Dropshipping in Hong Kong has gained popularity in the last decade is still remains competitive in 2022 due to Hong Kong’s strong internet and phone usage, speedy shipping routes, easy tax structure, and free-market economy. Apart from that, Hong Kong also has the fourth largest harbour in the world, allowing for quick shipment to dropshipping customers.
If you are planning to operate a dropship in Hong Kong, we have good news for you as dropshipping in Hong Kong is not difficult to start, but it is also not easy. Our guide below covers all the basics of what drop shipping in Hong Kong is all about.
WHAT EXACTLY DOES DROPSHIPPING MEAN?
- Dropshipping is when you sell your customers’ items through your own established website but don’t necessarily have them in stock. Once an order is placed, the store will contact the supplier to purchase the goods and dispatch them to the customers.
- Simply put, it is a retail fulfilment where the store’s requirement to hold the merchandise is eliminated. As a result, when adopting the dropshipping model, a product is purchased from a third party and supplied directly to the client. The seller is not required to handle the merchandise directly throughout this procedure.
- One of the primary distinctions between dropshipping and the traditional retail model is that the selling wholesaler does not stock the items or maintain any form of inventory.
- The dropshipping company’s owner acquires merchandise from a third party to fulfil orders.
WHAT ARE THE ADVANTAGES OF DROPSHIPPING IN HONG KONG?
There are a lot of advantages of doing dropship in Hong Kong. We have summarized the main ones which can be seen below: –
A thriving retail culture
- Before the eCommerce boom, Hong Kong was already a city with retail complexes. Being surrounded by a complex of stores and kiosks, as well as having 24/7 access to ATMs, it has undoubtedly influenced the way Hong Kongers spend their lives.
A business-friendly setting
- Hong Kong offers various benefits to companies wishing to establish a presence in the city-state. This manifests itself in the shape of a well-established rule of law, a free economy, and a well-constructed IT infrastructure.
- Right away, Hong Kong has a distinct geographical advantage in that it is adjacent to China and is a well-known commercial centre in the worldwide community.
- Furthermore, a large number of suppliers are located in China, making starting a dropshipping business much more feasible. And, because the vast majority of items on the market are made in China, you can expect super-fast shipment, generally within 5 days.
Cutting-edge technology and IT infrastructure
- The only other rivals in the region are South Korea and Singapore, both industrialised countries. Aside from the fast Internet and a well-optimized telecommunications system, Hong Kong does not lag in other IT fields. Hong Kong’s newest extended reality is at the forefront of experimental technology.
- The technology, which is a more advanced kind of virtual reality, promises to create a next-generation user experience in which clients may try on garments and enjoy hyper-realistic house tours overseas. Shop owners may vary their marketing materials using 5G technology, incorporating more interactive information into their campaigns. Not to mention the obvious increase in conversion rates now that your consumers can go through all of the checkout sections in a couple of seconds.
HOW DO I START A DROPSHIPPING BUSINESS IN HONG KONG?
Among the key aspects that you will need to know if you are planning to start a dropshipping business in Hong Kong are as follows: –
Select your goods
- Dropshipping is wonderful since it’s not only simple to get started, but it’s also a good method to test the market for any items you want to sell. You might approach this as someone who wants to sell the most popular things or as someone who wants to make a reputation for themselves in specific areas.
- Several approaches to this may be taken. Keep an eye out for things that function well and aren’t always seasonal.
- Selling novelty products such as toy figures and collectibles, on the other hand, is ideal if you want to play on your consumers’ nostalgic and sentimental impulses. In this regard, there are a few factors you should consider while selecting your product.
(a) Transportation and shipping costs
- Choosing a product that connects with your customers is one thing, but ensuring that it travels safely to its intended destination is another.
- Shipping expenses may eat up a significant portion of your sales margins for bulky items like exercise equipment or home entertainment equipment. Most of the time, the issue isn’t the weight of the item, but rather how much room it takes up in a vehicle.
