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The four 2023 trends that Hong Kong’s eCommerce merchants need to know

By Tim Fu, Market Lead, Hong Kong, South Korea & Taiwan, PayPal

Click here to read this article in Chinese

It should have been a year of post-pandemic recovery, but 2022 turned out to be a challenging year for the global economy. Many analysts and economists agree that 2023 will be another turbulent year, resulting in further tightening of consumer purse strings around the world.

Yet businesses that remain resilient and are adaptable can survive and even thrive. It is important for businesses to understand the changing environment in order to remain competitive, since what defined growth previously may not necessarily drive growth moving forward. Here are four trends for merchants in Hong Kong to take note of.

Savvy shoppers are even more price sensitive

Post-pandemic, consumers around the world have become more accustomed to shopping online. As disposable incomes tighten, they are more likely look further-afield and shop from online merchants overseas on the hunt for lower prices. A global report from PayPal[1] in 2022 found that 61% of surveyed shoppers are prepared to endure longer shipping times for a better deal.

Other consumers behaviours are also emerging. For example, consumer delaying the purchase of big-ticket items in favour of smaller items, looking for second-hand goods over brand new, or renting items instead of owning. In fact, 78% of Americans[2] admitted to planning to purchase used items as gifts ahead of the Christmas season just gone.

As shoppers look ever more broadly within the global online marketplace, the good news for Hong Kong merchants is that as long as consumer needs are addressed and the shopping experience optimised, great conversion rates are clearly within reach.

Prepare for a rise in attempted fraud  

Historically, economic downturns have presaged increases in fraudulent activities. In 2008 , the UK saw a 2.1% fall in GDP, while fraud offences increased 7.3% and the proportion of card users falling victim to fraud jumped 50% from the year prior[3]. As we enter 2023, we may well see merchants face a rise in attempted fraud.

Fraud can manifest in several ways and can affect both consumers and merchants. It might be the use of stolen card details, or someone claiming they had not received the goods when they had. Fraud and chargebacks can be catastrophic for businesses of all sizes and a substantial burden on resources, let alone the cost.

Merchants need to be extra vigilant in spotting suspicious orders; partner with a payment provider which can help to reduce risk of frauds and can even help interface with card companies and consumers on your behalf in the event of a dispute.

A race to push loyalty schemes ahead of the ‘2024 cookie crunch’

Businesses have traditionally relied on cookies and tracking data to target customers. However, businesses will need to switch tactics with tech giants introducing a raft of privacy-focused measures. For instance, Chrome, one of the world’s most popular internet browser, will phase out cookies in 2024, while Apple is losing access to device identifiers on its iPhones.

We will likely see brands and merchants race to gain first-party data in 2023 as well convince customers to ‘opt-in’. The good news is 53% of consumers globally[4] are willing to share their data but expect to have something in return. Therefore, we will see merchants pair opt-in efforts with generous incentives and competitive loyalty schemes.

Merchants look to diversify via Hong Kong’s free trade deals

Hong Kong is seeking early accession in 2023 to the world’s largest free trade agreement, the Regional Comprehensive Economic Partnership (RCEP). There are currently fifteen signatories including major economies such as Australia, Japan, South Korea, Malaysia, and Singapore. While the city already has a number of free trade agreements with many markets in the RCEP, favourable rules of origin and trade facilitation sections are likely to further benefit businesses.

While the U.S and UK are still popular cross-border markets for Hong Kong merchants, with the economic headwinds these markets are enduring, we can expect merchants to diversify and reach new customers. Markets under the RCEP and other free trade agreements can potentially present low-hanging fruit for merchants. There are also government supports such as fundable items range from setting up production lines, to establishing localised websites and promotional activities to help merchants expand into markets where Hong Kong has signed free trade agreements with.

As we move into a new year, it is important for merchants to reflect on areas where they can reduce risk, raise conversion, and reinforce resilience. Fortunately, there is support available and trusted partners who can take care of areas such as payments, to allow businesses to focus on the things that matter the most.