“Successful” Transformation to E-Commerce

Evolving E-Commerce Model in Hong Kong

• The general views : NO

• HK is small

• Shopping is convenient

• Need “Touch & Feel”

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E-Commerce in Hong Kong?

• In 2015 :

• With 49% of Hong Kong’s online consumers are prepared to

spend more online in the next 2 years

* http://www.go-globe.hk/blog/ecommerce-hong-kong/

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E-Commerce in Hong Kong?

•And, the most popular items shopped online are :

* http://www.go-globe.hk/blog/ecommerce-hong-kong/

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E-Commerce in Hong Kong?

• Misunderstanding towards the market…

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E-Commerce in Hong Kong?

• HK consumers are keen on CROSS-BORDER

shopping!

• Consumers want more DIVERSIFIED products

• Sectors including electronics, groceries, home

appliances are UNDERSERVED!

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• Average daily number : • ~1,300 (Jan 2016) -> 2,500 (Dec 2016) -> ~3,000 (Mar 2017)

How are we performing?

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• Online to Offline

Drives offline sales through online promotions,

advertisings & notifications, thus transforming online

users into offline customers

The O2O Model

Online Platform

Offline Sales

• Retail : large stores, relatively small warehouse

Rent: $18.8 / sq. ft.1

Rent: $1,200 / sq. ft.2

1: Global Prime Logistics Rents May 2016, CBRE, May 20162: Global Prime Retail Rents October 2016, CBRE, Oct 2016

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The O2O Model

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• Offline shops as an effective marketing channel, to promote and to engage customers to shop online

• Transforming Offline customers to online sales

The Reverted O2O Model

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Shops as a Marketing Channel – Weekly Thematic Display

• HKTVmall : small stores, large warehouse• -> save rent• -> save labor & fixed cost

Rent: $18.8 / sq. ft.1

Rent: $1,200 / sq. ft.2

1: Global Prime Logistics Rents May 2016, CBRE, May 20162: Global Prime Retail Rents October 2016, CBRE, Oct 2016

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The Reverted O2O Model

Hong Kong's largest 24-hour online shopping mall, providing one-stop shop platform to Hong Kong people

With more than 135,000 products available from 1,300 stores

Sells anything you can imagine or you cannot imagine

Possesses logistics centres with more than 200,000 sq. ft. in Tsing Yi & Kowloon Bay with our own delivery team & vehicle crew

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What is HKTVmall doing?

According to the article “How retailers can keep up with consumers” released by Mckinsey&Company in October 2013 :

*http://www.mckinsey.com/industries/retail/our-insights/how-retailers-can-keep-up-with-consumers

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“As purchases migrate to digital channels, most retailers will need less physical selling space

in store.”

“ And the lines between physical and digital must continue to blur—for example, as stores become fulfillment and

return centers for online orders.”

What’s next for retailers?

According to Vend’s 2017 Retail Trends and Predictions report…

*https://www.vendhq.com/university/retail-trends-and-predictions-2017

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“When it comes to store size, less will be more in 2017. We’ve already seen a shift here, with retail giants such as Target, Best Buy, and Ikea investing in smaller-format stores to accommodate consumer desire for more

curated selections.”

What’s next for retailers?

• E-Commerce brings Choices, Cost Advantages, Convenience &

Anytime, Anywhere unique shopping experience

• Neither the substitute nor competitor of offline retailing

• Online is complementary to offline retailing

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E-Commerce is the enemy of retailer?