Everyone understands the point of bulk-buying: customers who place a large order for the same item expect to be rewarded with discounts. But while that works well for companies, it’s not an approach that is typically available to individual consumers doing their grocery shoppers. Until now, that is. Step forward Pakistan’s DealCart.
The Karachi-based ecommerce start-up, which is today announcing a $4.5 million funding round, is all about the power of the community. Using its site to place orders for staple items, consumers can band together in order to place a bulk order and secure a discount from suppliers.
Launched in March, DealCart has already attracted 50,000 Pakistani shoppers and facilitated 40,000 transactions, explain co-founders Haider Raza and Ammar Naveed. The average saving on each purchase made through the site so far has been 22%.
“We are having a real social impact,” says Raza. “In many Pakistani households, families are spending more than half of their income on groceries, so anything we can do to help them save money is vital.” The point is underlined by the data on the top-selling items on DealCart so far: staples including cooking oil, tea, milk and baby products all feature highly.
The principle is very straightforward. Consumers join DealCart by downloading its app to their phones and can then start shopping. For each item they want to buy, they can ask other DealCart users in need of the item – as well as friends, family and contacts on social media – whether they want to join a group in order to increase their purchasing power. As long as the group consists of at least four people, the supplier will offer a lower price than the consumer would otherwise have paid.
It’s a model that gives DealCart certain advantages as well as benefiting the consumer, explains Naveed. “It’s in the interest of consumers to recruit to their groups so our customer acquisition costs are low, and we can pass on that saving,” he says. “We’re not in the quick commerce market, so we can aggregate demand and optimise our logistics costs; we’re also direct to consumer, so there are no intermediary costs for us to worry about.”
Suppliers are keen too, the founder says – particularly those small and medium enterprises struggling to scale their businesses. DealCart provides them with a route to the mass market that was previously off-limits and gives them a way to target the national market rather than local customers only.
While the business has made a strong start, Raza and Naveed believe they have only scratched the surface so far. Pakistan has 220 million people, they point out, but ecommerce take-up has been very limited – largely because providers have focused on speedy delivery rather than price competitiveness. By offering households the opportunity to save on groceries through an ecommerce platform, DealCart believes it can persuade Pakistanis of the merits of shopping online. The founders believe their total addressable market is worth as much as $60 billion.
Consumers are ready, says Raza. “Pakistan has recently seen a surge in social media users, a phenomenon that generally precedes these users transacting online for their daily needs,” he says. “We can use this opportunity to enable more people to get access to their favourite brands at extremely affordable prices.”
It is relatively early days for the company, which is still experimenting with its value proposition. There is scope to offer larger discounts to bigger groups, for example, and the founders are also convinced strategies such as gamification could have a major role to play in their future success.
Nevertheless, investors are excited. The company’s pre-seed funding round is led by Shorooq Partners, with participation from Fatima Gobi Ventures, Vibe Capital, 500 Startups, i2i Ventures, Julian Shapiro, Rally Cap Ventures, and several strategic angel investors.
“Given the broader macro environment and the rising cost of living seen across the world, there is greater demand for solutions like DealCart that are enabling access to affordable daily necessities,” says Ali Mukhtar, general partner at one of those investors, Fatima Gobi. It’s an important point – while the company’s priority for the next 12 to 18 months is to build out its operation in Pakistan, the founders see potential to expand across the region and beyond.
In the meantime, the additional financial firepower the business has secured will allow it to make further investments in its technology stack, in order to give it the resilience required to underpin a rapid scale-up process. The company is also in the process of recruiting a senior leadership team, with new hires in product development and engineering joining shortly.