E-commerce the order of the day
Chinese mainland consumers are spending 28 per cent more on online purchases this year compared with a year ago, according to the latest survey by global audit and advisory firm KPMG.
To take advantage of the trend, Egidio Zarrella, client and innovation partner at KPMG China, has urged Hong Kong retailers that are developing e-commerce services to jump on the bandwagon.
The growing popularity in e-commerce on the mainland comes against the background of Hong Kong’s shrinking retail sales which had slipped for the sixth straight month in August, particularly in the luxury-goods sector.
The ongoing National Day “Golden Week” has not been a boon for the city’s retail industry, with some retailers calling it the “worst ever” although Secretary for Commerce and Economic Development Gregory So Kam-leung said the number of mainland visitors rose by 4.3 per cent during the first five days of the week-long holidays, compared with the same period a year ago.
Zarrella suggested that the local retail market’s weak performance is just a correction, saying it’s unavoidable as some luxury brands have closed down their outlets in prime locations in the city.
However, he said physical stores are just showrooms for customers and he doesn’t expect the closures to emerge as a trend for prestige brands operating in the SAR.
“Understanding customers and having convenient payment channels” are the two main factors for online retail development, he said.
According to the KPMG poll, mainland customers have turned to credit cards as their favorite payment method in making overseas online purchases.
Fifty-three per cent of 10,150 Chinese respondents said they used credit cards, followed by 48 per cent who used Alibaba’s Alipay and 7 per cent who used Tencent’s WeChat for payment.
Zarrella said currency conversion is crucial for any electronic payment tool entering the mainland market.
KPMG also found that product origin and uniqueness are beginning to have a greater impact on people’s decision to make online purchases as about one-third of respondents had made online purchases of luxury goods at full, non-discounted prices.
“Price is becoming less of a driver, but value remains important as Chinese mainland customers are well-informed about global prices since most of them travel physically or digitally,” said Thibault Villet, chief executive officer of online cosmetics mall Mei.com.
Cosmetics products have become the most popular items bought online, followed by women’s shoes, bags and leather goods, women’s apparel and accessories, KPMG said.
Besides luxury items, the survey found that luxury services purchased online have increased, including online bookings for hotels and restaurants, followed by domestic and overseas trips.
KPMG expects the number of mainland consumers placing online bookings for overseas trips to double over the next 12 months — from 35 per cent in the past year to more than 60 per cent.