27 February 2017

Case study – Big data: a media buzzword or something carries substantial meaning for Hong Kong SMEs?

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South China Morning Post Tech News Team

SMEs start to gradually adapt to this new “big data world”

If you live in the 21st century then liking your friends’ Facebook posts might be one of the first things you do after waking up in the morning.

But it might never occur to you that the simple actions such as liking a post, staying long on a web page or searching for hotels far away from your current location can all be collected by companies that want to make money out of you.

That include the 320,000 Hong Kong small and medium enterprises (SMEs), referring to companies that have less than 100 employees according to the Hong Kong government’s definition.

Hong Kong SMEs are an essential part of the city’s economy, as they account for nearly 98 per cent of the total business units and offer jobs for more than 1.3 million residents of the city.

Although lots of them, who are mostly in manufacturing and retail sector, are still promoting their business using traditional ways such as holding exhibitions and buying advertisements on major TV channels, start to gradually and somehow painfully adapt to this new “big data world”, according to experts from big data application industry.

“When I first started my company in Hong Kong, people totally did not understand what I was doing,” said Francis Kwok Ching Kwong, co-founder of Radica Systems Limited, a big data marketing company headquartered in Hong Kong and has three regional offices in mainland China.

Inspired by Amazon’s renowned recommendation feature that can refer different book to users according to their buying habits, Kwok said he was fascinated by this technology and decided to help companies in Hong Kong to expand their business with a similar strategy.

Having more than 300 enterprise clients at the moment, Radica delivers millions of emails and SMS to help companies do targeted marketing according to its own numbers. They also use data collected from companies’ social media accounts to analyze customers’ behavior, including where they would like to go shopping the most and what web pages they browse more often.

Although only a small portion of Radica’s clients are SMEs, the situation is gradually changing, with more of them being aware of the importance of the use of big data as pushed by fierce competition and a slowing economy, said Kwok.

One of the examples is ASANA, a local cosmetics brand.

They first came to Radica wishing to do  “smarter marketing” for their core product “ASANA No.1” toner, which is being peddled in supermarket chain Mannings’ branches in Hong Kong.

Anki Lam, Manager of Radica’s e-marketing commerce department, said the main approach they use was to extract data from ASANA’s historical statistics collected from the company’s own website and Facebook page, after which the customers’ purchase pattern could be learned and applied for promotion.

Radica also takes a proactive approach to trace potential customers for ASANA and studies promotion strategy through big data. 

For example, Radica would study what age groups ASANA’s customers fall into by checking up the Facebook users who have liked the company’s public face book page, after which they would learn what products customers liked the most and what promotion strategy would suit them the best.

They would also use the data coming from ASANA’s Customer Relationship Management system, to analyze customers’ purchase pattern, such as what products they have been repeatedly buying and what have long been ignored.

“Their Facebook page attracted much more likes after applying our data analysis,” said Anki. The Facebook page of ASANA now has more than 40,000 likes.

In addition to cosmetic products, Kwok said small local bookstores and trade companies also use their technology to lure global customers.

“It’s usually very simple algorithm for boosting sales,” said Kwok, “in one case every time the temperature dropped the sales of a jewelry shop slumped as well as people needed to spend more on clothing. So we would advise them to do promotion before the weather cools down.”

According to a report on Big Data Adoption in Retail Sector compiled by the Hong Kong Productivity Council in October 2016, 48 per cent of surveyed SMEs in this sector said they agreed “SMEs need big data” and 40 per cent of them showed the willingness to adopt the technology in the future.

However, “cost” remains the second biggest concern for SMEs in using big data, following "Insufficient knowledge", said the report.

Bosco Lam, founder of Alike Audience, a young big data analytics company in Hong Kong founded in 2015, said he agreed the a limited budget was one of the biggest obstacles when cooperating with his smaller company customers.

“They don’t have good budget and that’s a problem,” he said.

The basic cost for big data application will be at least 1 million, which is a huge amount for most SMEs, according to a research by the Hong Kong Trade Development Council.

However, some experts say there are cheaper ways for SMEs to enjoy the benefit of adopting big data in daily operations.

“Big data projects don’t need to start ‘big’”, said Professor Kar Yan Tam from the Hong Kong University of Science & Technology.

He said that there are many free tools available on the internet that SMEs can use to kickoff pilot projects on business analytics such as built-in functions of MS Excel, or even simply chart their current data can provide a lot of insights and don’t cost much.

Echoing Kar’s conclusion, Anki Lam said she preferred the term “small data” for SMEs. “We would usually suggest our SME customers decide what they want the most with a limited budget,” she said, adding that they would then help them get data from registered customers’ information, campaign advertisements or social media pages.

With all potential obstacles, Kwok stays positive about the future of the use of big data.

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