Amid the COVID-19 pandemic, even shopping is considered a high-risk activity. As we stay home to avoid the spreading of viruses, many of us turn to online shops to order daily necessities at the click of a button. With the ultimate peace of mind, we can wait for the goods to be delivered to our doorsteps in the comfort of our own home. Long before online shopping became mainstream, JJ Yeung Sik-ho, a VTC alumnus born in the 1980s, had already been interested in jumping on board. When he was earning his higher diploma in Business Promotion and Event Management at IVE, he already signed up for e-commerce courses. Upon graduation, he furthered his study in the U.K. and found online shopping was gaining traction. After returning to Hong Kong, he got employed by a leading local e-commerce platform and was later promoted to Director. After spending years in the business, JJ understood the power of a strategy known as long-tail – standing out from competitors by carrying a large number of less popular products in smaller quantities, rather than stocking a few best-selling items in mass quantities. Three years ago, he started his own online shop JMartHK, specializing in wines not available in the mass market. Soon after JMartHK was launched, the COVID-19 pandemic broke out. Curiously, his business didn’t suffer as a result, but took off nicely instead. In two months’ time, JJ had earned enough money to cover the initial capital investment and his business has been running stably ever since. He believes that starting an online retail business incurs lower cost, but allows more tolerance for mistakes and adversity. Young people are encouraged to give it a try if they have new ideas. Meanwhile, he also reminded online shop owners to enrich their knowledge in legal context, so as to avoid falling foul of the law unwittingly.
JJ Yeung was among the first cohort of online retailers in Hong Kong. Graduating from IVE in 2010 with a Higher Diploma in Business Promotion and Event Management, he jokingly said he enrolled in the programme because of the event management part – he supposed it’s a job not requiring someone to “sit still all day”. He was introduced to various online marketing concepts and trends in the programme.
“The IVE programme then was quite forward-thinking. There were a few courses related to e-commerce, such as webpage design, database building, digital image design and processing, and digital publishing. These subjects were closely related to my career of running an online shop later on. There was also a course in online marketing and I almost got full marks in the exam. As I had a background in information technology and had a strong interest in marketing, I wished to kick-start my career in related sectors.”
In the 2000s, there were very few tertiary institutes in Hong Kong offering programmes related to online marketing. JJ recalled IVE even managed to invite some pioneering big shots in the industry to the school for seminars, including the manager of Yahoo Hong Kong, the most popular online search engine at the time. He also remembered a lecturer analysing upcoming internet trends, such as virtual reality (VR). “I had no idea about VR at that time and it was a revolutionary and inspiring topic. The lecturer discussed the topic in great depth and he left a lasting impression to me. That was a time when online marketing was synonymous with placing a banner ad on the Yahoo website, and the concept of VR was mind-blowing.”
After graduating from IVE, JJ pursued further education in the U.K. in a marketing programme. Though it was marketing in the traditional sense, JJ was exposed to the shock of online shopping in his daily life for the first time. While online shopping had not yet caught on in Hong Kong in early 2010s, big supermarkets in the U.K. had already been running online stores concurrently with their brick-and-mortar stores. The business model had achieved operational maturity and online shopping had become an inseparable part of the British way of life. “Their online shops delivered grocery three times a week. Even though I studied in a remote part of the country, they could still deliver goods efficiently to my doorstep, despite the occasional snow. I was truly shocked by the power of e-commerce, and it dawned on me that online shopping could be so convenient.”
After returning to Hong Kong, JJ tried to join the e-commerce sector. Being passionate about photography, he chose a company that ran an online shop to sell photographic equipment to foreign buyers. In 2015, he was invited by HKTVmall to take up the position of a manager, and was promoted to director later on. When JJ joined the company, HKTVmall had barely been running for one year and was still in its infancy. “I was in charge of product management. The company didn't have much concept in digital marketing yet, without a dedicated marketing team. I had to come up with promotional ideas, such as online shopping festivals, which were very common in foreign countries. There are always some kinds of festivals every month to boost online sales, such as Valentine’s Day, thanksgiving, and cyber Monday. In mainland China, there is also Singles’ Day in November. There’s no reason why only Hong Kong should miss out.” He said with a smile that hosting online shopping festivals was not unlike what he learned at IVE in terms of event management, except that the events took on an online format.