- In other words, the carrier company makes less money the more space your things take up in a vehicle. As a result, it is now usual practice in the business to impose fees depending on whatever generates the greatest revenue, “actual weight” or “dimensional weight.
(b) Popular market segments
- The most popular niches in Hong Kong include clothes, innovative and original items, home appliances, and leisure tools.
- People in nations where drop shipping is popular are always seeking attractive garments and accessories to add to their collection.
- The fashion industry alone is worth a massive US$2.3 billion now, with a projected increase of US$3.36 billion by 2025.
Identify a supplier
- We shouldn’t overstate the significance of this stage because it’s essentially the primary factor that makes this model operate in the first place. When procuring from Mainland China, you’ll come across two sorts of suppliers: Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM).
- OEMs today have the tools and skills to create your product in any shape or design you may imagine. As for you, make sure you’ve done your market research and have a finalised plan, or better yet, a functional prototype.
- ODMs, on the other hand, are more of a one-stop shop which is appropriate for inexperienced entrepreneurs trying to bring their products to market as soon as feasible.
Choose your selling platform.
- This is another critical stage in which you must select whether to sell on your website or an eCommerce marketplace.
- It’s a smart idea to develop your own website if you want to establish a long-term brand identification for your organization. The main advantage is that you have greater control over how your shopfront looks and feels.
(b) Marketplace for eCommerce
- Customer acquisition, which is both costly and time-consuming, is one of the most difficult obstacles for a new dropshipping company to overcome.
Establish your company
- Dropshipping is a trade operation in Hong Kong, thus, you must register as a trading firm. A private limited company is the most typical business type to choose because it provides a well-balanced blend of liability protection and tax efficiency.
- After gathering all of the required papers, submit an application form to the Hong Kong Companies Registry. Upon completion, you will be issued a Certificate of Incorporation, indicating the formal start of your firm.
- Under the import and export registration rules, all items and commodities, unless exempt, must file an Import/Export Declaration. It must be filed with the Commissioner of Customs and Excise within 14 days after the importation or exportation of the goods or articles.
Relin Consultants have helped numerous clients in their efforts to establish themselves as successful dropship entrepreneur in Hong Kong. If you are interested in doing the same, give us a call at +65 8756 2027, and our consultants can guide you.
Check our Hong Kong Company Registration Page for more details.
1. What are the popular eCommerce platforms for dropshipping?
As of today, there are a lot of eCommerce platforms that are rising in popularity. The following are some of the most prevalent.
Taobao, China’s largest eCommerce website, was started in 1999. Alibaba owns the platform, which is frequently utilised by purchasers throughout China.
Alibaba created Tmall in 2008 as a spin-off of Taobao for merchants of higher-end items. Tmall has developed tremendously since then and is now the second-largest eCommerce website behind Taobao.
Zalora is an e-commerce platform and website that sells clothing and footwear. It offers apparel and footwear from well-known brands such as Mango, Nike, Puma, Casio, Calvin Klein, Levi’s, and many more.
Shopify allows novices (as well as professionals) to construct online businesses without the need for coding. There is no need for software installs or hosting services. As a result, it is ideal for dropshippers.
2. What are the challenges in drop shipping to Hong Kong?
As with any dropshipping business in a different nation, a language barrier may exist. However, by ensuring that your website is available in both traditional Chinese and English, you will be able to target Hong Kong shoppers.
Distinct shopping traditions
It is also important to ensure that you grasp the culture of any place, including Hong Kong, if you are considering dropshipping there. High-net-worth individuals in Hong Kong tend to spend on edgy and high-tech things, often known as identity and ostentatious consumerism.
3. What is the type of business structure available for a dropship company in Hong Kong?
It is the most basic and controllable type of company. You are the only one who owns it, and you are the only one who is responsible for it. It consists of you, the owner, and your employees.
This type of Hong Kong business corporation is an organisation of two or more people who work together as co-owners of a profit-making enterprise.
Limited liability company (LLC)
The most frequent company structure in Hong Kong is the Hong Kong Limited Liability Company. It is a distinct legal entity that protects personal assets from the responsibilities and hazards of the company.