cities in Asia.