Online merchant financing heats up as Rider and CreditBook also join hands to expand SME lending

Two VC-funded startups catering to SMEs in the e-commerce space have partnered up to leverage their respective business models to boost sustainable growth. Rider is a logistics startup providing tech-driven delivery services to online merchants on the back of US$ 5.4 million in estimated funding to-date. While CreditBook is a digital platform catering to small businesses for managing their credit, sales and expense cycles with the aim of helping them gain access to financial services. The company has raised approximately US$12.5 million so far.

According to information shared by Rider, the 'strategic partnership will enable Rider to expand its "cash on pickup" model, providing working capital solutions to its 1000+ active merchants to help them grow'. In his latest interview, the company's CEO Salman Allana shared his perspective and interesting insights on the current state of Pakistan's startup ecosystem which point towards the factors behind such partnerships.

In recent months, the publicly-listed logistics player BlueEX (listed as Universal Network System Limited) and leading financial platform Abhi deepened their finance and logistics collaboration with the fintech reportedly acquiring a 20% equity stake in the e-commerce delivery company. Just a few days ago, Retailpedia.PK reported that PostEx has obtained a Non-Banking Finance Company (NBFC) license allowing it to directly offer financial services to online merchants.

PostEx gains NBFC license to offer financial services for unlocking growth in the e-commerce space

The e-commerce startup has been styled as a fintech company from the beginning and has raised US$ 8.6 million in investments since it was founded in 2020. Now that PostEx has finally obtained a 'Non-Banking Finance Company' (NBFC) license issued by the SECP, it is now expected to be able to roll-out broader financial solutions in the market.

As per industry sources, PostEx first disrupted the market by providing instant and partial up-front payments to brands and marketplaces against cash-on-delivery shipments which they hand over to the company to delivered to their customers. In addition, PostEx also offers a payment gateway to online merchants which enables it to manage non-CoD orders as well.

After building a team of seasoned professionals, it focused its e-commerce deliveries to Karachi, Lahore and Islamabad which comprise around 60% of online orders, according to market information.

Last year, PostEx acquired established player Call Courier to fast-track the expansion of its network and customer base with the goal of eventually providing a variety of financial services to as many e-commerce merchants as possible. Despite the acquisition, it has been observed that both companies have not yet been merged under the PostEx brand, which may happen at a later stage.

Now that the NBFC license has been granted to the company, PostEx is likely to provide financing in advance to cash-strapped online merchants along with other solutions. After reaching this regulatory milestone, perhaps the company will also look to raise more funding or even collaborate with banks and other fintechs to fuel its growth and boost the ecosystem further.

With US$ 6.4 billion market size, Pakistan still behind Egypt and Bangladesh in e-Commerce adoption

According to an informative report on the 'State of B2C E-commerce in Pakistan' co-authored by Data Darbar and alphaventure, Pakistan is the 47th biggest market for e-Commerce with a

forecasted revenue of US$ 6.4 billion for 2023 which is approximately 0.5% of the country's GDP. In terms of categories, Electronics & Media comprise the largest share of the market (34.1%) while Furniture & Appliances comes second (28.8%), then Fashion (20.4%) and Food & Personal Care (10.6%), as per data gathered from ecommerceDB.

In comparison, peer countries such as Egypt and Bangladesh have a forecasted revenue for 2023 of US$7.5 billion and US$8.4 billion respectively. The disparity between these two countries and Pakistan can be attributed to the lower GDP per capita of the Pakistan despite its population being much larger than both.

The report also includes information of Pakistan's e-Commerce funding landscape, the growth in digitally paid transactions and registered merchants the biggest 'click-and-mortar' stores and largest e-commerce platforms as well as other relevant analyses.