Hong Kong E-commerce Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022-2027)

Key Highlights

• E-commerce in the country is experiencing significant growth due to an increase in the adoption of digitalization by retailers in the region. Also, internet penetration in the region has increased as the advancement in Information Communication Technologies has fueled the adoption of broadband services in households, and businesses.
• However, the region is characterized by an aversion towards online shopping compared to Mainland China. The high density of population in the region is expected to create new opportunities as the region experiences a transition toward online shopping.
• eCommerce uptake is increasing with rising the smartphone use and younger generations involved in online shopping via social media channels. Mobile eCommerce is enhanced with 5G networks available in the country, increasing on-the-go internet speeds and facilitating more mobile eCommerce.
• Further, the country has a robust and efficient logistical system and is a regional logistical center of Asia. The robust logistical system eased the adoption of e-commerce by retailers in the country.
• The advent of Covid-19 has raised severe challenges in terms of logistics and transportation of goods due to stringent lockdowns in the region. However, the pandemic also created a need for the adoption of e-commerce and fueled the growth in the region.

Key Market Trends

Increase in Internet Penetration Across the Country is Fueling the Growth of the Market

• With the increase in internet adoption across the country, the penetration of online retailing is growing. According to the world bank, internet users in Hong Kong accounted for 92.4%, 91.7%, and 90.5% of the country's population for 2020, 2019, and 2018, respectively.
• According to a survey conducted by the Government of Hong Kong in 2020 over 2.01 million households in had PCs, representing 75.3 % of all households in the country, and 100 % of those households had an internet connection for their PCs.
• Businesses in the country are adopting the online-to-offline model (O2O) to meet the demand for goods in the online marketplace. According to Shopline, an e-commerce solutions, and customized services company, more than 50% of its e-commerce Hong Kong retailers have physical stores.
• With such a rise in the adoption of e-commerce, the region is witnessing significant growth and it is expected that traditional brick and mortar retailers are willing to adopt the Online-to-offline model as this can benefit them by selling products 24/7.

Fashion Segment Accounts for Significant Share

• In recent times fashion retail has become very competitive, as major brands in the business are boosting e-commerce operations in order to develop online shopping in the country. Further, online shopping enables retailers to adopt technologies such as Big data analysis which allows the company to grasp the fashion market with information and analysis of the user trends.
• Also, advancements in technology and an increase in the efficiency of logistics have enabled logistical companies to provide services at a lower price. As most of the orders in e-commerce are made up of small batches the cost of logistics used to be very high. Several apparel companies operating in the region have focussed on achieving higher logistic support in order to gain customer satisfaction with deliveries.
• In recent times logistical companies charge very less for small batches as in fashion e-commerce orders and also offer services such as collection, inspection, and repackaging of returned goods which enables the customers an added advantage to make fashion purchases online.
• The increase in internet adoption has enhanced the social media landscape in the country. Social Media such as Facebook, Instragram and other platforms are not only used for connectivity but to keep up with the latest fashion trends and to research on the products to purchase.
• With high user penetration rate for Facebook, Instagram and other platforms many fashion companies in the country have increased focus on brand advertising and user engagement through social media as reviews play an important role in ecommerce with a significant portion of consumers reading online reviews of products prior to purchase.

Competitive Landscape

• May 2022 - DFI Retail Group, an Asian retail company has launched yuu to me, the new one-stop platform on the all-inclusive app. This app enables users to shop for over 30,000 products from many brands in Hong Kong.
• March 2022 - Kicks Crew, a Los Angeles- and Hong Kong-based sneaker and apparel platform has raised USD 6 million in Series A funding led by Gobi Partners, Pacific Century Group and Complex China.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support