PostEx, a Pakistani startup that provides financial and logistics services to online merchants, is planning to expand into new markets. The company, which has contributed to the growth of e-commerce in Pakistan, will begin its expansion with Saudi Arabia this year. Muhammad Omer Khan, founder and CEO of PostEx, explained that the company aims to disrupt other markets by addressing the gap in services for online merchants.
In Pakistan, e-commerce currently accounts for only 1.5% of the total retail market, but it has grown by 50% in the last 12 months. One of the challenges faced by online merchants in Pakistan is the reliance on cash on delivery for 95% of transactions. This, coupled with the slow settlement process of courier companies, leads to working capital issues for merchants.
To address these issues, Khan founded PostEx in 2020. The company offers upfront payments to merchants against cash-on-delivery orders, along with a logistics service. PostEx, which is regulated as a non-bank financial institution in Pakistan, also provides growth capital to online merchants. However, the company only offers credit if merchants use its logistics service, reducing the risk of non-performing loans.
By controlling the flow of funds and handling deliveries and cash collection directly, PostEx has been able to keep its non-performing loans below 0.03% since its inception. Over 80% of its active merchant base has signed up for upfront payments with logistics, while the remaining 20% use only the logistics service.
Initially, PostEx used its own equity to provide financial services, as raising debt from traditional lenders in Pakistan is challenging due to capital controls. However, as the company scaled and gained a proven track record, it began working with conventional banks to provide loans to merchants directly.
In August 2022, PostEx acquired rival Call Courier, expanding its logistics footprint in Pakistan. The acquisition allowed the company to grow its market from three key cities to over 650 cities, enabling it to serve businesses of all sizes. PostEx became profitable in November 2021, just over a year after the acquisition, and has since crossed an annual recurring revenue rate of $21 million.
To fuel its market expansion, PostEx recently raised $7.3 million in an all-equity funding round led by Conjunction Capital. The company plans to enter Saudi Arabia in the next three months and is in talks with investors for another funding round of $15 million to support its expansion in the new market. PostEx is also testing its platform in the UAE and plans to launch there after successfully entering the Saudi Arabian market. Additionally, the company aims to expand its presence in Pakistan by increasing its headcount and investing in cities with higher growth potential.
PostEx is also exploring additional services for online merchants, including a digital payments service and an expense management system. The company’s recent funding round saw participation from Dash Ventures and Sanabil500, as well as existing investors VSQ, FJ Labs, and Zayn VC.
