After being hit hard by a pandemic-induced decline in sales, supply chain and logistics issues, e-commerce businesses in Hong Kong are confident about a quick rebound, according to a new study by PayPal.
The survey found that 61% of respondents are expecting a recovery by the end of the year, while 86% are already seeking to capitalise on the opportunity by improving their online shopping experience to boost their competitiveness.
“The pandemic has condensed the digitisation of commerce and payments from years into a matter of months, and businesses are realising the importance of digital transformation as a necessity of survival,” said Tim Fu, country leader at PayPal Hong Kong, Korea and Taiwan.
Although COVID-19 has given online shopping a boost, e-commerce businesses still reported tough challenges, with one in four (27%) claiming they are highly concerned about the sustainability of their business, while 61% expect competition to intensify.
Since the beginning of the pandemic in Hong Kong in January 2020, 86% of businesses surveyed claimed logistics and supply chain issues, and over half (52%) reported decreased sales as their top challenges. This is creating dual pressure on businesses as a fall in sales is further compounded by increasing operational costs because of logistics and supply chain issues.
Logistics and supply chain issues were also causing deteriorating customer relationships, with nearly two-thirds (64%) of the businesses surveyed experiencing issues with their company reputation and customer relationships. This includes rising complaints from customers (48%), damaged company reputation (27%), and loss of regular customers (14%).
The race to recapture growth
Despite the mounting pressure and challenges Hong Kong’s e-commerce businesses are facing, almost two-thirds of the businesses surveyed (61%) have taken measures to address the immediate financial pressure and customer relationship challenges.
To recapture growth, 64% said there is a need to increase demand and find new customers quickly and, to that end, 48% of businesses are looking for alternative ways to sell their products and 45% are looking to reach customers in new markets.
The study found 86% of e-commerce businesses believe that improving their online shopping experience for consumers is key to increasing competitiveness.
In addition, communication is seen as key for addressing customer relationship challenges, with businesses now engaging customers more proactively – 68% have been posting advisory or information updates on their website. Meanwhile, 61% have been managing customer expectations through more proactive communications on a more regular basis either weekly (39%) or monthly (23%). Also, 45% of respondents plan to offer discounts to customers experiencing long waiting periods.
The study, entitled “From New Normal to New Growth”, was conducted by Edelman Intelligence on behalf of PayPal Hong Kong. The results are based on interviews with 44 senior executives of mid to large-cap e-commerce merchants in the physical goods space held online in August 2020.
Sourced from PayPal Hong Kong