How Rider plans to boost the e-commerce sector in Pakistan
Retail analysts who only follow Western markets might be surprised to find that e-commerce is not a dominant force everywhere – in Pakistan, for example, only 3% of retail sales are made online, while that this country has 70% of the population. have smartphones. The biggest barrier to increased adoption of online retail is that shoppers have had a bad experience when trying e-commerce — something that logistics start-up Rider is announcing today. today seed funding of $3.1 million, hopes to remedy.
“When e-commerce came to Pakistan, the logistics industry’s response was to copy-paste the model it had been using to deliver mail and freight for the past 150 years,” says Salman Allana, founder and CEO of Rider. “It quickly turned into a disaster.”
Retailers selling products online in Pakistan often run into big problems, Allana says. Up to 20% of deliveries do not reach consumers because it is often difficult to find the right address; therefore, many buyers no longer bother to make further deliveries. Additionally, Pakistan has a cash on delivery culture and by the time the delivery agents collected the money and the logistics provider reconciled the account, traders often started to suffer from cash flow issues.
“Our thesis at Rider was that if we started small, solved problems one at a time, then optimized the solution before moving on to the next problem, we could make e-commerce work much more efficiently,” says Allana.
So it turned out. Rider moved to Karachi in 2019 with just four staff members and only made 10 deliveries in its first month. But three years later, its logistics network covers 60% of the Pakistani population in 60 cities of the country; it has now made over 3 million deliveries and its workforce is approaching 700.
Rider’s advantage over incumbent logistics providers in Pakistan is that Allana and her team were able to build a business from scratch. The company operates through 16 hubs across the country, collects products from merchants who have received an order online and scans them to decide which hub they should go to. Once the product arrives at the hub, it is scanned again and sent to a delivery center, from where it is assigned to a bag to be picked up by a Rider delivery person.
About 80% of these agents are employed directly by the company, with the rest coming from the gig economy to provide flexibility and scaling potential. Agents receive automated routes, calculated for maximum speed and efficiency by Rider software. The aim is to provide an Amazon-style next day delivery service with success rates well above those of incumbent logistics companies in Pakistan; currently, deliveries complete are running at around 91%, Allana says.
The bigger picture is that online merchants using Rider’s delivery service can have much greater confidence that their customers’ orders will be fulfilled – and therefore customers will place more orders. Rider connects to merchants’ computer systems via APIs or, with small businesses in particular, can provide an order management system that they can use with their customers while connecting to the business.
Another feature that Rider is proud of is its fundraising technology. As soon as agents collect payments upon delivery, Rider’s digital tools allow it to consolidate the merchant’s account. This means that retailers are paid within days of the sale, rather than having to wait several weeks as in the past.
“It’s about improving the speed and efficiency of deliveries,” says Allana. “If consumers can be confident that they will actually receive their goods and merchants have a partner they trust to deliver, we will see e-commerce accelerate rapidly.” And that, of course, is also good for Rider – he makes a living by charging a fee for each delivery, depending on the weight of the package and the distance to the destination.
The potential is huge, says Allana. “Retail is north of a $150 billion industry in Pakistan, but it’s stuck in bricks and mortar,” he says. “Through our platform, One Mile at a Time, we are enabling the industry to transform.”
Investors embrace this pitch. The company raised a pre-seed funding round last September and today’s additional funding brings the total amount raised by the startup to $5.4 million. This latest round includes investments from YCombinator, i2i Ventures, Flexport, Soma Capital and Rebel Fund. Existing investors including Global Founders Capital, Fatima Gobi Ventures and TPL E-ventures also provided additional support.
Allana says the money will be used for further investment in product refinement, largely through strengthening Rider’s technology. The company is also committed to improving the user experience, to make it easier for more merchants to connect online.