Retail in Asia

In Trends

HK retailers use PayPal to buck e-commerce trend

Hong Kong PayPal merchants continue to grow their businesses on the international network of PayPal. Even though Hong Kong’s total exports saw a paltry 2 percent year on year growth in exported goods value in 2012, PayPal merchants in Hong Kong selling to the world through cross-border e-commerce grew their business significantly faster, according to Kerry Wong, Managing Director of PayPal Hong Kong, Korea and Taiwan.

"2012 was a year of momentous growth for trade and commerce in Hong Kong with the increasing popularity of mobile shopping as well as the growing popularity of cross-border commerce, leading to a continuous growth in the size of the market," Wong said in a media briefing last month.

Cross-border trade accounted for the majority of PayPal’s total payment volume in the past 12 months as Hong Kong merchants exported goods to buyers around the world searching for high quality products at a low price. The US, Australia, UK, Germany and Canada are the five largest trade markets for PayPal merchants in the city.

"One of the interesting things I’d like to point out is that based on the statistics of the Hong Kong government, normal offline export sellers have been declining in both Germany and UK corridors. However, Hong Kong sellers are using PayPal to buck the trend of e-commerce and drive higher sales volume than traditional offline competitors," noted Wong.

Riding the growth of traditional market, Hong Kong PayPal merchants also grew their overall sales last year to emerging markets, led by the Philippines, Argentina, Korean, Sweden and Russia.

Alan Lim, CEO of E-Services Group, a Hong Kong-based consumer electronics etailer with operations in the UK, US and Singapore, thought the opportunity for having an online store is the ability to expand and partnering with PayPal makes it easy for an e-commerce company to crack the new market.

"One of our key focuses is to grow in the new market. When we break into a new market, we are unknown in the territory. We need to partner with reputable brand. For example, when we first got into Germany, people didn’t feel comfortable buying products on our website. Partnering with companies like PayPal helps a lot," said Lim.

The mobile commerce market in Hong Kong jumped 444 percent to HKD 6.4 billion (USD825.1 million) in 2012 from HKD1.5b in 2011, according a PayPal study last year. The company launched PayPal Here in the city last year in March, tapping the small business market. The mobile solution allows small retailers to accept multiple forms of payments by smartphones.

Blablakids, a small retailer in Hong Kong that sells handcrafted baby products, deployed PayPal Here last year in March and saw 30 percent increase in sales.

"Specialising in high-quality, hand-crafted items, most transactions processed by Blabla Kids are over HKD1,000. As a result they often found that customers made a trip to the showroom, picked their favourite dolls but discovered that they could not take them home because the company previously only accepted cash payments," said Wong.

"Applying for a credit card terminal was too troublesome and did not enable them to capture sales when on-the-go, attending expos, or events. PayPal Here has enabled Blabla Kids to create new, higher-value sales opportunities as payment method is no longer a limitation."

PayPal processed USD145b in total payment volume in 2012 – a 22 percent increase year on year. USD14b were processed via mobile payment last year, more than the USD10b it predicted a year ago. The company is expecting to process USD20b in mobile payment volume in 2013.