Hong Kong Toy Company Makes E-Commerce History
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Hong Kong-based ActionAce.com, is turning into Asia's first e-commerce success story.
ActionAce.com is an online retailer that handles orders for popular and hard-to-get Japanese and American toys.
Recently, there has been much chatter about the company because it has in several months succeeded in developing a niche in the U.S. toy market.
The online toy retailer grew out of the idea of Casey Lau and John Wong, the managers of a local Web design company called Rogue Media, to build a Web site for selling action figures and comic books.
"E-commerce in Hong Kong was a fantasy a few years ago. Nobody believed in it," said Lau, "John and myself are big comic book fans and toy fans. We wanted to do something that we liked."
The company, in its original incarnation, operated from early 1997 to mid-1998 but couldn't logistically expand without an injection of capital. In mid-1998, David Haines, now ActionAce.com's chief executive officer, joined the company, brought in some venture capital, and renamed the company ActionAce.com.
"We started new four or five months ago," said Lau."We wanted to appeal to people like us - who are generation-X and who are the majority of people online."
"From week one to this week, ActionAce's sales have increased tenfold," Haines pointed out.
However, according to both Haines and Lau, building their e-business in Hong Kong has been a complicated process.
"Selling it - attaining where we are now - was a little more difficult in terms of money. E-commerce didn't exist here," said Haines. "There are only two or three [e-commerce companies] operating in Hong Kong. We are still looking for money."
Haines said that advertising with Yahoo! was key to their sales increase.
"We decided to put our marketing money in the most effective place we could find," said Haines. "Yahoo has worked with us quite a bit with targeting the right markets. We do almost 100% search word banner advertising."
"We are happy to encourage local Internet pioneers like ActionAce, Boom.com and Chinesebooks," stated David Mickler, Yahoo!'s director of Asia sales. "For there to be an exciting future in Asia, the community and venture capital has to support Internet ventures like these."
As Haines explained, seventy five percent of ActionAce's client base is in the United States because the country takes up such a large chunk of the international online market.
In addition to toy sales, ActionAce's Web site provides toy-related content. It has an online magazine called ActionZine which provides reviews of movies, toys and games as well as polls, trading posts and auction message boards.
"So people, once they are finished shopping or when they want to find out more about what they want to buy, can come to ActionZine to check it out," stated Lau.
The biggest task for ActionAce is to eliminate its distribution centers in the U.S. by setting up an automatic system from Hong Kong.
Currently, the company needs to use large American distributors and a US based office to meet customer orders in the States.
According to Haines and Lau, the toy retailer is already working with large courier companies to bring down delivery prices so they can deliver individual orders directly to the U.S.
"This week, we will send out 300-400 items that we need to get out before Christmas through one of the big couriers at almost the same cost as it takes us to do it from the U.S.," said Haines."It can be done in Hong Kong. So much stuff goes out of here that they have the volume to do it."