PCCW quietly builds e-commerce platform Habbitzz to rival HKTVMall

PCCW has been in stealth mode for the past nine months prepping the kickoff of a new B2C e-commerce platform, Habbitzz.

An independent business unit under PCCW Solutions (the IT and outsourcing-services division of the conglomerate), the company took the name Habbitzz because it wants Hong Kongers to kick their old, more traditional habits of shopping.

Alex Bono, who wears two hats as CEO of Habbitzz and senior vice president of ecommerce at PCCW Solutions, runs the unit as a separate, low-profile startup out of a co-working space.

To be launched on March 6, Habbitzz has gathered 15,000 SKUs from over 1,000 international brands in these categories: electronics, babycare, alcohol, fashion and beauty, sports and lifestyle, and travel. This time next year, the goal is to have 100,000 products and services, with a broader O2O strategy in the works by 2019 or 2020.

Alongside the main business of Habbitzz Retail (webstore reselling products from both mainstream and niche merchants) are two other business lines: Habbitzz Express (warehouse and logistics support) and Habbitzz Services (CRM, data analytics and payment gateway technology).

The double letters in the Habbitzz name, presumably for SEO ease, are an example of 'leetspeak', online jargon in which certain letters are modified with phonetic or visual replacements. That may seem odd, given that the site will prioritise prestigious and high-quality goods. But leetspeak is also originally a hacker's vernacular form of 'elite', so it is perhaps still fitting for Habbitzz's premium positioning. 

"We just wanted to deviate from the usual spelling of 'habit' to make it more memorable and special. Especially when the word 'habit' feels a bit mundane to a consumer," explained PCCW.

The task of exciting consumers enough to shop on Habbitzz will be left to in-house digital marketers, as the company has no intention of appointing an ad agency, apart from Lion & Lion focusing on search engine optimisation, and a yet-unknown PR shop still being pitched for.

"We have designed our marketing to be agile and always ready to get plans cancelled," said Bono, highlighting how PCCW allowed Habbitzz to have "more freedom to execute at speed".

"One year in this startup will be like five years in a corporation like PCCW that is used to big, finalised products," described Bono. PCCW tried to grow e-commerce in "a corporate way" before this, playing in the enterprise space through its 'e-commerce-as-a-service' package.

In Nov 2015, PCCW Solutions also ventured lightly into e-commerce logistics. With LTF Asia, the companies jointly launched a network of automated lockers, called House of Parcels, to store online orders temporarily before customers picked them up.

Habbitzz is a much more full-fledged venture. Bono has hired almost 100 employees based in Hong Kong and the Philippines in all manner of expertise, from data scientists, software engineers, merchandisers, product managers, search engine technologists, UX/UI gurus, to design thinking specialists. 

This move by PCCW is Hong Kong's second example of a conglomerate with interests in broadcasting and telecommunications now branching out to e-commerce for alternative revenue. "Telco subscriptions have limited growth in Hong Kong, while overseas acquisitions are costly," Bono told Campaign.

Habbitzz's main rival on the local scene, HKTVMall, obtained the first-mover advantage when it launched during 2015 with an unprecedented, splashy HK$30-million MTR media placement. Today, HKTVMall gets 7,600 daily orders, raking in an average of HK$537 per order (as of December 2017) from 180,000 products out of 2700 brands. 

"I'm thankful that HKTVMall is like a 'partner' in this e-commerce journey," said Bono, while saying that a rising tide lifts all boats, also drew attention to HKTVMall's push of low-ticket items like groceries.

Less than 40% of HKTVmall’s sales are of supermarket staples, notes Jelly Zhou, HKTV’s managing director of shopping and e-commerce in this report, and additional growth is expected in other product categories like electronics.

"There will be categories in which Habbitzz will overlap with HKTVMall, but we aim for premium positioning, emphasised Bono. "Think of us as the Amazon of Hong Kong, but remove all the low-end products. We will definitely not hold any cheap brands." 

Outside Hong Kong, no single retailer 'owns' the e-commerce landscape, but at least shoppers are offered options. In Singapore for instance, "Lazada means higher-end goods, and then Qoo10 is slightly more dodgy", said Bono, who spent part of his career in the city. "But Hong Kong's e-commerce scene is very poor."

To improve the scene, Habbitzz wants to start with product recommendations triggered by holiday festivities, different days of the week and timings of the day. 

Ultimately, it will work towards providing personalised curations after learning about purchasing habits through big data.

Will data from PCCW divisions, like viewing history from Viu or NowTV and mobile locations tracked by HKT or CSL be leveraged to get folks to shop more? No confirmations yet, as Habbitzz says it's currently finding ways to partner up with PCCW's extensive media and telco arms, but working with The Club on reward points is probable.

One of the most dissuasive factors putting HKers off online shopping, according to a November survey by KPMG, GS1 and YouGov, relate to unbearably long delivery times and costs, especially given such proximity to brick-and-mortar stores.

"Three-day delivery is really nonsense, so we are aiming for same-day or even a four-hour delivery window for Habbitzz," stated Bono. Complacency has been the cause of such slow delivery in the past, he said.