China's postal service is expanding into e-commerce by launching a new online shopping website on Tuesday with domestic media company TOM Group.
The website, Ule.com.cn, is a business-to-consumer portal that will function as both an online and offline retail network. State-owned China Post has 46,000 post office locations in the country and will provide the offline sales while TOM Group plans to spend 200 million renminbi (US$29.4 million) in marketing the Web site and supporting its operations. Ownership of the company will be split 51-49 percent between China Post and TOM Group, respectively.
China's e-commerce business is already filled with such competitors like Taobao.com, China's popular online auction and retail site. But the new shopping venture between China Post and TOM Group will have advantages over rivals, said Chen Shousong, an analyst with Analysys International.
Ule will benefit from China Post's extensive reach into the smaller cities and underdeveloped areas, where other competitors have less exposure, Chen said.
"They already have the channels to reach those markets," he said. "China Post has a very traditional business. But now they have an opening."
Ule, which was launched as a beta in October 2009, will sell a wide range of products. Consumers can buy products through the Internet or mobile devices. They will also be able to buy them offline through catalogues, a phone-order service or over-the-counter services.