Ricky Wong eliminates a distraction from his HKTVmall venture

March 28, 2018 14:37
Having given up his TV business ambitions, Ricky Wong can now devote all his energies to boosting the prospects of his e-commerce operation. Photo: Bloomberg

Telecoms and media entrepreneur Ricky Wong has finally abandoned his pursuit of a free-to-air TV broadcast license in Hong Kong, a decision that will allow him to step up focus on his e-commerce business.  

Wong, the founder and chairman of Hong Kong Television Network (HKTV), announced Tuesday that his group will withdraw its free-TV license application following an unsuccessful quest that stretched more than eight years.

As there has been no positive response from the government, HKTV decided to end the chase for the traditional broadcast license, Wong said during his firm's annual results news conference. 

Also, HKTV will surrender its existing mobile TV license to the Communications Authority and halt the service, he said.

The moves bring to close Wong's TV ambitions, allowing the tycoon to now devote all his time and resources to strengthening his HKTVmall business that was launched three years ago. 

With a major distraction out of the way, Wong can focus more on boosting the online shopping platform that holds good promise yet faces a lot of challenges

HKTV needs to improve its financials after suffering steep losses in recent years. The company announced Tuesday a net loss of nearly HK$205 million for 2017, after posting a HK$257 million loss in the previous year.

The e-commerce business is bleeding cash but Wong expressed confidence that the situation will change going forward.

Given his forays over the years into telecoms and media ventures, Wong can indeed leverage his experience, including the lessons learnt during the abandoned TV business, to boost his online shopping platform.

According to the results announcement Tuesday, HKTVmall saw gross merchandise value, a gauge of products and services sold on the platform, jump 218 percent to HK$1.07 billion.

In the year ended December, 477,000 unique customers made purchases on HKTV platforms and the average spending per order was HK$536. 

Wong admitted that the online mall made losses as it fulfilled orders, but said break-even will come if the company manages to boost the order volume and lifts the profit margin.

In his statement accompanying HKTV's 2017 results, Wong suggested that he finds that running an online shopping mall business is more or less the same game as what he experienced during his forays into the telecoms market in the past, which included an IDD and broadband business.

He said he is confident his telecoms experiences over the last three decades will prove useful in his current online shopping venture, adding that investors can expect a better future for his firm.

HKTV believes it can move into the black if it manages to boost revenue three-fold from current level and lift the gross profit margin to 30 percent level. Wong noted that higher transaction volumes will bring down costs.

In order to keep costs down, HKTV has invested in automatic and robotic technology for inventory management. The company spent more than HK$170 million on a German developed system for picking orders automatically.

The whole system will be fully in place by late 2019, which can help HKTV handle more orders simultaneously and improve customer experience in terms of delivery.

What Wong and HKTV will focus in the near future is online and offline integration, which is key to the company's success in the local retail sector.

One of the interesting points Wong mentioned relates to HKTV’s decision to have its own logistics and delivery team, in contrast to other online shopping service providers who are outsourcing the "last mile" to third-party courier firms.

Wong said having an own logistic team is good for brand building as HKTV’s trucks and the delivery team members get noticed while delivering the orders across Hong Kong, putting a human face on the online firm.

HKTVmall will continue to invest in building its own delivery team. Currently, the group has around 180 to 200 delivery trucks in operation daily. The truck number will be increased to 500 in the coming three years to cope with business expansion needs.

In addition to boosting the number of trucks, Wong plans to further penetrate into residential areas to establish closer ties with customers, just like what he had done in laying fiber network within residential buildings to provide high-speed broadband a decade ago.

HKTV currently has 15 concept shops in selected residential areas for orders pick-up. The shops also serve as marketing tool to attract customers to try shopping online. HKTV said it is evaluating an expansion plan for the O2O concept shops, as they have "pivotal influence" on online business development.

According to the company, it has noticed that when a new O2O shop is opened, it results in a surge in business from the neighborhood area.

The shops are no doubt an effective marketing tool, but HKTV will have to plan them carefully to keep the rental expenses in check. 

Wong has said HKTV may take less than seven years to break even, but it remains to be seen if his targets would be met.

Apart from the group's own efforts, a lot would depend on whether Hong Kong people will transition to online shopping in greater numbers and whether traditional retailers will remain content with their existing business practices.

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EJ Insight writer