MAKING BRICKS

CLICK
HARNESSING THE POTENTIAL OF
E-COMMERCE
APRIL 2017

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Copyright © 2017 The Nielsen Company
 Over the past decade, the rapid development of technology has
transformed the lives of consumers. Not only are consumers
moving many aspects of their lives online, but technology has also
contributed to the evolution of e-commerce around the globe.
While the level of engagement in online shopping varies among
countries, consumers around the world are moving in the same
direction as e-commerce continues to reshape shopping behavior
and revolutionize the retail business environment.

CHANGING
TECHNOLOGY GUIDES
CHANGING BEHAVIOR
As one of the most densely populated places in the world, finding what
you need within a few minutes’ walk is never a challenge for Hong
Kong consumers. Compared to consumers from other parts of the
world, such as Mainland China, United Kingdom, or the United States,
where huge online shopping platforms are widely available, Hong Kong
consumers are relatively less likely to engage in online shopping, simply
because of the close proximity and convenience of nearby physical
stores.

While the development of e-commerce has not yet evolved as a

widely adopted trend in Hong Kong, consumers’ growing reliance on
the internet and mobile technology shows an openness to change.
Consumers’ are frequently interacting on digital platforms and
increasingly looking for personalized shopping experiences when they
shop online.

“Hong Kong consumers are accustomed to touching and seeing

a product first-hand before making a purchase. Today, with the
emergence of online shopping platforms offering advantages like
convenience and heavy promotions, consumers’ interest in e-commerce
is increasing. However, ensuring a high quality product is still top
priority in many cases, meaning that consumers often still prefer to
see a product in-store before making a purchase,” said Angel Young,
Managing Director, Nielsen Hong Kong & Macau.

Considering the shifting market landscape and shopping behavior,

how should retailers and manufacturers adapt? What can brands do to
diversify their sales channels? By taking a closer look into the five Ws
of e-commerce, organizations can better understand where to focus
efforts:

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 WHO IS SHOPPING ONLINE?
WHAT ARE CONSUMERS BUYING ONLINE?
WHY  DO CONSUMERS SHOP ONLINE?
WHERE DO CONSUMERS SHOP ONLINE?
WHEN DO CONSUMERS USUALLY SHOP ONLINE?
ABOUT THE STUDY
The findings in this survey are based on an online survey conducted in
Hong Kong with over 1,200 consumers, of which over 1,000 have made
an online purchase in the past 12 months. Results are weighted to the
Hong Kong population as internet penetration is very high among those
aged 15-64. Survey responses are based on claimed behavior, rather
than actual metered data. Cultural differences in reporting sentiment
are likely factors in the outlook across countries. The reported results
do not attempt to control or correct for these differences; therefore,
caution should be exercised when comparing with other countries and
or regions.

Copyright © 2017 The Nielsen Company 3

 WHO IS SHOPPING
ONLINE?
With e-commerce gradually evolving, 8 in 10 shoppers in Hong Kong
have made an online purchase in the past 12 months. In terms of age
group, incidence of online shopping is highest amongst consumers
aged 20-29, the most technology-savvy group, with 93% claiming to
have shopped online in the past 12 months, followed by those aged
30-39 (88%) and 40-49 (86%). This high online shopping penetration
is not surprising considering the highly digital and connected lifestyle
of Hong Kong consumers. When riding the MTR or having lunch at
a restaurant at lunch, it’s not uncommon to see majority of people
using their phones, whether it be reading the news, interacting on
social media, messaging or even shopping ‘on-the-go’. Even among the
Silver Generation (aged 50-64), 71% claimed to have engaged in online
shopping within the past 12 months. Online shopping has penetrated
to consumers of all age groups. As for gender, there was no significance
difference determined by the study in terms of online shoppers.

WHAT ARE THEY

BUYING ONLINE?
Looking into the shopping habits of online shoppers in Hong Kong, it
is not surprising to see that the key categories purchased are clothing,
travel, and household goods. The rise of online fashion retailers,
including those on Taobao in Mainland China, or various online brands
from the US or Europe, coupled with delivery to Hong Kong at a
relatively low cost, have led almost half of Hong Kong online shoppers
(45%) to purchase clothing online in the past 12 months. Convenient
shopping platforms together with the frequent promotions have greatly
contributed to consumers’ willingness to buy fashion items online.

