This Hong Kong Startup Uses Technology To Change Everyday Grocery Shopping

Despite being one of the financial capitals of the world, Hong Kong has traditionally lagged when it comes to cultivating game-changing startups. Among the list of reasons for this includes the high cost of living, lack of government support and an immature ecosystem to retain talent. One commonly overlooked deterrent is the fact that Hong Kong, by most world standards, is already highly efficient—there simply aren’t many outstanding problems that need solving. Real estate developer-turned-entrepreneur Clarence Ling was fully aware of the challenges that Hong Kong presents for an aspiring startup founder, but instead of leaving the city he stayed and took on the challenge.

“Hong Kong people, in general, in my point of view, are still stuck in the era of our most glorious days—back in the ’80s, ’90s, even 2000s. And most successful people are from real estate and finance in Hong Kong. The younger kids, teenagers, they have someone new to look up to—be in Pony Ma, Jack Ma from China or Jeff Bezos, Elon Musk—in Hong Kong, we’re still talking about Li Ka-shing. It hurts me.”

Ling, is the cofounder and chief development officer of Ztore, a Hong Kong-based e-commerce startup selling groceries. Ling has a broad entrepreneurial and investing background. Apart from managing Kwai Hung Group, a private property development company, he’s also helped dozens of overseas companies to expand in Asia, and he’s also an active investor in more than 20 startups globally, including Lalamove, which is either at or close to becoming a unicorn.

In late 2014, after recognizing that the B2C landscape in Hong Kong was reaching a tipping point, Ling and his cofounder stumbled upon a Singaporean e-commerce company called RedMart. Ling immediately recognized that the websites of the traditional brick-and-mortar grocers in Hong Kong were antiquated at best and in dire need of an upgrade. Despite pushback from friends and family, he decided to press forward and jump headfirst into launching Ztore.

“Rental in Hong Kong is very, very expensive, compared to Singapore,” Ling says. “A lot of investors actually were quite shocked that we chose an online supermarket as an entry point rather than doing electronics or fashion—these with much higher margins. But we thought if we wanted to change the customer behavior, we had to pick something that affects Hong Kong people’s daily lives.”

Ztore, comes from the Chinese pronunciation of the word “store.” Hong Kong, as a former British colony, has a lot of unique words derived directly from the English language. Pronounced “Zee Tore” the company represents old Hong Kong, with a name relatable to both mom-and-pop store owners and their patrons alike.

E-commerce company with character

Right from the start, Ling and his team knew they wanted to create a platform that included mass products and big brands, but also one that supported Hong Kong’s local and traditional brands. Since all the big in-store brands were already being serviced by the larger conglomerate-owned grocers, Ling’s strategy was to target and represent the smaller brands. Ironically, it was these same traditional mom-and-pop retailers, most of whom were unfamiliar with online commerce, that gave his team the most pushback at the onset.

“The biggest reason we chose Hong Kong is because in terms of retail,” Ling says. “Hong Kong offers the most talent—traditional retail has been very strong, because the switching cost of Hong Kong customers is very high, and the loyalty is there. The strategies that the mainland Chinese companies that have been doing in the past five, seven years, would never be sustainable in Hong Kong.”

Persistence quickly paid off, and Ztore’s unique angle supporting Hong Kong locals began to quickly pick up media coverage and traction. In just the first year, Ztore’s growth blossomed, which led to a partnership with SF Express for home deliveries and warehouse operations. SF Express ended up becoming a strategic investor in their next funding round which fast-tracked their growth.

Looking forward and advice to entrepreneurs

Ztore’s vision is to serve Hong Kong customers located anywhere in the world. The company recently launched a new business line called Neighbuy, a community collective buying model that offers groups of buyers discounts at different local mom-and-pop retailers which in turn drives previously unseen traffic to the stores. With over 50 shops already signed up for this new offering, Ling is optimistic on the growth of the new segment. As for aspiring entrepreneurs in Hong Kong looking to build a startup, Ling highlights the importance of being realistic with the city’s total addressable market size.

“Just focusing on Hong Kong on a specific vertical would be too small. The reason we are focusing on Hong Kong is that we are expanding horizontally to other products and services, and the Hong Kong retail market is $50 billion a year, and that’s not a small market,” Ling says. “And the e-commerce/online sales market share is only less than 4%, 3%, and we feel that there’s a lot more room for growth. If you look at neighboring markets like Taiwan, Singapore…Taiwan is almost 20%.”