Hong Kong’s online food market is a challenging sector posing tough barriers to entry.
Setting up business in what is essentially an emerging marketplace against the backdrop of Hong Kong’s highly-developed economy brings about marked complexities in terms of the technology, logistics, the issue of food storage at appropriate temperatures, the digital platform, expiry dates, nutritional labelling compliance, approvals for restricted products, and so many other hurdles that make this sector particularly difficult for a new business to get right.
The launch of British Essentials earlier this year under MD Faraz Amir is a bold play in the online grocery sector that seems to have been very much worth the effort, going by the almost universally positive customer feedback the startup has received thus far. British Essentials occupies a very tight niche within the industry – strictly British-only products, with the key business relationship being its exclusive arrangement with UK supermarket brand Morrison’s as its first international distributor.
According to Amir, the focus on a single central brand gives British Essentials a unique competitive strength – instead of bouncing 40 or 50 different brand offerings against each other, Amir’s model allows the level of attention needed to effectively concentrate on a single product range, creating the maximum impact on the site’s target market.
“We had space on our platform to have one brand that we would work with on an exclusive basis, in addition to the branded groceries that we would be selling,” says Amir. “We pitched to a number of retailers in the UK, and after due diligence on both sides, we decided to proceed with Morrison’s. So British Essentials, as of now, has exclusivity on Morrison’s brand groceries in Hong Kong.”
British Essentials launched with a very broad selection of Morrison’s products so as to capture a wide consumer base right from the outset. Preparations were extensive – the project had been in the pipeline for three years before opening for business in May, allowing sufficient time to make an optimum product selection and obtain all the necessary permits.
The platform itself took two years to develop, based on eBay’s open-source eCommerce platform Magento: “Anybody can use Magento, there are no licensing costs,” explains Amir. “But what you have to do is to make the front end talk to the back end of the website, and that’s where the complexity comes in. The reason it took so long to build is because every single page of the website has been well thought through, with the end user in mind. We were aware of issues with current websites and we have tried to make sure that we don’t stumble across those on ours.
“So in terms of usability, we have made sure that we provide Western user-friendliness within a website that’s going to be used in Hong Kong.”
Keeping it in-house
The business concept has its origins in Amir’s own observations as a British expat in the region for over a decade, during which time he saw how difficult it seemed to be to buy quality UK groceries with home delivery services available at an affordable price. In the interests of making this process as straightforward as possible under his own site, he has tried to keep a very close rein over every function of the business.
“One of the things in Hong Kong is that if you outsource anything, you lose the quality of service, the quality control on anything and everything you try to do,” he says frankly. “So we try to do everything in-house. We prefer to spend more money to make sure the issues are minimised, so the customer gets the right product at the right time and at the right price.
“We’re trying to do 90 per cent of the business in-house at the moment; only 10 per cent is outsourced, which we are going to be bringing in-house in 2018 when our new logistics facility is all built out.”
The hands-on approach has allowed for special attention to a particular Achilles’ heel for Hong Kong’s online retailers – the issue of fulfillment times, especially considering Hong Kong’s administrative restrictions in terms of traffic and routes and the impact this has on route planning. British Essentials allows purchasers to select a delivery date out of a number of available slots, with next-day delivery an available option for orders placed before midday.
“We’ve made the experience very user-friendly for the customer,” says Amir. “You can select which delivery date, out of the available slots, you want your order to be delivered in, and in addition to that, when you’re checking out it will ask you if you have any special requirements for delivery. You can put those in there and we will follow up before delivery and make sure that we can accommodate the customer’s requirements.”
With business so far going according to plan, British Essentials is quietly consolidating its product range stage by stage and making the necessary preparations to expand its offer. And while the nature of its relationship with Morrison’s is so focussed on online technology that for the time being there are no plans to branch out into physical stores, the long-term potential of such a move is not being ruled out.
“I think the thing that we compete on is quality of service,” muses Amir, “which is very important in Hong Kong. Whether it’s the website, whether it’s the product range, whether it’s the quality of service, you have to think from the perspective of your customer – and that is what we have been doing from day one, working very closely with Morrison’s in building this.”
