The combined entity will be handling about 50,000 orders a day, a scale that makes it profitable. The acquisition gives PostEx delivery operations in 500 Pakistani cities, compared with its previous base that consisted of just the three main ones.
Pakistan is attracting interest from global investors as its online businesses gain users. The country’s startups raised more than USD 350 million in 2021, a record, with several global venture funds investing for the first time. PostEx raised USD 8.6 million last year in one of Pakistan’s largest early-stage funding rounds.
According to the press release, more than 90% of ecommerce deliveries in the South Asian nation are paid for in cash, resulting in long delays before the merchants receive the proceeds for the sale. PostEx offers these businesses upfront payments before deliveries are made, giving them liquidity. The financing services help PostEx stand out from the region’s other delivery companies.
Pakistan’s ecommerce industry has lured the most investment in the recent funding rush. The majority of the population still hasn’t switched to online shopping, providing room for the sector to grow and transactions to reach USD 10 billion before 2025 from about USD 6 billion now, as per company officials.
According to reports cited by trade.gov, 95% of e-companies receive payments for their online orders via cash-on-delivery. This increases the liquidity requirements for ecommerce companies and also forces them to have dedicated teams that manage cash receipts for the company, thereby raising operational costs.
The larger players in the ecommerce space have started to utilise digital payments, and are optimistic that the industry will come together to coax consumers into moving away from cash-on-delivery to online payments. Digital payments also represent a hurdle for Pakistan’s ecommerce sector. While a number of products like EasyPaisa, JazzCash, and uPaisa – which are mobile banks - are available today, none of them have high market penetration. This, coupled with the fact that only 24% of the country’s population has a bank account, significantly increases the cost of doing business for ecommerce companies.
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