Everyone understands the usefulness of bulk purchases: customers who place a large order for the same item expect to be rewarded with discounts. But while that works well for businesses, it’s not an approach typically available to individual consumers doing their grocery shopping. Until now, yes. Step forward that of Pakistan DealCart.
The Karachi-based e-commerce start-up, announcing a $4.5 million funding round today, is all about community power. By using its site to place orders for basic items, consumers can work together to place a bulk order and get discounts from suppliers.
DealCart, launched in March, has already attracted 50,000 Pakistani shoppers and facilitated 40,000 transactions, co-founders Haider Raza and Ammar Naveed explain. The average savings on every purchase made through the site so far has been 22%.
“We have a real social impact,” says Raza. “In many Pakistani households, families spend more than half of their income on groceries, so anything we can do to help them save money is vital.” The point is underscored by the data on the best-selling items on DealCart to date: Staples, including cooking oil, tea, milk, and baby products, are all very good.
The principle is very simple. Consumers join DealCart by downloading the app on their phone and can then start shopping. For each item they want to buy, they can ask other DealCart users who need the item — as well as friends, family, and social media contacts — to join a group to increase their purchasing power. As long as the group consists of at least four people, the supplier offers a lower price than the consumer would otherwise have paid.
It’s a model that offers DealCart certain benefits and benefits consumers, Naveed explains. “It’s in consumers’ interests to recruit for their groups so that our customer acquisition costs are low and we can pass that savings on,” he says. “We are not in the quick commerce market, so we can bundle demand and optimize our logistics costs; we are also direct to the consumer, so we don’t have to worry about intermediate costs.”
Vendors are also excited, the founder says, especially those small and medium-sized businesses struggling to scale their business. DealCart offers them a route to the mass market that was previously banned and gives them a way to target the national market rather than just local customers.
While the company has gotten off to a strong start, Raza and Naveed think they’ve only surfaced so far. Pakistan has 220 million people, they point out, but e-commerce adoption has been very limited — largely because providers have focused on fast delivery rather than price competition. By offering households the opportunity to save on groceries via an e-commerce platform, DealCart believes it can convince Pakistanis of the benefits of online shopping. The founders believe their total addressable market is worth a whopping $60 billion.
The consumer is ready for it, says Raza. “Pakistan has recently seen an increase in social media users, a phenomenon that generally precedes these users transacting online for their day-to-day needs,” he says. “We can use this opportunity to give more people access to their favorite brands at extremely affordable prices.”
It is still relatively early for the company, which is still experimenting with its value proposition. There is scope to offer larger discounts to larger groups, for example, and the founders are also convinced that strategies such as gamification can play a major role in their future success.
Still, 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 around the world, there is a greater demand for solutions like DealCart that provide access to affordable daily necessities,” said Ali Mukhtar, general partner at one of those investors, Fatima Gobi. . It’s an important point – although the company’s priority for the next 12 to 18 months is to build out its business in Pakistan, the founders see potential to expand across the region and beyond.
In the meantime, the additional financial clout the company has acquired will allow it to make further investments in its technology stack, to give it the resilience it needs to support a rapid scale-up process. The company is also recruiting a senior leadership team, with new product development and engineering employees coming soon.
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