Grocery delivery provides food for thought for HK startups

US online shopping behemoth Amazon made headlines when it made a big push into the grocery business by acquiring Whole Foods Market - an upmarket operator with more than 400 stores across the United States - for $13.7 billion.

The transaction, if it goes through, could transform the US grocery industry currently dominated by Walmart with a 25.3-percent market share.

In Hong Kong, the news has been of interest only to global investors with a portfolio of US stocks. But, it shouldn't be that way because Amazon's latest buy has raised the question why Hong Kong has fallen so far behind in retail technology.

For years, consumers have complained about the almost total dominance of the local supermarket business by Wellcome and Park n'Shop, which are separately owned and run by powerful Hong Kong conglomerates. The lack of competition has given rise to widespread suspicion that the two chains are able to set prices to achieve profit margins that are bigger than those of supermarkets in other economies.

Consumers, however, continue to shop at these stores for the sake of convenience. There's always a store, or more, of either chain within walking distance in almost every neighborhood. There's a Park n'Shop superstore, plus two Wellcome outlets, near where I live.

Both chains offer delivery services to customers, but the choice of items for delivery is limited. If a consumer can't find an item at one store, he or she can go to the nearest one. So, why bother ordering groceries in the first place?

Apart from the two leading chains, there're other supermarkets like City Super and Sogo that offer a wide range of upmarket goods to cater to middle to upper middle-class families. But, all their stores are located in just a few commercial districts. It'd be so nice if consumers can pick up products from these stores and have them delivered to their homes.

There's a growing number of startups providing such a service in major US cities. You can bet that Amazon will take such a service to an even higher level when it completes the purchase of Whole Foods.

Young Hong Kong entrepreneurs are said to be constantly seeking new ideas to start their own business. Grocery delivery is something they can consider as they don't have to compete with any industrial dreadnaught like Amazon, at least, for now.

(HK Edition 06/23/2017 page1)