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The impulse to shop online
There was a time when online portals were restricted to auction sites like eBay. Amazon's success in the US has spurred it to venture outside American soil opening portals to serve customers in Canada, the United Kingdom, German, France, Japan and China. Amazon turned a tidy profit of US$5 million on US$1 billion sales.
The 2010 Nielsen Global Consumer Report on Global Trends in Online Shopping suggests that books remain the most popular items bought online. What is more interesting is that price range is not an indicator of success. Airline tickets and electronic equipment ranked third and fourth most popular items purchased online. Moreover the survey suggests this trend is on the rise.
In March 2010, CSL Limited, a pioneer cellular mobile service operator in Hong Kong launched what it argued is the Special Administrative Region's (SAR) online shop primarily selling mobile phones and cellular services.
What makes Hong Kong an attractive place to run an online business? Hong Kong has one of the highest residential broadband penetration rates in the world with 81% of households or 3.9 million Internet users in total according to AFP/Strategy Analytics.
Exactly what is driving consumers to buy online? An often quoted reason is convenience. Personally the first products I started buying online were books. At the time it was the high markups that book retailers in Hong Kong charged that drove me to go online. The Internet also allowed me to get my hands on products that are not available locally (or if they were, the prices were horrendously expensive).
Mark Liversidge
CSL Limited's Chief Marketing Officer Mark Liversidge said that customers shop online primarily out of convenience: "The desire for more freedom, choice and a convenient shopping experience where customers can browse and buy at their own pace, from anywhere and at anytime. Online shopping allows customers to easily check out the latest product information and pricing, along with recommendations from friends or other users in the social media."
But convenience alone is not the determining factor. Ease of use has been found to be a strong motivating factor. The popularity of the Apple iPhone can be attributed to the ease with which consumers are able to immerse themselves in the device without the cumbersome experience associated with many consumer electronic devices. Indeed Nokia's success can be attributed to the company's effort to keep the Symbian interface simple to use, a fact that other mobile phone makers like Motorola and Sony Ericsson have ignored for many years.
As consumers become more sophisticated in their lifestyle, so too is the penchant for products that thrive on complex technologies like high definition (HD) television or 3D display.
Liversidge sees the increasing ease of use of new technologies that make life easier leading to a change in customer behavior. He cites examples like iTunes with music, Facebook with social interaction and ebay with online as clear indicators of how technology is changing customer behavior.
David Boden, senior director of retail for Asia Pacific and Japan at Oracle believes social networking offers a very attractive cost-performance ratio for online retailers. He predicts that social networking is going to be the norm when it comes to engaging customers, and mobile devices will be the platform of choice.
The availability of low-cost, high speed broadband is fueling growth in websites that encourage online commerce. The growing popularity of online gaming may also be contributing to the popular acceptance of the Internet as a safe medium for shopping.
CSL saw the writing on the online wall when in December 2009, the China Internet Network Information Center (CNNIC) reported a 38.9% increased in Chinese online shoppers for the first half of 2009 compared to the previous year. The CNNIC also estimated that 87.88 million Chinese spent US$26.62 billion in 2009 with 79.4% expressing satisfaction with their online experience.
A decade ago I would have doubt the possibility of online shopping becoming a possibility in a small locality like Hong Kong. But with a highly mobile and busy workforce, the convenience and safety of online shopping is slowly making its presence felt in the SAR.
Doing business online has already proven itself with a local startup, Alibaba, being showcased as the poster child of the opportunities. In Asia companies like UNIQLO in Japan, China Eastern and Xinhua Bookstore from China all pointing to the potential of the Internet as the next platform for consumer purchases.
For CSL, the launch of an online store in March 2010 marks a new chapter in Hong Kong's long and fast march towards mobile commerce. Competition for the hearts and minds of Hong Kong's 7 million consumers has meant high churn rate and put excessive demand on the five mobile network operators to come up with innovative ways to stay relevant to a fickle customer base.
"The online channel compliments the existing one2free retail and telesales channels. It enables CSL to deliver another best in class customer experience to suit modern Hong Kong consumers' lifestyles, providing a shopping and information experience 24 hours a day, every day of the year, with a number of specific offer benefits," said Liversidge.
Does this mean the end of the brick and mortar retail store? Boden sees online retail stores gaining a foothold in what was once an almost pure brick and mortar channel. Ff course we had mail order and the roaming salesman. But true mass market was still dominated by retail stores.
David Boden
"Mobile shopping will finally and permanently take root, forever changing the retail buying, selling and marketing landscape. It's how we live today, so retailers need to catch up. Mobile phones are sometimes fashion accessories, but more importantly, they are really everyday items you put on each day like your shoes," said Boden.
A catalyst for the further growth in online shopping is the social network phenomenon. Marketers agree that social chatter have the power to influence the success and failure of a product or company. The center of power is shifting to the consumer.
"Customer reviews, mass tweets or blogs of customer comments (pros or cons) mean the views of customer can be highly influential globally. It would be to one's peril for the retailer to ignore this influence," cautions Boden.
But why online? Doesn't going online suggest a less personal approach to engagement? For complex or sensitive issues, the personal face-to-face approach probably will remain the norm. But where the transaction is simple and the consumer knows what he or she wants, a more discrete, less public channel is probably the best approach. And this is what the Internet offers.
Boden says customers want less but more meaningful engagements. So how do you engagement less frequently but more intimately? The answer lies with analytics technology. In a nutshell, analytics can help analyze sales data, response rate data, and so on, to continually refine messaging and offers that lead to better success.
He may be on to something here.
About the Author
Current I am the content director and web strategist for Questex Asia Ltd. I also have 6 years of Marketing and Communications experience with Hitachi Data Systems in Asia. Other prior stints include senior industry analyst for Dataquest (a Gartner Group brand) and account director at Euan Barty Associates - a PR firm in Hong Kong.
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