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Tim Fu, Market Leader, Hong Kong, South Korea and Taiwan at PayPal

Unprecedented growth has been recorded in eCommerce in the past two years. In 2022, the uncertainties over the global economic outlook still remains high, online shopping is a trend to stay. A recent report reveals that the total volume of global eCommerce sales is estimated to exceed US$5 trillion for the first time this year, accounting for more than 20% of overall retail sales. The figure is expected to rise to nearly US$7.4 trillion in 2025[1]. Therefore, the ability to capture eCommerce opportunities will be a key factor for businesses to achieve growth in the year ahead, especially for small and medium-sized businesses (SMBs) with relatively limited resources. Only by harnessing the right resources and platforms can SMBs get a share in the highly competitive global eCommerce market.

The Hong Kong SMB Survey Report 2021 published by PayPal earlier this year has concluded five recommendations to help SMBs stay agile and adapt to the new normal.

1. Establish a digital shop front
As more consumers joining the ranks of online shopping, merchants should start building their online presence as soon as possible to reach potential customers from all around the world in the new era of eCommerce. Especially in the densely populated Hong Kong, the rents and business costs have always been the key obstacles for SMBs to run a brick-and-mortar business. Operating an online shop allows them to conduct business at a relatively lower cost. Concerns may stem from a lack of resource to the potential costs that going online can incur, but the amount of digital investment is in fact flexible to anyone’s needs. Even SMBs with limited resources can leverage social media or third-party platforms to easily conduct online sales and expand their local and even overseas customer base. Therefore, SMBs yet to venture into the digital world should accelerate their moves now.

2. Consider cross-border trade
Despite Hong Kong being one of the most thriving eCommerce markets in the world, SMBs should still consider leveraging digital technology to achieve global expansion since cross-border trade has never been easier. The traditionally popular markets in mainland China, North America and Europe remain top priorities for many merchants. Yet, emerging eCommerce markets such as India and Mexico have also demonstrated enormous potential for online shopping in recent years. Furthermore, some eCommerce platforms provide localization support to help merchants attract new customers without learning local languages, which is especially helpful for SMBs.

3. Choose the right digital platform
With a wide range of digital platforms flourishing, ready-made third-party eCommerce platforms are certainly a shortcut for SMBs to build their online presence. Nevertheless, there are still many businesses opt to operate their own digital platforms, such as eCommerce websites and mobile applications to enjoy greater control over their customer experience. SMBs should choose the most suitable platforms according to their own budget and business needs. For those starting or planning to establish an online presence, a third-party platform can make a head start for their digitalization journeys. After getting their eCommerce business on track and successfully building a customer base, these SMBs may consider doubling down investment to develop their own platforms.

4. Leverage social media platforms
Social media has already become a necessity in today's world, with hundreds of millions of users from all around the world on each major platform. Through the platforms’ well-developed online marketplaces, SMBs are now able to establish a digital shop front at an extremely low cost and minimal resources for operation. PayPal's report has also shown that social media is the most adopted online selling channel for SMBs in Hong Kong[2]. Nonetheless, if SMBs would like to stand out from their eCommerce competitors across the world, investment should be made to strengthen customer and fan engagement. Besides, they should also try to reduce hard-selling or cookie-cutter content. Simultaneously, SMBs have to pay close attention to the ever-changing algorithms of social media, which directly affect the chance of merchants reaching their potential customers. To minimize loss, SMBs should stay agile and avoid investing all their resources on a single platform.

5. Ensure a seamless customer experience
Online shopping has brought enormous growth opportunities to SMBs and, at the same time, more choices for consumers. Merchants who provide satisfying customer experience are bound to gain a competitive edge. Payment process, for example, is a crucial part of that. If consumers encounter obstacles in the payment process that prevent them from completing the transactions, or even cause losses, it is highly unlikely that they will purchase from the same merchant again. Thus, providing convenient, reliable and secure digital payment options is critical to attracting and retaining customers. Take PayPal as an example, our buyer and seller protection not only minimizes the financial loss of merchants, but also helps enhance brand reputation and customer loyalty. SMBs should carefully consider every detail in their digital transformation journeys to realize their gains in the long run.

As the global eCommerce market keeps growing, embarking digitalization as soon as possible spells a greater chance of success for businesses. To reap the rewards in the year ahead, SMBs could bear in mind the above tips and seek appropriate support when formulating their business strategies.

To learn more about Hong Kong SMBs’ digital transformation strategies, please download PayPal Hong Kong SMB Survey 2021.