PostEx to Expand Pakistani E-Commerce Footprint into Saudi Arabia

Pakistani startup PostEx, known for providing financial and logistics services to online merchants, is set to expand into new markets, starting with Saudi Arabia this year. The move marks a significant step for the company as it aims to disrupt regional markets.

“We see a gap in these markets and intend to disrupt them,” said Muhammad Omer Khan, founder and CEO of PostEx, in an interview.

E-commerce in Pakistan, currently accounting for around 1.5% of the total retail market, has seen a 50% growth in the last year, with PostEx playing a crucial role in this expansion.

Online merchants in Pakistan face significant challenges in sustaining and growing their businesses, primarily due to the widespread use of cash on delivery (COD), which accounts for 95% of transactions. Courier companies often take 10 to 15 days to settle these payments, leading to cash flow problems for merchants.

In response, Khan founded PostEx in 2020 to address these issues by offering merchants upfront payments against COD orders, coupled with logistics services. The startup, now regulated as a non-bank financial institution in Pakistan, has also launched a growth capital offering for online merchants. To minimize risks, PostEx ties credit offerings to its logistics services, helping maintain non-performing loans at below 0.03% since its inception.

“We control the flow of funds by handling both the credit and the deliveries, ensuring we collect the cash directly from consumers,” Khan explained.

PostEx’s model has attracted a strong merchant base, with over 15,000 active merchants. Over 80% of these merchants use both upfront payments and logistics services, while the remainder rely solely on logistics.

Initially funded through equity due to the challenges of raising debt in Pakistan, PostEx has since secured traditional bank partnerships to provide loans directly from their balance sheets. The company expanded its logistics network by acquiring Call Courier in August 2022, extending its reach to over 650 cities across Pakistan. This acquisition allowed PostEx to onboard smaller businesses and enterprise customers alike, establishing it as a key player in Pakistan’s e-commerce logistics sector.

Just over a year after acquiring Call Courier, PostEx became profitable in November last year and recently surpassed an annual recurring revenue rate of $21 million. The company processes 4 million monthly transactions and aims to reach $25 million by year-end.

To fuel its expansion, PostEx recently secured $7.3 million in an all-equity funding round led by Dubai-based Conjunction Capital. The startup plans to enter Saudi Arabia within the next three months and is in talks to raise an additional $15 million to strengthen its position in this new market.

PostEx is also testing its platform in the United Arab Emirates (UAE), where it already holds a financing license. The company plans to launch in the UAE after establishing its presence in Saudi Arabia. For its Saudi expansion, PostEx will apply for a financing license with the Saudi Central Bank and has begun a pilot program with local online merchants.

In parallel, PostEx is expanding its footprint in Pakistan, aiming to increase its workforce from 6,500 to 9,000 across 600 cities by the end of the year. The company is also testing a digital payments service to help merchants in Pakistan digitize payments at checkout or delivery. Additionally, PostEx offers an expense management system that allows merchants to manage salaries, supplier payments, and other expenses through a single platform.

The latest funding round also saw participation from Dash Ventures, Sanabil 500, and existing investors VSQ, FJ Labs, and Zayn VC. Prior to this, PostEx had raised $8.6 million.