X5 Retail Group, Russia's largest retailer, has unveiled plans to develop the company's online sales capabilities, with a view to becoming Russia's "leading brand in Internet retailing".

X5 has established an online joint venture with the owners of www.bolero.ru and www.003.ru to create a new internet retailing platform.

X5 said it will purchase a 51% stake in the JV, IT business, for US$1m, while the other parties bring their capabilities, internet properties, staff and business infrastructure into the venture. X5 has an option to purchase the remaining 49% within five years, at a price to be determined based on future operational and financial performance using an agreed formula.

Bolero.ru specialises in selling books and entertainment media online and 003.ru is Russia's leading online retailer for household appliances and electronics.

Bolero.ru and 003.ru stores will continue to operate under their existing brands. In 2010 X5 will decide on a launch of a new brand in Russian ecommerce.

"Internet retailing is still in its infancy in Russia, and X5 has the opportunity to develop the
leading online retail brand, leveraging our store network, distribution infrastructure and
marketing capabilities to drive the growth of E-commerce," X5 CEO Lev Khasis said.

Khasis said X5 was in a "unique position" to address the factors currently limiting the growth of E-commerce channels in Russia, ranging from consumer mistrust to the immaturity of payment systems and under-development of logistics infrastructure and postal services.

"In addition to Internet payments and direct home deliveries that are not always suitable for Russian consumers, we plan to utilize our store network to provide customers with convenient locations for making payments or picking up their purchases," he revealed.

"Our marketing capabilities give us a huge competitive edge - X5 can market online retailing services to the 3m customers who visit our stores every day as majority of them are potential Internet shoppers," he added.