PENETRATION OF ONLINE
SHOPPING IN HK IN PAST 81%
12 MONTH

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 Travel-related purchases such as air tickets & hotel bookings (39%)
are the second most popular category bought online. The emergence
of travel websites has greatly simplified the process of booking travel
items such as air tickets, hotels and car rentals. Consumers are now
able to compare prices across numerous sites and travel platforms
before purchase. Household goods (37%) are the third most popular
category purchased online. Consumers claimed to be most focused
on promotions, wide variety and trendy products when shopping for
household goods.

Despite the proximity of nearby restaurants throughout Hong Kong,

around one-fifth of Hong Kong consumers (21%) have ordered food
delivery service online. Delivery service from fast food chains is most
popular, while ‘food delivery platforms’ are also thriving as delivery
service providers partner with local restaurants to provide more

TOP 3 PRODUCT CATEGORIES BOUGHT

45% 39% 37%

choice and variety for consumers. Convenient, fast, and hassle-free

are key attributes that consumers look for in a delivery service. Service
providers are meeting these needs by offering tracking services
which updates the customer on the status and location of their order.
Considering the convenience of these emerging delivery services, it’s
not surprising that 38% of those who have ordered food delivery service
online plan to increase their spending in the next 12 months.

Copyright © 2017 The Nielsen Company 5

 TOP 5 REASONS FOR SHOPPING ONLINE

Flexible shopping hours 62%

Lower price/more discounts 59%
Can compare prices 43%
Wider range on products available 41%
Delivery service options 35%

While a key concern for the retail industry has been how the fast
growing online market will impact sales at bricks-and-mortar stores,
and whether it would lead to cannibalization. However, figures show
that e-commerce can actually lead to incremental sales for offline
stores within certain categories. Additionally, the majority of consumers
say online shopping will not affect their in-store purchase for many
categories including grocery (63% who have bought grocery online say
online shopping has not affected their in-store purchase), household
goods (62%), confectionery items (62%), clothing (56%) and jewelry
(71%).

NO CANNIBALIZATION AT BRICKS AND MORTAR

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 WHY DO PEOPLE
SHOP ONLINE?
It is of no surprise that convenience is considered a key advantage
of online shopping. Consumers prefer online shopping for its flexible
shopping hours (62%), as they can shop anywhere at any time. Another
advantage that consumers noted was that products can be purchased at
a lower price or with discount (59%). Other reasons for shopping online
include the ability to easily compare prices of different products and
across platforms (43%) as well as the wide range of products that are
available (41%).

Despite the flexibility and convenience of online shopping, Hong Kong

consumers often times still prefer to see a product first-hand before
making a purchase. For grocery, personal care products, and baby
products, consumers are accustomed to buying in-store. Consumers are
also hesitant to buy certain food or beverage items online, as product
freshness is also a key concern. Payment security is a consideration
especially for large ticket items. These challenges indicate that
e-commerce still has an opportunity to grow and develop in Hong Kong.

WHY “NOT ABLE TO INSPECT THE PRODUCTS”

IS THE MAJOR BARRIER. THIS INDICATES THE
IMPORTANCE OF A POP-UP STORE!
TOP 5 REASONS FOR TOP 5 BARRIERS FOR NOT
SHOPPING ONLINE SHOPPING ONLINE
DESIRE TO
Flexible
shopping hours 62% INSPECT GOODS
Lower price/
more discounts 59% CONVENIENCE &
HABITS
Can compare
prices 43%
PRODUCT
Wider range on
products available 41% FRESHNESS
Delivery PAYMENT
Service options 35% SECURITY

Base: P12M Online shoppers (n=1,018)

Question: A13 Reason for shopping online in past 12 month
Note: Mentions less than 10% are not shown
Source: Nielsen Hk E-commerce Survey 2016

Copyright © 2017 The Nielsen Company 7

 Having said that, what would encourage consumers to purchase fresh
food online? The answer is a ‘guaranteed full refund,’ with 70% of
respondents saying a guaranteed full refund for fresh produce that do
not meet their expectation would encourage them to purchase fresh
food online. In addition, if retailers were to offer the same produce for
free with the next purchase on top of the guaranteed full refund, more
consumers would be willing to purchase (72%). While consumers are
concerned about the quality of products, 69% of consumers claim they
would be willing to purchase on a platform which has detailed product
descriptions and information including origin, supplier and nutritional
information.

