Tom-China Post venture poised for rapid sales growth

Media firm pins hopes on marketing campaigns to accelerate growth at Ule after sales at the venture more than double in the first half

PUBLISHED : Tuesday, 30 July, 2013, 12:00am
UPDATED : Tuesday, 30 July, 2013, 3:13am

Tom Group, the media conglomerate controlled by Li Ka-shing, predicts faster growth for its e-commerce venture with China Post on the back of a series of marketing campaigns to be launched in the second half of this year.

The venture, Beijing Ule E-commerce, saw its gross merchandise volume - the worth of goods sold across the service - more than double to 517 million yuan (HK$649 million) in the first half from 240 million yuan a year earlier. That result also surpassed the 500 million yuan it recorded for the whole of last year.

Ken Yeung Kwok-mung, Tom's chief executive, yesterday told the South China Morning Post: "Despite minimal marketing investments, Ule has managed to outperform the [mainland e-commerce] market since it debuted in August 2010."

The average cost of order per transaction on Ule in the first half rose 31 per cent year on year to 432 yuan, which Yeung said was double the domestic standard of about 200 yuan.

"We've laid down the foundation for Ule's rapid growth. The next step is marketing," he said, without elaborating on what the company's latest campaigns would be about.

Ule was established by Tom and China Post, which owns a 51 per cent stake, to provide a business-to-consumer e-commerce platform that supports online and offline store integration, distribution and logistics, and promotion to more than 5,000 merchants in 31 provinces.

Unlike Alibaba Group's Taobao online retail operations, which rely on third-party logistics service providers, Ule is backed by the massive resources of China Post. These include 52,000 postal outlets, 40,000 Postal Savings Bank branches, 200,000 affiliate outlets across the countryside, 150,000 postal delivery workers, 50,000 direct-sales staff, 5,000 call-centre workers, 80,000 postal vehicles, 433 train carriages and 18 cargo aircraft.

Being early in the market has allowed Alibaba to build up its user base from the mainland's 271 million online shoppers as of June. Taobao Marketplace, its consumer-to-consumer platform, and Tmall.com its business-to-consumer site, had a combined gross merchandise volume of one trillion yuan last year.

Yeung said Ule was focused on garnering business from the 90 per cent of the population still not shopping online. "Mobile commerce will be our next growth engine because more people, especially in China's 700,000 villages, will access the internet for the first time on smartphones," he said.

Tom's first-half net loss widened to 113 million yuan from 102 million yuan a year earlier as its strategic investments continued. Revenue slipped to 975 million yuan from 1.13 billion yuan.