E-commerce is rapidly expanding in Hong Kong as more retailers establish an online presence and shoppers alter their consumption habits and lifestyles. With over 4.5 million online shoppers, Hong Kong's e-commerce penetration rate is 59.8 percent in 2018 and is expected to reach 72.6 percent in 2022, and e-commerce sales in Hong Kong are steadily increasing. With a growing market, there is no better time to start your e-commerce business.

Market Size

Expected Revenue: US $7,598 million
Number of Users: 4.5 million

According to Statista, revenue in the Hong Kong e-commerce market is expected to reach USD $7,598 million in 2021. Revenue is expected to grow at a 10.5 percent annual rate (CAGR 2021-2025), resulting in a market volume of USD $11,308 million by 2025. Fashion is the largest segment of the Hong Kong e-commerce market, with a projected market volume of USD $2,337 million in 2021.

The Impact of Covid-19 on Hong Kong's E-commerce

According to a PayPal study, approximately 86 percent of mid to large e-commerce enterprises had logistical and order fulfillment issues. Covid-19 also impacted 43 percent of merchants' cash flow.

Between January and June 2020, more than half of Hong Kong's online shoppers purchased more groceries and personal hygiene products online. During this period, many Hong Kong consumers were threatened with job losses or lower earnings, so they spent less money on non-essential products.

In Hong Kong, the new top purchase criteria have been discovered to be value for money, ease of shopping experience, and product quality. According to KPMG's study, consumers' overall positive online shopping experiences ensure that they will continue to frequent and make more purchases from e-commerce stores compared to before the start of the coronavirus outbreak.

Hong Kong's Most Popular Online Stores

Alibaba's Tmall, WeChat, Taobao, Amazon, JD, Alibaba, and eBay are the most popular online stores and marketplaces in Hong Kong.

Hong Kong E-commerce Key Metrics and Statistics

According to GlobalData's E-Commerce Analytics, Hong Kong's e-commerce market is expected to grow at a compound annual growth rate (CAGR) of 9.9 percent from 2019 to 2024, with a market value of approximately HKD $226 billion (USD $29 billion) in 2024.

E-commerce transactions are expected to increase by 13.4 percent in 2020, as consumers spend their money online rather than in physical stores.

Hong Kong's user penetration is expected to reach 73.1 percent of the population in 2021 and 83.8 percent by 2025. According to Statista, the average Hong Kong user's (ARPU) revenue in 2021 will be USD $1,375.89.

Methods of Payment Online

Digital wallets complete a quarter of all e-commerce payments in Hong Kong (HKD $0.9 billion per year), making them the second most preferred payment option in the city.

Digital wallet transactions will outnumber card transactions by 2021, as they are growing at a compound annual growth rate of 32%. By this year, digital wallets are expected to outperform all other e-commerce payment methods in Hong Kong. PayPal and AliPay are the most popular digital wallets among Hong Kong residents.

Purchases made across borders

Hong Kong online shoppers are also purchasing from other countries, with China topping the list. Singapore and Japan are two other popular choices.

In 2019, Hong Kong's internet retailing sales value is 5.7 percent of total retail sales, which is less than half of the global average of 13.7 percent. China leads with 34.1 percent, while the UK has 21.8 percent of total business receipts from online sales, followed by South Korea with 21.6 percent.

Two Important Trends:

Hong Kong E-commerce Trend 1: More Hong Kong retailers are going online

According to data from the Census and Statistics Department, Hong Kong's physical store retailers have suffered losses since the pandemic, with Year on Year sales decreasing by 44% in February 2020. To survive, the stores required an online presence.

According to a Nielsen survey, 46 percent of Hong Kong consumers preferred eating at home to dining out in the food and beverage sector. During the peak of the Covid-19 outbreak in 2020, Hong Kong residents were increasingly opting for food delivery, takeaways, and cooking at home, and this trend is expected to continue into 2021.

To meet online demands, businesses in Hong Kong are increasingly using the online-to-offline (O2O) model. According to Shopline, more than half of the e-commerce Hong Kong retailers have physical stores. In the long run, 20% of its merchants are considering fully embracing the O2O model, supplemented by the establishment of pop-up stores.

Hong Kong E-commerce Trend 2: When shopping online, consumers are increasingly using bank transfers and digital wallets

Bank transfers and digital wallets are becoming more popular in Hong Kong, with 12-percent compounded annual growth rates and 11-percent compounded annual growth rates, respectively. By 2023, bank transfers and digital wallets are expected to account for 48 percent of all online transactions.

Simultaneously, Hong Kong shoppers are moving away from prepay methods (a 27% drop in CAGR), debit cards (a 14% drop in CAGR), and cash on delivery (13 percent drop in CAGR).

According to Worldpay Merchant Solutions, more consumers prefer to shop on their mobile devices, and this trend is expected to continue. Merchants who study their customers' behaviors and provide them with an engaging online experience will profit from their e-commerce businesses. Hong Kong e-commerce merchants should offer digital wallets that their customers frequently use, as digital wallet transactions will account for one-third of all e-commerce purchases in Hong Kong over the next five years.

Are you ready to launch your e-commerce business in Hong Kong? Focus on buying the best products to sell and growing your business while we handle all administrative tasks, from filing necessary documents to accounting for e-commerce companies.