The Pakistani enterprise PostEx, known for providing financial and logistical solutions to internet-based merchants, is gearing up to venture into new territories, beginning with Saudi Arabia within the current year, a report from TechCrunch reveals exclusively.
Muhammad Omer Khan, PostEx’s founder and CEO, shared in an interview, “Our goal is to venture into additional markets and instigate disruption because we identify significant opportunities there.”
The digital commerce sector of Pakistan, which accounts for approximately 1.5% of the nation’s entire retail scene, has seen a surge of 50% over the past year. PostEx has played a notable role in this expansion.
Pakistani online merchants face difficulties in sustaining and growing their businesses, as cash on delivery comprises 95% of transactions. It takes courier services in the country between 10 to 15 days to process these transactions, leading to working capital challenges for these merchants.
To address these issues, Khan launched PostEx in 2020, offering immediate payments for cash-on-delivery orders alongside logistics services. Upon being regulated as a non-banking financial institution within Pakistan, PostEx further introduced a capital growth service for digital merchants. Yet, the company maintains a risk-aware approach by only extending credit in tandem with its logistics offerings.
Khan highlighted to TechCrunch that such a model has enabled PostEx to maintain its non-performing loan ratio at a mere 0.03% since its inception.
“Controlling the fund flow—integrating credit provision with self-managed deliveries and direct cash collection from customers—underpins our approach,” Khan explained.
Khan added that, within its active community of 15,000 merchants, over 80% have opted for the combined upfront payment and logistics solution, while the remaining 20% utilize only the logistics service.
Initially, PostEx funded its financial offerings through equity due to Pakistan’s stringent capital controls, which hamper raising significant debt via traditional means. But as the platform grew, building a reputable merchant base with a solid credit repayment history, it began securing loans directly from banks for the merchants.
By acquiring its competitor Call Courier in August 2022, PostEx significantly expanded its logistical network in Pakistan, instantly growing its market share from three primary regions to over 650 cities. This move also facilitated the incorporation of smaller businesses and enterprise clients, making PostEx a nationwide e-commerce service provider for businesses of all scales.
Khan revealed that a little over a year post-acquisition, PostEx turned profitable in November last year, recently hitting an annual recurring revenue rate of $21 million, aiming to exceed $25 million by this year’s end with four million monthly transactions.
“Our operational model excludes acquisition costs, focusing instead on the costs of debt and capital to maintain healthy profit margins… experiencing a monthly growth rate of 10–15%,” he stated.
Venturing into New Territories with $7.3M in Fresh Funds
With a fresh injection of $7.3 million in equity financing led by Conjunction Capital based in Dubai, PostEx sketches its ambitious plans for market expansion, eyeing regions beyond Saudi Arabia, including the United Arab Emirates over time.
PostEx is set to make its entry into Saudi Arabia within the next three months, with plans to raise an additional $15 million to consolidate its position in this new territory. Negotiations with potential investors are actively progressing, Khan confirmed.
Moreover, PostEx is piloting its offerings in the UAE, where it already possesses a financing license, anticipating a launch following a successful establishment in Saudi Arabia.
In preparation for its Saudi Arabian debut, Khan disclosed to TechCrunch plans to apply for financing licensure with the Saudi Central Bank, alongside initiating a pilot in the country with a select group of small to medium online merchants and a couple of major players, in collaboration with local financing partners.
Additionally, PostEx aims to bolster its footprint in Pakistan, planning to increase its workforce from 6,500 employees across 600 cities to 9,000 by year-end.
“We prioritize investments in cities showing greater growth potential,” Khan mentioned.
PostEx is also exploring the launch of a digital payment solution for Pakistani online merchants, enabling seamless transactions at checkout. It already provides an expense management system, assisting merchants with payroll, supplier payments, and other financial operations through a unified platform.
The latest funding round also saw contributions from Dash Ventures and Sanabil500, along with continuing investment from previous backers including VSQ, FJ Labs, and Zayn VC. Prior to this, PostEx had secured $8.6 million in funding.
Compiled by Techarena.au.
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