Electronic Commerce in Hong Kong
Reference Case: Jusco Stores (Hong Kong) Limited

Background of Company
Streamlined
operation
procedure:
EDI
invoicing
has
streamlined the traditional accounting process and has

Jusco Stores (HK) Limited is established in Hong Kong in
improved the communication between Jusco and their
November 1987 and listed on the Stock Exchange of Hong
suppliers.
Kong in February 1994.

It is a subsidiary of the AEON

Management information: The point-of-sales system using
Group. It engages in the Operation of General Merchandise
barcode scanning captures sales data of each transaction at the
Stores (GMSs) providing a wide range of daily necessity
checkout.
merchandise of fashion, food, household items and catering
and the product’s performance. Jusco management can use
services to local consumers.
this valuable information as a base for business decision
Jusco is now running eight GMSs in Hong Kong and one
making.
This information reflects the consumers’ behavior
GMS in Guangzhou, the PRC. 90% of their product are
sourced locally to suit local market needs. It employs over
3000 staff.

Challenges encountered on promoting E-Commerce
One major target in Jusco’s business strategies is to
continuously enhance cost efficiencies and to streamline

operations through various information technology initiatives.
Product source marking: The availability and quality of
barcode on products is a big concern in promoting
E-Commerce. Dry grocery items in food department are 100%
source marked but barcode on some other categories such as
Use of Electronic Commerce
apparel and garment is not satisfactory.


Suppliers’ attitudes towards E-Commerce: Most of their small
Jusco has started to use Electronic Data Interchange (EDI) to
suppliers are not ready to do E-Commerce. They are very
send purchase orders from April 1997 and to receive invoices
reluctant to change their traditional way of doing business.
from around 20 of their suppliers since the end of 1998.

They are trading with more than 300 suppliers through EDI
within which 208 are food suppliers. In terms of turnover,
Future Plan on E-Commerce
their EDI transactions represent 91% in food department, 40%
in household department, 43% in electronic appliances


Jusco sees the EDI for purchase order placement and
department and 53% for company total.
invoicing is beneficial at operational level. Their vision is to
In their food department, they have 100% barcode scanning at
adopt E-Commerce at strategic level to improve the overall
the checkout counters. The scan data from the Point-Of-Sale
supply chain efficiency. They are planning to experiment other
system is used to support their Computer Assisted Ordering
initiative in Supply Chain Management (SCM) – the Efficient
(CAO) system at the stores. The orders from the stores are
Consumer Response (ECR) with selected strategic suppliers in
transmitted and processed at their backend system to generate
year 2000. The selected suppliers can receive Jusco’s basic
purchase orders to their suppliers for replenishment.
sales and inventory data using EDI sales data message report.


The purchase orders are sent to their EDI suppliers by EDI or
They can use the data to establish key performance indicators
by fax to other suppliers. The EDI transactions are transmitted
to improve the physical stock movement and forecast
through a value-added network or through Internet.
accuracy. Suppliers can then forecast the market demand,
On the payment side, suppliers need to acquire payment
prepare adequate stock level and jointly develop marketing
requisition form from Jusco to fill in payment details and then
and promotional plan with Jusco. With this EDI application,
fax it back to Jusco. Then Jusco operation staff key in the
both Jusco and the suppliers can reduce the inventory level,
details into their accounting system for processing. With EDI,
the operation cost and the possibility of out-of-stock situation.
suppliers can send their invoices to Jusco through the EDI
introduce the company’s news and information to the public.
Jusco’s accounting system directly for payment settlement.
If the web site becomes popular, Jusco may consider to
The EDI invoicing process has improved the efficiency of
provide Internet shopping service.
increasing the data accuracy of the transactions.
Jusco has also established their web site on Internet to provide
company information to the public.
Benefits of using E-Commerce

Faster transmission: Jusco recognizes that EDI is more
reliable and efficient communication tools as compared with
the manual fax or PC fax system. It takes 40 seconds to fax a
purchase order but only takes 3 seconds to transmit it via EDI.
The improvement is significant when a high volume of
purchase orders is to be transmitted.

To the consumers, Jusco has already established a web site to
network or Internet. The EDI invoices can be captured into
their payment process by reducing data capturing effort and


Reduced operation costs: EDI reduces the duplicated effort in
capturing data. Purchase orders and invoices are to be input
once by the initiator and then the recipient can capture the
information automatically through the network. This ensures
the integrity and accuracy of data, hence reduces the error
handling costs significantly.