PostMart model means better days on the horizon

At each center, there are now at least five sales employees, who visit stores to check on product availability. The service is supported by a truck fleet that delivers the next day, on-time and in full.

Such a system would have proved expensive for manufacturers to build, but Luo said PostMart's advantage is being able to call on a large-scale system that lowers costs, provides door-to-door delivery, and supports and manages services to individual store owners.

PostMart claims to have reduced delivery time from 21 days to one day.

Ben Cavender, principal of the Shanghai-based China Market Research, is enthusiastic that the China Post/Horizon logistics model may work well in helping to get small businesses their commodities easier.

But the question remains how they will handle competition from other wholesalers and e-commerce operators in the next few years.

Cavender said that the partners must build their brand awareness and the relationship with their customers quickly, to guarantee any hope for long-term growth.

The PostMart idea was actually the brainchild of Alan Clingman, CEO of China Horizon Management, who concluded that its previous business model of managing retail shops in rural China was not working.

Clingman took part in a three-year joint pilot program with China Post in rural regions, during which time the partners opened 100 stores under the PostMart brand and provided services to more than 6,000 China Post village postal stations and franchisees.

The idea of developing a full-blown retail business in rural China then came to Clingman.

The PostMart pilot program with operations in three provinces－Henan, Shandong and Jiangxi－was to run retail operations out of China Post real estate in various towns.

At the same time, they would run a wholesale distribution model to distribute products to stores at the village level.

"It was not a commercial operation. It was a giant experiment. The prime objective was to find a commercial model," said Clingman.