Hong Kong has always been a shopping mecca. Every year thousands of tourists each year flock to the city to spend and shop, making the retail industry one of the key engines driving Hong Kong’s economic growth.
But things are changing fast and Internet consumption has become a key driver.
According to the 2020 Global Payment Report, Hong Kong’s Internet penetration rate is as 89%. Together with the adoption of more digital sales channels by suppliers, and the impact of Covid-19, more consumers are shifting their shopping habits online. These factors have further sparked the rise of Hong Kong’s e-commerce market.
It’s predicted that online retail sales in Hong Kong will reach HKD 42.1 billion in fiscal year 2025/ 2026, with a compound annual growth rate of approximately 13.4%.
In our e-book “Hong Kong- How BNPL empowers retailers and e-tailers to reach outside the box”, gain rich insights into Hong Kong’s e-commerce potential and growth space.
In this blog post, we give a brief snapshot into some of the key trends to look out for.
- Trend 1: Shifts in purchasing power
- The pandemic has led to more home-bound consumers turning online to get their retail fix, amid concerns about personal safety and the need for convenience. Besides young people, seniors with little exposure to new technologies are starting to use their phones for online shopping. In addition, shopping is not only a commodity, but represents an experience as well. Hence, the increased popularity of social media has made shopping a by-product of social interaction, and interest consumption has become a new driver of consumption.
- Trend 2: Millennials and Gen Zs are the target customers
- Nearly 41.2% of Hong Kong’s total population are made up of young people under the age of 40.
- Naturally, Hong Kong’s overall shopping habits relate toward a younger demographic and there’s a widespread acceptance of e-commerce shopping. These millennials and Gen Zs desire not only desire more personalized products and services, but are also willing to pay higher prices for things that highlight their individuality and life value.
- In the post-pandemic era, where most consumers have reduced purchasing power for non-essential goods, demand among millennials and Gen-Z for non-essential goods has increased. Hence, e-commerce merchants should be strategic on how they plan to seize these high-quality, consumer capable groups in the future and build customer loyalty.
- Some of the key ways include creating a seamless omni-channel experience, personalised selection for users and the use of Internet celebrity marketing to influence consumer behaviour.
- Trend 3: Emerging model of Buy Now Pay Later (BNPL)
- Worries about online playment has ways been one of the reasons why Hong Kong consumers are relatively resistant to e-commerce. But with advanced technology and robust network security, it can strengthen consumers’ confidence in online payments.
- When Millennials and Gen-Z gradually become the main force in the consumer market, they often choose the “buy first, pay later” payment method when faced with their favorite high-priced products. The BNPL payment method not only lowers the shopping threshold for consumers, but also increases the unit price of merchants, offering a win-win for both parties.
- In 2021 alone, there will be three transactions worth hundreds of millions of dollars in the BNPL field.
- Using Atome as an example, the double eleven GMV in 2021 achieved a 30-fold increase compared to 2020. The data shows that the sales of brand merchants cooperating with Atome have increased by 23-50%, the average customer unit price has increased by more than 30%, and the average repurchase rate has exceeded 60%.
While Hong Kong’s retail industry has been impacted by fewer tourists and shrinking consumer spending due to the social unrest and impact of the pandemic, there are still bright spots ahead with the e-commerce scene.
The growth of Hong Kong’s market is still on the uptick. Dig deeper into what the future holds for Hong Kong in our e-book “Hong Kong- How BNPL empowers retailers and e-tailers to reach outside the box.”