The SARS Outbreak in Hong Kong: Use of the Internet in Times of Crisis

CONSUMER E-COMMERCE

According to A.C. Nielsen's Nielsen/NetRatings service, which monitors Internet traffic, local auction sites experienced twice as much traffic in April 2003 - the first full month of the SARS crisis - as in the previous year. Among other findings for the month: ⁹

• 1.5 million home Internet users visited Hong Kong-based news sites; shopping sites were visited 1.1 million times, while education sites received 1.2 million visits.
• Banking and travel-related sites received 600,000 and 271,00 visits respectively.
• The average user spent 22 hours 39 minutes online, up from 15 hours 12 minutes in February.
• Yahoo! registered a 20% increase in site visits, a 70% increase in transactions and an 80% increase in revenue.
• According to Nielsen/Netratings, auction sites generate higher sales than direct retailers. The most popular Hong Kong-based auction sites were HK.Auctions (130,000 visits; 200% year-on-year increase). Red-Dots (122,000 visits; 35% year-on-year increase), and Go2HK (105,000 vists; 47% year-on-year increase).

With Hong Kong consumers jittery with SARS anxiety, more people took to the Internet and discovered online shopping sites they hadn't previously visited. The desire to avoid crowded shopping centres led many consumers to make online purchases for the first time; e-commerce site owners expressed hope that a positive first-experience would lead to return-purchases over the long run. There were also indications that as with Ebay in the U.S., many unemployed people were selling merchandise through auction sites.

The Hong Kong public was also favouring online banking in unprecedented numbers.¹⁰ HSBC and its subsidiary Hang Seng Bank recorded a 40% rise in online transaction volumes since the start of the outbreak; The Bank of East Asia saw a 22% rise in online transactions. Hong Kong banks have long attempted to convert customers to online-banking in search of massive cost savings. After the initial capital investment in technology development and infrastructure, online services cost banks significantly less to provide than their branch-based equivalents. In this sense, the SARS crisis was almost a blessing-in-disguise and many bankers harboured hope that customers would prefer online-banking in future after trying it for the first time. By shifting a greater portion of the client base to online-banking, banks could devote branch banking to more lucrative wealth management services.

9. Neil Western, "Auction action," South China Morning Post, May 17, 2003.
10. Bien Perez, "Scramble on for continuity; The Sars outbreak is forcing companies to turn to telecommuting, with staff advised to work from home," South China Morning Post, April 1, 2003.