Pakistani startup Post XAmazon, which provides financial and logistics services to online merchants, is set to enter new markets, starting with Saudi Arabia, this year, TechCrunch has learned exclusively.
“We want to go into other markets and make a real difference because we see the gap,” said Muhammad Umar Khan, founder and CEO of PostX, in an interview.
E-commerce in Pakistan, which currently accounts for about 1.5% of the total retail market, has seen a 50% growth in the past 12 months. PostX is likely to contribute to this growth.
Online merchants in Pakistan are struggling to sustain and grow their businesses, as 95% of transactions are made through cash on delivery. Delivery companies in the South Asian country take 10 to 15 days to settle these transactions from the time of dispatch to delivery. All this leads to working capital issues for online merchants.
In 2020, Khan founded PostEx to solve these problems by offering merchants upfront payments for cash-on-delivery orders, and an accompanying logistics service. After getting regulated as a non-banking financial institution in Pakistan, the startup also launched a growth capital offering for online merchants. However, to minimize risk, the startup does not provide outright financial support to merchants, and only extends credit to them if they use its logistics services.
Khan told TechCrunch that this model has helped PostEx keep non-performing loans below 0.03% since the beginning.
“Because we control the flow of money, which means that if we’re extending credit, we do the delivery ourselves, and then we collect the money directly from the consumer,” he said.
The co-founder added that out of its 15,000 active merchant base, more than 80% of merchants have only signed up for payments with Logistics, while the remaining 20% use its logistics services only.
Initially, PostX started offering the financial service through its own equity, as capital controls in Pakistan made it difficult to raise large amounts of debt from traditional lenders. However, as it grew and gained a proven number of merchants and credit history, the startup began working with traditional banks to provide loans to merchants directly from their balance sheets.
PostEx expanded its logistics presence in Pakistan by acquiring competitor Call Courier in August 2022. The acquisition helped the startup expand its market from three major markets to over 650 cities in one go. It also enabled the integration of small businesses and enterprise customers—along with large merchants—to become a nationwide service for e-commerce companies of all sizes.
Just a year after acquiring Call Courier, PostEx began turning a profit in November of last year, Khan said. It recently surpassed $21 million in annual recurring revenue, with four million monthly transactions, and is expected to surpass $25 million by the end of this year.
“There are no acquisition costs, except for the cost of debt or the cost of capital only. So, we are focusing on healthier margins to achieve profitability… We are growing 10-15% a month,” he said.
Entering new markets with new funding of $7.3 million
The startup has now raised $7.3 million in a full funding round led by Dubai-based Conjunction Capital to outline its expansion into the market, which it plans to expand beyond Saudi Arabia and into the UAE over time.
PostX plans to enter Saudi Arabia in the next three months. The startup is also seeking to raise another $15 million round to double its investment in the new market. Khan confirmed that talks with investors regarding the new round are ongoing.
PostX is also testing its platform in the UAE, and has already obtained a financing license. It plans to launch its services there after successfully penetrating the Saudi market.
As for Saudi Arabia, Khan told TechCrunch that PostEx will apply for a financing license from the local regulator, the Saudi Central Bank. In the meantime, the company has started a pilot project in the country with a few small and medium-sized online merchants and one or two larger players by tying up with local financing partners.
Meanwhile, PostX plans to expand its presence in Pakistan, increasing its headcount from 6,500 employees across 600 cities to 9,000 by the end of the year.
“We expect growth in some cities more than others. So we are investing more in these cities,” Khan said.
The startup is also testing a digital payment service for online merchants in Pakistan, allowing them to digitize payments at the door or checkout page. It already offers an expense management system for merchants to help them manage salaries, supplier and vendor payments, and their own expenses through a single portal.
PostEx’s latest round also saw participation from Dash Ventures and Sanabil500 in addition to its existing investors VSQ, FJ Labs, and Zayn VC. Prior to this round, the startup had raised $8.6 million.