Local clothing retailers are set to take another hit as mainland China’s leading online shopping platform Taobao will ship apparel items for free to Hong Kong, Macau and Taiwan from next month.
The “Global Free Shipping for Clothing” programme will first cover the three markets in August, with Taobao aiming to expand it to Australia by the end of the year and gradually go global.
According to Taobao, there will be no delivery charges on orders from Hong Kong with a total amount of 99 yuan or HK$107 (US$14) or more, beginning on August 1.
It also highlighted a “zero returns and zero refunds” policy, saying it would deal with any returns and further costs beyond the expense that merchants incurred from sending items to the firm’s mainland warehouses.
The free shipping service mainly covers 16 types of men’s and women’s clothing, including shoes, handbags, sports shoes, outdoor bags or accessories.
Industry players and representatives urged local retailers, which have already suffered losses with increased cross-border spending, to enhance their services to retain customers.
Hong Kong lawmaker Peter Shiu Ka-fai, who represents the wholesale and retail sector, expressed concern but urged shops to maintain their competitiveness and improve customers’ experiences.
“High rent and labour costs have already made it difficult for Hong Kong retailers to compete on cost,” said Shiu, chairman of the pro-business Liberal Party.
“But our advantage is that Hong Kong is a compact place, one can go down the streets to buy clothes or other products without having to surf online to choose and then wait for delivery.
“The important thing is that our service at shops should be good. I believe there are many customers who won’t mind paying a bit more for the same product if they have a better customer experience at shops.”
His views were echoed by economist Billy Mak Sui-choi, associate professor at Baptist University’s department of accountancy, economics and finance.
“Technology has had a huge impact on customers’ shopping behaviour. Online shopping allows customers to buy goods instantly by just sitting at home, instead of wasting time travelling to the retail market and standing in long queues for payment,” Mak said.
“However, online shopping offers zero service. For clothes or fashion, customers may want tips from shop assistants about fitting, styling, or alteration services. These can only be possible via on-site shopping.”
Mak said he believed retailers who would be hit hardest by the online shopping giant’s new service were those who bought items from Taobao, then resold them locally at jacked-up prices.
“If these shopkeepers cannot adapt to the new era, they are bound to be outcompeted,” he said.
Hong Kong’s retail sales dropped 11.5 per cent to HK$30.5 billion (US$3.9 billion) in May from a year ago, marking the second consecutive month with a double-digit decrease.
The government attributed the poor performance to changes in the consumption patterns of visitors and residents, as well as to the strength of the Hong Kong dollar.
The city’s retail sector has been hit by the trend of Hongkongers spending more across the border on the mainland or in other countries.
Taobao’s model is built on the company heavily subsidising shipping fees.
Apparel merchants on Taobao can directly sell items to consumers worldwide by joining the free-delivery service, which aims to sharpen the e-commerce platform’s competitive position against other fast-fashion giants such as Temu and Shein.
Taobao is owned by mainland-based Alibaba Group, which also owns the South China Morning Post. The group is China’s biggest e-commerce company, with holdings in a wide portfolio of businesses from logistics, cloud services, and finance to media.
