Pakistan’s rapidly-growing e-commerce sector has a problem. It’s an industry where the standard practice is for consumers to pay for their goods with cash on delivery, handing payments to the courier at the door. It may take two weeks or more for this money to make it back to the e-commerce provider’s accounts, causing major cashflow issues that impede their growth.

PostEx is an innovative start-up business that thinks it has come up with an answer – and today it is announcing its acquisition of logistics business Call Courier in a move that will significantly expand its services to e-commerce providers and their customers. The deal creates the largest e-commerce services provider in Pakistan in terms of daily transactions.

“Our job is to ensure e-commerce providers in Pakistan are able to fulfil their potential,” explains Omer Khan, co-founder and CEO of PostEx. To do that, the business operates through a hybrid model, supporting e-commerce businesses with access to finance, but also with a logistics and delivery service.

Founded in 2020, PostEx’s business is built on an invoice finance model. When an e-commerce platform makes a sale, PostEx is able to advance it a sizeable chunk of the revenue upfront – typically around 70% – so that the company does not have to wait for a cash-on-delivery payment to filter back. That supports the e-commerce provider’s cashflows, enabling it to invest and scale more rapidly.

From the outset, however, PostEx’s founders realised that offering this kind of financing service would mean it taking on the cashflow issues that its e-commerce provider customers previously faced. So they decided to launch their own logistics service, providing delivery and fulfillment to their e-commerce customers as well as financing. That meant PostEx was collecting cash on delivery itself, rather than having to wait for third-party logistics providers to pay up, substantially reducing payment timescales and its cashflow exposure. “We realised we needed to take control of the logistics process,” recalls Khan.

The hybrid concept made sense, but rolling out the infrastructure required to serve e-commerce platforms’ logistics needs is a more demanding task than simply operating as a finance provider. For this reason, PostEx launched initially in just a single Pakistani city, Lahore, before expanding its service to Islamabad and Karachi.

That roll-out has enabled PostEx to reach 60% of the country’s e-commerce market, Khan explains, leaving him and his fellow founders with a sense of frustration. “We wanted to be able to serve 100% of the destinations that our customers sell to,” he says. “That’s what they need.”

That’s where today’s Call Courier deal comes in. The business is one of Pakistan’s largest logistics operators, making deliveries to consumers in around 500 cities across the country. PostEx’s purchase of the business will therefore enable it to leapfrog its way to near 100% coverage of the country. “It’s about adding more cities to our range and increasing our market share,” adds Khan.

The Call Courier business will operate as a wholly-owned business under the PostEx brand, with an emphasis on high-quality service for consumers. The vast majority of PostEx’s customers use the company for both invoice finance and logistics service, Khan explains, but a small minority of larger e-commerce providers are just looking for the latter. Call Courier will expand its reach to that constituency too.

In a marketplace where e-commerce has been slower to take off – partly because of the scale-up problems providers have faced – PostEx is now exceptionally well-placed to take advantage of what is becoming exponential growth.

“We are really seeing a shift in people’s buying patterns,” Khan says. “We expect that to just keep on accelerating.” Indeed, the e-commerce market in Pakistan was worth around $4.5 billion in 2020, but is expected to reach $7.7 billion this year – and to hit $12 billion by 2025.

Following the transaction, PostEx will be serving around 1.3 million consumers and 8,000 merchants across the country, with a monthly loan book of in excess of $12 million. That financing book is set to grow quickly, with PostEx tapping into venture debt as well as the capital it has already raised to support its lending activities. The business completed an $8.6 million seed finance round in November 2021, with funds coming from investors including Zayn Capital, Global Founder Capital, MSA Capital, RTP, FJ Labs and Shorooq.

Khan is ambitious for PostEx – as well as for the e-commerce market it serves. “Our aim is to bring about change,” he says. “It will be a win for us when every e-commerce provider has access to the financing and the services we provide, even if they don’t get that from us.”

In the meantime, the company continues to broaden its services, securing a regulatory license that now enables it to offer a wider range of financing. It is also eyeing international expansion, with markets such as Saudi Arabia and Egypt, which follow a similar cash-on-deliver model to Pakistan, offering interesting opportunities.