As online retailer Newegg Inc. explores ways to expand, it’s looking to China.

The City of Industry company was first hatched a decade ago as a seller of computer hardware. But Newegg has branched out over the years into consumer electronics, appliances, apparel and even coffee.

Now it’s adding products direct from China to its website in an effort to expand its offerings in the United States. In the process, the company’s forming partnerships that could help it sell more products in China’s growing e-commerce market.

Last month, Newegg announced it has teamed up with the Department of Commerce in China’s Yunnan Province to sell products from that region in the United States, including the country’s largest coffee brand, Hogood Coffee.

Bernard Luthi, Newegg’s senior vice president of marketing, said the exchange with Yunnan will lead to more opportunities for sales in China.

“It opens the door to do a number of things,” Luthi said.

As part of the Yunnan deal, Newegg has started selling Hogood, which is grown in the mountainous province in southwest China. Newegg plans to add other items from the region, such as binoculars and tea.

The company began expanding beyond electronics several years ago. It now sells everything from power tools to jewelry. The Chinese coffee isn’t its first roast, either: It already sells Distant Lands Coffee from Tyler, Texas.

Since its founding in 2000, Newegg has been a mainstay on the Business Journal’s annual list of fastest-growing companies. (It was No. 88 on the list of Fastest Growing Private Companies in 2010, with revenue growth of 21 percent from 2007 to 2009.)

The company filed to go public in 2009. That year, the company reported net income of $24.9 million on revenue of $2.3 billion, up 9.5 percent from 2008. It has been profitable every year since 2001.

But Newegg dropped its IPO plans in May this year. Mark Brohan, director of research at Chicago magazine Internet Retailer, said he believes the company decided to raise money privately instead.

The company also experienced some changes at the top last year when Chief Executive Tally Liu resigned. He was replaced by co-founder and former Chief Executive Fred Chang.

Luthi said the dropped IPO and executive shuffle do not signal problems at the company, noting that revenue grew 8.7 percent in 2010 to $2.5 billion.

But Jeffrey Grau, principal analyst covering e-commerce for New York research firm eMarketer, noted that Newegg is not growing as quickly as the rest of the industry.

“They’re performing below the average and much slower than Amazon is,” Grau said.

Seattle-based Amazon.com grew 40 percent to $34.2 billion in 2010 revenue, according to Internet Retailer.

The entire U.S. e-commerce industry grew nearly 13 percent to $176 billion in sales last year, according to Cambridge, Mass., research firm Forrester.

Electronics equipment, where Newegg does a lot of its business, has become especially competitive. Companies such as Circuit City and CompUSA both closed amid pressure from online vendors.

“Consumer electronics has really cutthroat-thin margins,” Grau said. “When you think about the retail companies that have gone out of business, a lot of them are in this space. They just haven’t survived.”

Meanwhile, Newegg is putting more effort into its Chinese operations, an area where it could see substantial growth. The company launched its Chinese website in 2001, the same year it debuted in the United States, but did not begin focusing on expanding its business there until 2008.

The Chinese website features made-in-China products and some of its American inventory.

Chinese focus

In its filing with the Securities and Exchange Commission to go public, the company outlined its plan for China. That includes building a Chinese headquarters in Jiading, a district in Shanghai, and opening facilities in other cities. The company has since completed construction of the Jiading office.

In that IPO filing, Newegg reported 2009 revenue of $136 million from its Chinese website. Luthi did not say how large that business is today, but he said it continues to be a focus for the company.

“It remains an important part of our strategy,” he said. “There’s certainly a tremendous opportunity in that region.”

He added that Newegg’s ties to China – founder Chang is from Taiwan – have helped the company develop business relationships there.

Zia Daniell Wigder, a principal analyst covering e-commerce for Forrester, said China’s e-commerce industry is primed for growth.

That industry raked in $49 billion in China last year and is expected to grow to $159 billion by 2015, she said.

But she warned that it’s not an easy market to enter. Cash on demand is still a popular payment method and many deliveries are made by courier. Those are all risks that Newegg outlined in its IPO filing.

The company could make progress in China by offering its products at competitive prices, Wigder said.

“Chinese consumers are extremely price sensitive,” she said. “They look to the online channels to be cheaper than traditional channels.”