Saturday, May 17, 2003

Auction action

GOING ONCE . . . a signed promotional poster of Joey Yung (bids start at $30); Going twice . . . a floral vase which 'might be antique' (open at $50); Gone . . . 'your lover' (upwards of $100,000). These are the types of goods and services you stumble on while surfing Hong Kong's thriving Internet auction sites. While many Americans are addicted to eBay, the growing fascination with cyber wheeling-and-dealing in Hong Kong is a lesser-known phenomenon. Yet sites such as Red-Dots, HK.Auctions and Go2HK are filling the local niche for new and second-hand clothes, cameras, books and, well . . . junk.

According to Nielsen/NetRatings, which monitors Internet use, auction sites are pulling in up to twice the number of bargain-hunters than this time last year. Adding to the trend is an overall Internet shopping boom, since Sars forced Hongkongers off the street and into the safety of their homes.

In April, Hong Kong shopping sites were visited 1.1 million times by home Internet users, behind news and education sites with 1.5 million and 1.2 million visits respectively, but ahead of banking and travel sites, which attracted 600,000 and 271,000 visits. By far the most popular shopping site was Yahoo, with 430,000 visitors.

'April was the first 'full Sars month' and traffic increased dramatically as surfers explored sites they wouldn't normally visit,' says Peter Steyn, director of sales and marketing for Nielsen/NetRatings. 'There was a clear sign that people were surfing the Internet as a substitute for activities that would normally take place away from home.' The average time users spent online increased from 15 hours 12 minutes in February to 22 hours 39 minutes in April.

Yahoo's own figures suggest that since the Sars outbreak in March, many window-shoppers have made their first online purchases and existing customers are spending more. While site visits are up 20 per cent, transactions have soared 70 per cent and revenue 80 per cent, according to business development manager Arthur Chow. 'People are getting used to the online shopping experience,' says Chow. 'Whether Sars will permanently change shopping habits is too early to tell, but making their first buy is a step in the right direction.'

According to Neilsen/NetRatings, auction sites sell more than direct online retailers. In April, Yahoo subsidiary HK.Auctions was the biggest draw, having doubled its home-viewing figures to 130,000 since the same month last year. Next came Red-Dots (122,000, up 35 per cent), eBay (119,000, up 98 per cent) and Go2HK (105,000, up 47 per cent). Of these, all but eBay are locally based sites, where people meet and make deals.

'A lot of people in Hong Kong look for special items or good bargains,' says Chow. 'My guess is that they also have more spare time, considering the high unemployment rate. Also, many jobless people are setting up small merchandising businesses via auction sites, as happened in the US.

Alan Chow of Go2HK agrees. 'Most Hong Kong people are money-sensitive with sound business minds. They know how to earn money by buying at a low price and selling [on] at a higher price.'

The city's faddish consumers also want the latest mobile phone, or this season's fashion, which creates a large pool of second-hand goods, he says. The fact that Hong Kong is relatively small also means buyers and sellers can meet personally to trade goods rather than do so by mail, increasing the chances of a fair deal.

However, while Americans trade across cities thousands of miles apart, Hong Kong's unique cultural, political and economic structures mean people cannot trade easily with Taiwan or the mainland. 'Hong Kong is still a standalone city of about two million Internet users,' says Chow. 'Most auction players here only trade with others from Hong Kong.'

Although popular here, eBay has no Hong Kong-based site, as it does in Taiwan, Singapore, South Korea and on the mainland. 'In Hong Kong, our members range from individuals looking for rare items to small businesses trying to find a global audience for their products,' says Chris Donlay, eBay's senior director of communications. But Nielsen/NetRatings' Steyn says regular shopping sites may have a hard time sustaining this recent growth. Although niche products may do well (popular buys from overseas sites are books, CDs and DVDs unavailable locally), low-end local retailers, such as supermarkets, may struggle. Says Steyn: 'Convenience is not a reason in Hong Kong because everything is already convenient. Catalogue shopping is non-existent, so why go online? People like to go to stores and look at different products.'

Security can be a problem with Internet transactions. Yahoo and Go2HK say they have a strict privacy policy and secure systems, but a fear of being ripped off remains. 'We have to overcome the barriers that exist. People are wary of buying online with their credit cards,' says Steyn. 'Retailers and banks need to assure people that electronic transactions are safe by providing guarantees of maximum liability in case of overcharging, or a customer's card details being stolen. This is where the Sars-enforced trend to shop from home may help. Web site owners will be able to show customers doing their shopping online that their credit card has not been overcharged.'

The Sars-led Internet boom is a golden opportunity that probably won't happen again, says Steyn. 'Site owners have to make sure the online shopping experience works for people, so they will come back.'

Additional reporting by Hannah Lee

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