PostEx is a Pakistani company that helps online stores with shipping and money matters. Parhlo World has learned that the company is about to expand into new markets, starting with Saudi Arabia this year.
On the phone, Muhammad Omer Khan, founder and CEO of PostEx, said, “We want to go into other markets to really disrupt them because we see the gap.”
There is about 1.5% of Pakistan’s total retail market that is made up of online shopping. This number has grown by 50% in the last year. Most likely, PostEx is a part of that growth.
Since 95% of purchases in Pakistan are paid for with cash on delivery, it’s hard for online stores to stay in business and grow. From the time of dispatch to arrival, it takes courier companies in that South Asian country 10 to 15 days to settle those deals. All of this makes it hard for online stores to keep their working capital up.
In 2020, Khan started PostEx to solve these problems by letting sellers pay up front for orders and collecting the money when the goods are delivered. PostEx also offers a logistics service. Pakistan made the startup a non-bank financial company, and then it started giving online stores money to help them grow. However, to lower risks, the company doesn’t just give merchants money; it only gives them credit if they use its logistics service.
Khan told Parhlo World that this plan has helped PostEx keep its bad loans below 0.03% since the company started.
He explained, “Because we control the flow of the funds, which means that if we give credit, we make the deliveries ourselves and then get the cash directly from the customer.”
The company’s co-founder also said that of its 15,000 active merchants, more than 80% have signed up just to get upfront funds with logistics, while the other 20% only use its logistics service.
Pakistan’s capital controls make it hard for companies to get large loans from standard lenders, so PostEx started the financial service with its own money. But as the business grew and had a track record of merchants paying back loans, it started working with traditional banks to give loans to merchants straight from their balance sheets.
PostEx grew its shipping business in Pakistan in August 2022 when it bought a competitor, Call Courier. The purchase helped the new business grow its market from three main areas to over 650 towns all at once. It also made it possible for small businesses and enterprise customers to join, along with big merchants. This made it possible for e-commerce companies of all kinds to use the service across the country.
Khan said that PostEx started making money in November of last year, a little more than a year after Call Courier was bought. It also recently passed a yearly recurring revenue rate of $21 million, which means that four million transactions happen every month. By the end of this year, it hopes to have surpassed $25 million.
He said, “There is no cost of acquisition; there is only the cost of debt or capital.” “That’s why we’re focusing on better profit margins…” Every month, we’re growing by 10–15%.
Getting Into New Areas With New Money Of $7.3 Million
Over the next few years, the startup wants to grow its market beyond Saudi Arabia and reach the United Arab Emirates (UAE). To do this, it has raised $7.3 million in an all-equity funding round led by Dubai-based Conjunction Capital.
Postal Service wants to go to Saudi Arabia in three months. The company also wants to get an extra $15 million to really go after the new market. Khan said that talks with investors about the new round are still going on.
PostEx is also trying its platform in the UAE, where it already has a license to do business. It hopes to start selling there after it has done well in Saudi Arabia.
Khan told Parhlo World that PostEx will ask the Saudi Central Bank, which is in charge of Saudi Arabia, for a funding license. In the meantime, it has started a pilot program in the country with a few small and medium-sized online stores and one or two big ones. This is possible with the help of local financing partners.
PostEx also wants to grow in Pakistan, where it already has 6,500 employees spread out across 600 towns. By the end of the year, it wants to have 9,000 employees there.
“We think growth will be stronger in some cities than in others.” Khan said, “So we put more money into those cities.”
The new company is also trying a digital payments service for Pakistani online stores that will let customers pay digitally at the door or on the checkout page. It already gives businesses an expense management system that lets them handle payments to suppliers and vendors, salaries, and other costs all from one place.
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VSQ, FJ Labs, and Zayn VC, along with new investors Dash Ventures and Sanabil500, took part in PostEx’s most recent round. The company had already raised $8.6 million before this round.
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