In the digital era, rapid advances in technology have managed to transform the way the world works. While some industries find this environment particularly favourable, other companies still have ways to go in engaging the right digital architecture.
It is undeniable that digitalisation is crucial to business longevity, especially in a post-pandemic world. The home renovation sector is no different.
Amidst the lockdowns, the renovation industry is flourishing. In Hong Kong, the traditional renovation market is worth HK$14 billion (US$1.7 billion). Yet, more than 40 per cent of the industry does not even have a digital strategy in place.
With a bulk of the market still conducting business in a traditional setting, this presents an opportunity for those ripe for disruption to migrate their operations into the digital workspace.
Untapped potential in the renovation market in Hong Kong
With most of the world confined to their homes, home renovation services have soared in demand as people want to create the perfect living space. In Hong Kong, homeowners here are more willing to spend on renovation projects.
Where apartments are packed and space is scarce, constructing the right house plan can transform the way people live.
Paired with the increasing transactions involving Home-Ownership Scheme (HOS) flats amounting to HK$17.6 billion (US$2.2 billion) in the first half of 2021, the housing and renovation landscape in Hong Kong is slowly picking pace.
There is an opportunity in the market right now to build better infrastructure to accommodate increasing demand. Most homeowners are also digital natives. To get in on this first-mover advantage, contractors need to prepare their services to survive in the new playing field.
Leveraging the latest technologies to resolve diversified renovation needs
As such, HKDecoman, a technology-powered marketplace for renovation services, has placed synergy at the forefront of its strategy to digitally transform the industry. At its core, the platform allows homeowners to find traditional renovation companies that provide the services they need.
The Hong Kong-based startup works on a model of smart matching and big data. With an extensive knowledge base of about 1344 videos, 2648 articles, 905 case studies, 1479 floor plans, the system depends on big data to refer potential customers to suitable suppliers using an algorithm-based selection process.
Also Read: How proptech startup iMyanmarHouse remains profitable despite COVID-19
To illustrate, the AI-powered matching system defines the abstract needs of house owners into a set of parameters, which is used for matching with a database of over 1000 design and renovation suppliers. The companies on the platform would have gone through an interview where their services and specialisations are stored in a built-in algorithm.
The content on HKDecoman also generates a significant amount of traffic from search engines and social media, forming a foundation of the community. Not only does the system enable consumers to search for and find valuable recommendations businesses can also reduce the cost of lead generation through a scalable model.
With more valuable matches, the design and renovation firms can also boost their reputation by taking on projects within their expertise, essentially creating a win-win situation for both parties.
Creating synergy in the home improvement ecosystem
Besides simplifying a multi-structure renovation process using smart features, having an end-to-end solution has a synergistic effect on the ecosystem as a whole. In a time where businesses are looking to rebuild the economic downturn from the pandemic, HKDecoman seeks to provide multiple functions across players in the industry.
Alongside smart matching between homeowners and renovation companies, they offer a one-stop O2O decoration shopping platform via three channels: An online portal, a smart vending machine and a self-service showroom.
The company also owns Deco Academy, a learning centre that offers online and offline courses, 24/7 free Q&A with expert consultants, and a Deco Charter which mediates between two parties in dispute.
To illustrate the synergies within this environment, clients using the AI-based marketplace will proceed to buy materials from the shopping platform. Mall clients, on the other hand, can look for installation services via the smart matching software or learn DIY home repairing techniques from the Academy.
As a result, each advertising dollar spent not only benefits a single business unit but also drives traffic to others.
The impact of COVID-19 on the industry
In the past year, many brick-and-mortar businesses had to cease operations due to a decline in footfall. Traditionally, renovation retailers and suppliers go about their operations offline, from home inspections to sales meetings and the purchase of products.
Digital businesses, or those that were quick to pivot to online models, were able to avoid the bulk of these challenges with alternatives to old practices.
Also read: The world of proptech and its fate in a post-pandemic world
As an O2O online platform, HKDecoman managed to see a slight increase in leads during this time. However, due to more careful spending, especially on big-ticket items, the lengthened decision cycle lowered their sales for a while.
To ensure business continuity, the team took this opportunity to expand the infrastructure, establishing the solutions as a gateway for design and renovation companies to go digital and scale-up.
A pandemic-led slump has drastically shifted consumer spending and behaviour. Because of this, the recovery is expected to be a gradual revival rather than a sharp change. In particular, Hong Kong is facing a lot of other changes.
The emigration outflow, for instance, is a factor that has led to decreased demand during this period of time. On the other hand, pent-up demand plays a huge role in ramping up post-pandemic business activity.
On a macro scale, Southeast Asia represents a fast-growing internet sector. As the region moves to the online space, consumers will not only expect but demand digital services. With the proven business model, the right go-to-market strategy and potential synergy, HKDecoman has established itself as a leader in Hong Kong’s online renovation services.
The time is ripe for the startup to venture into the flourishing SEA economy, bringing its services to local markets, with the help of accelerator programmes such as 500Startups and the blueprint for a renovation ecosystem.
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