The Battle of Hong Kong’s Delivery Services

By Ben Coulter | Photography by Tallie Lin | Layout by Maegan Wang

If you have been to an MTR station in the past year, you have probably seen one of the fluorescent pink Foodpanda ads shining in your face, claiming to be the fastest and most convenient way to get food. Walking along the streets of the city, you have probably spotted the green HKTV Mall stores perched on street corners, while the packages you order zip through the streets in DHL, Fedex or SF Express vans.

Hong Kong is filled with a variety of logistics companies who are engaged in a fierce battle of costs and competition, as they try to conquer the deceptive delivery market of the city. Being a global cosmopolitan environment, it may be expected that Hong Kong would boast the same lightning fast delivery times that are seen in Mainland China or the United States, however, the unique geographical and demographic situation of Hong Kong has made it much more challenging to roll out such programs than in other countries.

To understand the Hong Kong delivery market, we must understand how the delivery industry actually started. One key form of delivery that has been prevalent for centuries is the shipping of letters and parcels. Prior to the modern world we live in today, messengers would ride horses for hundreds of miles and then pass their item over to another colleague in a vast network of horseback messengers.

In 1889 however, a new type of delivery surfaced, with King Umberto and Queen Margherita getting pizza delivered to their palace, generally regarded as the first official food delivery. A few years later, an evolution of this idea caught on in India, in the form of Dabbawalas (literally translated as “one who carries a box”). These delivery men would sometimes hang an incredible fifty metal lunch cans on the sides of their bicycles and take them through the bustling city centers of India to deliver hot lunches to workers. In fact, this method has been so successful that Dabbawalas are still prominent today, with the trusty meal delivery service even operating without the use of modern technology.

Through these two examples, we could see the formation of two delivery types. Infrastructural delivery with horseback messengers and integrated network delivery with Dabbawalas.

Up until the 2000s, there was not much that could be done to improve infrastructure based delivery, as there was no way to manage orders and people simply went to their district shopping malls and stores to buy all their products, however, the internet changed everything. With the rise of the web, one could simply go onto a webpage and order whatever they wanted, without even having to stand up (which of course at the time was revolutionary). To complement this, there was a new challenge for delivery services, as they had to figure out a way to get orders placed online for products located across the globe to individual homes in totally different countries, all in an accurate and convenient manner. A key player which shaped the evolution of infrastructural delivery is a company named Amazon, with their founder Jeff Bezos originally starting out by running an online bookstore. As his business grew and the market adapted, he began to sell different items, slowly but surely growing into a respected platform for online shopping, however, to become the world’s largest ecommerce platform, they had to nail delivery. With this goal in mind, Bezos fully focused Amazon’s efforts on achieving this, and slowly but

For Amazon to become what it is today, they had to spend billions of dollars, purchasing thousands of delivery vans, a fleet of cargo aircraft, constructing mammoth fulfillment centers, working with

legacy delivery services and creating one of a kind digital platforms to manage online orders. To help grasp this, in the United States, Amazon has 110 mammoth warehouses (which go up to 1 million square feet in size), along with hundreds of sortation centers, receiving stations, specialty locations and delivery hubs, employing a total of 1.1 million people.

The cost of building this infrastructure was so significant, that Amazon lost money for years before even turning a slight profit, which only came down to scale. As Amazon takes a cut of 8% - 15% on each purchase, this will only pay off the operating costs for such facilities if every day, hundreds of thousands of packages stream through their doors, which is in turn only possible with good business strategy, time and a massive market like the United States.

As such, even if consumers in Hong Kong want luxuries like same day delivery, it would simply be unfeasible given the amount of infrastructure and astronomical rent that would have to be dished out for a market of only 7 million. Given this, Amazon has not even tried to build a single facility in Hong Kong. Instead, the infrastructural delivery in the city is being managed by UPS, Fedex and SF Express, who generally deliver within a few days, a number that is not at the speed of Amazon or expected to improve.

There are however instances where waiting a few days is not feasible, like with food, which is where platforms like Foodpanda come in. In an effort to solve the issues with holding massive inventory and getting it to users, Foodpanda’s economical model relies on using the inventory of businesses on their platform (ie. their restaurants), with their sole responsibility being last mile delivery. To further reduce costs, Foodpanda doesn’t even own any delivery vehicles, as their couriers drive their own motorbikes and cars, simultaneously accepting deliveries through their phones. This has essentially turned their participating stores into mini fulfillment centers, while their army of drivers are all private volunteers, turning Foodpanda into a decentralized network delivery service, much like the Dabbawalas one would see in India.

Given the success of this model with food delivery, the Singapore based startup decided to launch Pandamart in early 2021, identical to the food delivery side of Foodpanda, with the difference being the ability to order household items and groceries from retailers, essentially turning them into a mini ecommerce site with near instant delivery. Although their venture is still in its early stages, it is clear that they have pinpointed an potentially highly successful delivery model for Hong Kong, overcoming challenges with costly infrastructure and inventory storage. Nevertheless, there is only so much Foodpanda can ship, with their selection being largely limited to typical groceries and household items, with little optionality with brands and retailers like with Amazon. This is where the final delivery model for Hong Kong’s market comes in, with it being the hybrid model between infrastructural and decentralized delivery, used by HKTV Mall.

HKTVMall falls into this hybrid category due to their unique fusion of delivery solutions, largely tailored to Hong Kong. Although next day delivery is an option for select products, the delivery company has refrained from investing much into the costly infrastructure for last mile delivery, and have instead focused on creating mini pickup hubs in each district, located in high traffic areas such as MTR stations or on important street corners. With this, users can pick up their packages from a local HKTVMall center, however due to their smart placement and the urban density of Hong Kong, such a journey tends to be no longer than a pleasant ten minute walk. While it did take a few years of losses, HKTVMall has now turned a profit with the pandemic, as it catalyzed a surge in online shopping across the city. In an extension to their already multifaceted delivery offering, the Hong Kong based company has also launched HKTVmall Express, their own instant grocery delivery service implemented in partnership with the logistics startup Zeek. In an effort to build on existing infrastructure, HKTVmall’s pickup hubs have now even become a “service point for express delivery,” where Zeek’s motorbike couriers can also pick up deliveries, after which they drive them to customers in a 2km radius.

All in all, due to Hong Kong’s unique position and market size, shipping models that may have worked elsewhere have been rendered simply unfeasible, yet as seen with Foodpanda and HKTVMall, it is clear that cutting out expensive, complex infrastructure and opting for more decentralized and integrated delivery solutions is the key to winning the battle, proving to be profitable, while reducing delivery times.