Online shopping caught on relatively late in Hong Kong. JJ recalled that there weren’t many true online shops when he joined HKTVmall. Many clients are brick-and-mortar stores looking for online promotion. For instance, they’d place banner ads on search engines, mainly for group buying deals or bespoke services of a professional shopper. “But customers have to collect the goods in physical storefronts. Strictly speaking, it’s not real online shopping. They were just brick-and-mortar merchants advertising on online platforms.” JJ said many merchants were reluctant to open online stores at that time because they thought revenues from their physical shops were more than enough to keep their businesses afloat. This was especially true for those targeting mainland tourists visiting Hong Kong under the Individual Visit Scheme.
After departing HKTVmall, JJ kept on working in the scope of e-commerce, providing online sales solutions to clients, and involved in a myriad of products, ranging from VR games to frozen meats. He also gained access to the market of alcoholic drinks, which was a turning point for him to start his own business.
“Brick-and-mortar retail store is limited by its square footage. There’s never enough space to display every product. The advantage of online shop is its long-tail nature. Inventory turnover is not as important and you can carry an item for a long time. Even if the item only appeals to a niche market with low sales volume, an online shop may still carry it and display it, waiting for the right customer to come along.”
When rents keep rising, brick-and-mortar stores get smaller and smaller. The pandemic has been dragging on for a long time and traditional retail businesses were hit the hardest. That means online shops become more viable in comparison. According to JJ, data and figures of online businesses are very transparent. Though he may not always make a big fortune, he can avoid making huge losses as long as he makes a sensible forecast based on the past data. As he had developed close relationships with some wine distributors, JJ figured it was the right time to be his own boss.
JJ made a six-figure investment on his online store JMartHK, focussing on alcoholic drinks appealing to niche markets, supporting local small brewers by carrying local craft beers and local gins in particular. “I don’t carry products that are available in big supermarket chains. Some beer companies have approached me and asked me to carry their products. But I can’t sell them cheaper than supermarkets. Mass products aren’t in line with my market positioning either.” JMartHK caters to a middle-class clientele, and about 30% of its clients are expats living in Hong Kong. JJ managed to earn enough revenues to cover the initial capital investment within the first two months of operation. At present, JMartHK carries about 800 different alcoholic drinks. Half of them barely register sales of a single bottle each month. But the low running cost of online shop and the lack of physical space constraint allow him to take advantage of a long-tail strategy.
Soon after he started JMartHK, the COVID-19 pandemic broke out. JJ swiftly switched to selling anti-epidemic and disinfectant supplies. As Hong Kong faced the fifth wave of outbreak in early 2022, revenues from selling anti-epidemic products were already enough to cover the loss of business in alcohol sales. “In the traditional high seasons for alcoholic drinks, such as Chinese New Year and Valentine’s Day, restaurants weren’t allowed to serve dine-in customers and they stopped ordering wines and drinks. Many alcoholic products were diverted to the retail market. However, even gatherings at private premises or homes were restricted, meaning it’s not possible to drink and chat at a friend’s house without breaking the law. In other words, the F&B sector and wine retailers are in the same boat suffering from a downturn. All in all, the pandemic has huge impact on the wine industry in every sense.” JJ admitted that his wine business has dwindled by 30 to 40% amid the andemic. But cleaning and disinfectant products brought in more sales to cover his loss. All in all, his revenues have been stable.
Online shops entail less initial capital investment. JJ says it’s possible to start an online shop with HK$10,000 or less. Running costs such as salary and inventory can be handled flexibly. He encourages young people to give it a try.
“If you have a full-time job, you can run an online shop as your side business after work. The opportunity cost is rather low. Online shoppers are also more open-minded than traditional customers. As long as you have a good idea, your business can stay afloat even by selling outlandish and hard-to-find items.”
However, he also warned young people with entrepreneurial ambition about the three potential pitfalls of opening an online shop. Many people were not aware of these issues and may fall foul of the law as a result. First and foremost, do not sell counterfeit products or items that infringe intellectual property rights. Second, strictly follow the requirements of product labelling as stipulated by laws. Third, never sell anything that is illegal. “Such malpractices involve criminal responsibilities and cannot not be settled by money alone. It makes sense to enrich your knowledge in legal context and pay attention to relevant laws and their enforcement. That would save your company from breaking the laws.”