Can This Idea Move Hawaii Beyond Tourism?

In an A-for-effort, even if perhaps misconceived, the State of Hawaii hosted a novel event that occurred at Waikiki’s Ala Moana Hotel yesterday. More than 250 attendees showed up for the first “Made in Hawaii Presents: Your Future in E-Commerce” conference. It was sponsored by the Hawaii Department of Business, Economic Development and Tourism (DBEDT). The state said that “Industry leaders from Amazon and Shopify shared tips and insights on how Hawaii manufacturers and retailers can succeed in the e-commerce world.”

You may be wondering how this relates to Hawaii visitors. Ever since Covid and the state’s ongoing fatigue with over-tourism, there has been a renewed interest in finding ways for the islands to be less reliant on visitor numbers. This conference speaks to Hawaii trying, but having few ideas as to what to do beyond being a beautiful visitor destination.

The conference started with beginner-level “Starting E-Commerce.” There Amazon Marketplace’s seller growth team shared about platform selection, online store setup, product curation, and rudimentary marketing strategies.

Shopify shared “Mastering E-Commerce,” together with Love Fitness Apparel and Coco Moon Hawaii, two successful Hawaii-based e-commerce companies.

Hawaii businesses face overwhelming odds against e-commerce success.

1. Hawaii’s geographic Isolation. Hawaii’s remoteness from the U.S. Mainland presents logistical and financial challenges in terms of shipping availability, delivery timeframe, and cost. The distance even prevents Amazon from effectively shipping from mainland markets to Hawaii, which is certainly telltale. Amazon Prime delivery times in Hawaii are simply awful, and we can generally expect to wait weeks to see ordered goods arrive. These factors make Hawaii far less competitive compared to businesses located closer to major hubs. Not only that, but this puts Hawaii businesses at a disadvantage in their ability to offer free or discounted shipping to customers.

2. Limited market size for sales within Hawaii. Hawaii has a relatively minuscule population compared to the mainland, further limiting the in-state potential customer base for Hawaii businesses. This smaller market size makes it challenging for businesses to achieve economies of scale, among other things.

3. High cost of living. Hawaii’s cost of living, the highest in the US, translates directly to higher operating costs for local businesses. That includes all expenses from labor, first and foremost, to rent, utilities, and products. This factor erodes profit, making it difficult for Hawaii businesses to be competitive, especially in an online marketplace competing with companies based in lower-cost areas.

4. Limited human resources. Hawaii businesses are challenged beyond mainland companies in terms of the resources and expertise needed to effectively deal with e-commerce marketing complexities, again making it difficult for them to compete.

5. Limited technology, internet, and payment Infrastructure resources. While Hawaii has certainly improved in these areas, it still lags behind the mainland. The development of websites and other technologies must often be sourced remotely due to limited resources. Banking options are also not those from the mainland and are limited.

Hawaii travel looks to be here to stay.

Overall, Hawaii businesses face unique and onerous challenges in terms of the e-commerce space among other tourism alternatives. It takes strong entrepreneurship, innovation with unique products, and the ability to adapt to Hawaii’s challenges in order to succeed. E-commerce won’t work for most Hawaii businesses. We note that one of the other success stories is Anahola Granola, made in Hanapepe on Kauai, and available throughout Hawaii and beyond, and shipped to wherever you are.

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7 thoughts on “Can This Idea Move Hawaii Beyond Tourism?”

  1. Anyone who thinks of marginalizing tourism is fooling themselves. Hawaii is a tourism destination, had been and always will be. Tourism is good for our economy.

  2. I think it is wise to look at e-commerce. Many posts state the islands want to be self sufficient and ban the tourists. In order to do this, you must begin education, strong education and family values. If the locals keep posting how they dislike outsiders, it will surely put a damper on marketing their goods. Whiners don’t usually succeed in business. Be of tough, kind, intelligent, and high integrity. …Well unfortunately some do not hold these attributes, but an island in the pacific should focus on those factors. I want the islands to survive and keep all the goodness. i would love for you to find a way to do this. I am older, so I enjoyed all the wonderful days, but I sure would hate to fast forward if change is not made.

  3. Looks like Hawaii may be a good place for the biotech industry. Salaries are high in this sector and would be compatible with cost if living. However, all that PhDs will require good schools for their kids.

  4. Hawaii’s biggest challenge is the appalling lack of competency at all levels of government. Rampant corruption among the political classes is a real threat to any and all potential solutions. None of this changes until Hawaiian residents become less apathetic and start holding politicians accountable.

  5. Never happening. Many of the problems are self-inflicted. According to Hawaii’s own Department Of Taxation, in its June 2023 analysis, “Hawaii has one of the highest income tax burdens of any state for all income levels,” and “Of the 41 states and the District of Columbia that have an income tax, Hawaii has the second highest tax burden after Oregon, a state with no sales tax.”

    Similarly, according to a February 2024 note by Statista, “Hawaii is the state with the highest household electricity price in the United States” at “42.69 U.S. cents per kilowatt-hour.” Then pile on all the other crushing problems, like remoteness, small land mass, infrastructure, etc. Insurmountable hurdles.

  6. I see one advantage that Hawaii could build on. The Covid pandemic and the rise of Genzies who want the world to accommodate their wishes has seen the rise of the digital nomad. If Hawaii was to put plans in place to promote this in Hawaii could see more income and tax revenue as a result. Though there would need to be provision to ensure a minimum stay to avoid Californians and others trying to evade short term rental restrictions.

  7. Diamond Bakery also ships its goodies anywhere too. I get shipments of their cookies, shortbreads, and especially Christmas cookies on a regular basis. For a flat shipping fee too. Last Dec it cost just $20 to receive two well packed, securely taped together boxes here to the SE. Gotta have those Christmas cookies! (Hope it’s OK to post the link)

    Best Regards!

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