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Mobile commerce (M-Commerce) is the latest frontier in the world of online retailing in Hong Kong, where purchases through smart phones have already grown exponentially.

The special administrative region has been described as one of the most ‘mobile-centric’ markets in the world, where many locals have two or three devices – an iPhone, Samsung Galaxy Tab and a tablet.

Official statistics, published by the Office of Communications Authority, show that at the end of March 2013 there were 16.4 million mobile subscribers with a mobile penetration rate of 228.4 per cent.

One prominent market research firm, Nielsen Hong Kong, published a survey last October showing M-Commerce rose 444 per cent in 2012 to $HK6.4 billion, from $HK1.5 billion in 2011. It is expected to hit $HK17.8 billion by 2015.

The survey also found that the number of consumers who purchased items through a mobile device nearly tripled in size, from just 376,000 last year to 1.1 million in 2012.

In June, a GfK Retail survey found that one third of online shoppers spent around $HK200 to $HK499 during each transaction, mainly on clothing, accessories and shoes. More than 80 per cent of online purchases are for items, costing below $HK1000. The ten top items bought online include books, airfares, hotels and electronic products.

Meanwhile, the Hong Kong Trade Development Council cites the example of companies like photo-finishing chain Fotomax, that has a mobile printing app which allows customers to order prints online without having to physically go to the shop until pick-up time.

Elsewhere, coffee retail chain Pacific Coffee Company launched its iPhone app last year to allow customers to pay for items by scanning a QR code at the counter.

The phenomenal growth of M-Commerce poses a challenge to Hong Kong's 300,000 SMEs. They have to figure out a way to utilise this new channel of sales and distribution.

“Hong Kong's younger generations are the most adapt online purchasers,” says Andrew Davis, associate director at Invest Hong Kong, a government agency charged with encouraging foreign investment into Hong Kong. Some 50 per cent of these so-called ‘digital natives’ shop online.

Davis says a recent Asian Digital Marketing Association survey found the 25-45 age group made 35 per cent of its purchases through mobile phones. The percentage falls away to nine per cent among those aged 55-64.

Davis believes that this could change as the older generations, who are more likely to be using an older model mobile phone, upgrade to a smart phone.

"Mobile websites provide the bridge from websites to mobile technology," adds Terry Wong, vice president of productisation at Exicon, in Hong Kong. (Exicon is the App LifeCycle management company that simplifies the creation, deployment and management of mobile applications).

Wong says mobile websites provide an option to an SME on a low budget to expand their reach without a mobile app. “Apps can be developed from $US500 using a template approach”, he says, “but typically you would expect $US20,000 – $US50,000 with apps of $US100,000 not unusual as you get deeper integration into legacy systems.”

A mobile website provides functions such as search, mapping and directory, and this is sufficient for mobile users looking for "casual engagement" with a business.

Tech-savvy business owners can develop something close to mobile websites that deliver the native mobile experience by drawing on features, now available in mature toolkits such as jQuery Mobile.

Available products, such as Passkit, provide an affordable way for businesses and developers to create, distribute and manage coupons, tickets, store cards, membership cards and much more for Apple Passbook.

But mobile technology experts agree that if an SME is seeking "quality engagement" with its customers, then the mobile app is the way to go. US statistics show that more than 80 per cent of mobile users prefer apps over websites, but the preference for apps over mobile websites is not so strong in other markets.

"We generally say that an app exists to promote loyalty so that customers can have an ongoing engagement with you," says Wong.

Quotes:

"There has been a big shift to responsive design websites. Business owners are starting to understand that this is where technology is going." - Art Lee, Passkit.

Quote:

“Tech-savvy business owners can develop something close to mobile websites that deliver the native mobile experience by drawing on features, now available in mature toolkits.” - Terry Wong, Exicon

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