Tom venture aims to crack mainland online shopping

PUBLISHED : Tuesday, 10 April, 2012, 12:00am
UPDATED : Tuesday, 10 April, 2012, 12:00am

China Post and Tom Group, the media conglomerate controlled by Li Ka-shing, aim to soon turn their joint venture into the mainland's pre-eminent e-commerce infrastructure services provider for online retailers.

'We are offering a unique value proposition to a lot of merchants,' Tom chief executive Ken Yeung Kwok-mung said. 'We're providing the entire infrastructure - e-commerce system, online and off-line store integration, distribution and logistics, as well as marketing and promotion - so that more merchants can participate in the mainland's growing online retail market.'

Beijing Ule E-Commerce, the venture that Tom and China Post set up in 2010, is working with two undisclosed major brands in pilot tests of what Yeung described as the firm's all-encompassing 'e-commerce infrastructure-as-a-service' offering.

'With the resources of China Post, Ule is capable of becoming the ultimate service provider for all e-commerce players on the mainland,' Yeung said.

The mainland postal service has a network of 46,000 post offices, 150,000 postal workers, 36,000 Postal Savings Bank branches, 56,000 delivery vehicles and 17 aircraft.

Tom is providing the information-technology system that runs Ule's e-commerce, which online merchants can plug into like a utility.

'We have a cloud-computing platform that a merchant can connect to over the internet and instantly set up an online retail operation,' Yeung said. 'It is like you're hooked up with a pipe that delivers everything you need to serve customers online.'

He added that Ule will also work with merchants who want a 'customised solution' to differentiate their operation from other vendors.

By comparison, other prominent e-commerce players on the mainland are scrambling to develop their own logistics infrastructure.

E-commerce giant Alibaba unveiled plans last year to invest as much as 30 billion yuan (HK$36.76 billion) in building a network of warehouses across the mainland to expedite the delivery of goods by the online merchants it serves.

The Hangzhou-based firm, which controls Hong Kong-listed and the three Taobao online shopping platforms, has started developing infrastructure close to large population centres in the Beijing/Tianjin area, the Yangtze River Delta and the Pearl River Delta regions.

The initial facilities to be built over the next five to seven years will have a total storage space of three million square metres, or the equivalent of 356 soccer pitches.

Alibaba chairman Jack Ma Yun said last year that everyone involved in the mainland's e-commerce sector 'needs to work together to accomplish' the goal of faster delivery of goods.

The firm estimated that a logistics network capable of handling the storage, transport and delivery requirements of the mainland's online merchants would need a capital outlay of more than 100 billion yuan.

Both Taobao's online retail operation and's business-to-business e-commerce service currently rely on multiple logistics service providers to serve customers on the mainland and in other markets.

Yeung said the breadth and depth of Ule's resources allows the venture to not only help merchants reach existing online shoppers on the mainland, but tap into the majority of domestic consumers who are yet to buy goods online.

Online analysis firm iResearch estimated that online shopping revenue on the mainland reached 773.56 billion yuan last year, up 67.8 per cent from 2010. It said there were 187 million online shoppers on the mainland last year, compared with the market's more than 500 million internet users.