WHERE DO THEY
SHOP ONLINE?
When asked about which websites they purchased from, 43% of online
shoppers cited Taobao, the largest e-commerce platform in China.
Group buying sites and grocery retailers such as Yahoo!, GROUPON,
HKTV mall, Welcome and Parkn Shop are also popular with Hong Kong
consumers. In fact, 57% of online shoppers said they have made a
group buy purchase in the past 12 months, indicating the strength and
popularity of these platforms.

Hong Kong consumers do not only want convenience, they are also
looking for a personalized experience. New on-demand players are
offering services such as an online grocery concierge, shopping from
multiple stores in one basket, and 1 hour delivery.

As Hong Kong is still behind other markets in terms of a large single

platform with wide product assortment, many consumers are turning
to overseas cross-border sites for wider selection. Over 40% of online
shoppers have shopped at an overseas website in the past 12 months.
Among cross-border online shoppers, 71% have shopped from Asia
Pacific websites including Mainland China, Japan, South Korea and
Taiwan, while 44% of them shopped on US websites and 20% on
European websites. In terms of categories purchased, consumers tend
to buy clothing, shoes and accessories via cross-border online shopping.

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 WHEN DO THEY
PREFERRED DELIVERY METHOD

58% USUALLY SHOP

PREFER DELIVERY TO HOME
ONLINE?
32%
Many consumers actively look for discount and promotions online,
and 58% of online shoppers shop online during weekdays (Monday to
Friday). 23% of online shoppers shop on weekdays between 9am and
6pm and interestingly, the majority of this group is females in their 30s.
The other popular time for shopping online is 6pm – 10pm on weekends
PREFER DELIVERY TO and weekdays. It is therefore important for online sellers to understand
DESIGNATED LOCATION the active shopping time of their target shoppers and launch targeted
promotions to maximize engagement.

26% WHAT MAKES ONLINE

PREFER DELIVERY TO CLOSEST
CONVENIENT STONE
21%
PREFER DELIVERY TO OFFICE
SHOPPING MORE
FAVOURABLE?
When compared to shopping in a traditional physical store, online
shopping offers flexibility and convenience in terms of where products
are delivered. Over half (58%) of online shoppers prefer to have

15%
products delivered to their homes directly, 32% prefer delivery to a
different designated location, while 26% prefer to pick up the ordered
items at the closest convenience store. When asked what kind of
advertising messages would encourage consumers to buy consumer
packaged goods online, ‘guaranteed money back for products not
matching the order’ topped the list at 75%, followed by 70% finding
PREFER DELIVERY PICK UP ‘same day product replacement for product not matching the order’
AT BRAND STONE relevant. ‘Precise delivery time’ is also an important element for online
shoppers in order to accommodate the busy schedules of today’s
consumers.

Copyright © 2017 The Nielsen Company 9

 OUTLOOK FOR
E-COMMERCE
DEVELOPMENT IN
HONG KONG
Hong Kong’s market landscape is evolving due to the development of
e-commerce and the increasing connectedness of its consumers. While
online shopping still has opportunity to further penetrate the market,
many consumers are already relying on the channel to add convenience
and save time. Retailers and manufacturers looking to maximize growth
should be assessing their strategy in both online and offline channels
and creating engaging, personalized experiences for Hong Kong’s
emerging online shoppers.

“While Hong Kong’s e-Commerce landscape still has room to

develop compared with other global markets, the opportunity within
E-commerce is clear. Consumers’ lives are busier than ever and they
are looking for ways to increase convenience, while still ensuring
high quality and value for money. The consumers’ shopping journey
is becoming increasingly complex, with online research and price
comparisons now the default. However, a personalized experience is
still powerful, and nothing can compare to holding a product in your
hand in order to gauge quality. Organizations will need to balance these
emerging trends and insights if they are to capitalize on the emerging
Omni-channel trend,” Young concluded.

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 ABOUT NIELSEN
Nielsen Holdings plc (NYSE: NLSN) is a global performance management
company that provides a comprehensive understanding of what
consumers watch and buy. Nielsen’s Watch segment provides media and
advertising clients with Nielsen Total Audience measurement services
for all devices on which content — video, audio and text — is consumed.
The Buy segment offers consumer packaged goods manufacturers
and retailers the industry’s only global view of retail performance
measurement. By integrating information from its Watch and Buy
segments and other data sources, Nielsen also provides its clients with
analytics that help improve performance. Nielsen, an S&P 500 company,
has operations in over 100 countries, covering more than 90% of the
world’s population. For more information, visit www.nielsen.com.

Copyright © 2017 The Nielsen Company 11

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