With the advent of e-commerce, consumer shopping has become a hassle-free process. Okay, maybe not so much in Pakistan (yes I am talking about you) but it’s far worse for our friends in the business-to-business market where the amount at stake is much bigger and transparency still limited. And that’s exactly what Khareed.pk wants to change.
Khareed is an e-procurement platform that allows businesses to buy and sell goods and services from each other. The buyers can search for products and request a quote, which takes around a day to receive and then directly communicate with the vendor. Meanwhile, registered users have the freedom to even do a tendering process where they list down the products required so the suppliers can bid.
The traditional procurement market involves a fair bit of hassle and is usually a long process, which can vary from asking suppliers for quotes or proposals, issuing tenders or doing reverse auctions. But Khareed.pk Chief Executive Officer Haroon Sethi believes his solution can automate much of that, using an end-to-end service.
While the startup does have a marketplace ready with some 2,000 vendors, for now, it is not the main focus at least. “We actually started from a marketplace model but there was this chicken and egg problem; buyers were reluctant to come because of the lack of options while sellers didn’t want to join due to the lack of demand. So we had to pivot to an e-procurement solution early on, but would like to eventually put in place the old plans,” says Sethi.
Currently they have some 45 major corporates, such as the likes of MCB Bank or D. G. Khan Cement, in addition to a host of small and medium enterprises.
Sethi was running a manufacturing unit in Pakistan when he realised the magnitude of this problem. “There was no transparency in the B2B procurement market and it always had ample room for negotiation,” he explains. “I then moved to the Middle East but eventually came back here again and launched Khareed in 2015,” he continues.
The portal runs on a free-mium model where non-paying users can browse through listed goods and request for quotes, in essence using Khareed as a discovery portal. On the other hand, paid subscribers have a range of modules available to manage their procurement needs, including tendering, history and proof of payment.
Given its software-as-a-service model, Khareed makes money through monthly subscriptions, which can range between Rs150,000 and Rs450,000, depending on the number of modules required. However, that’s not supposed to be the only source of income as Sethi also wants to cash in through lead generation and seller advertisement.
The startup raised seed money worth $300,000 in January last year and now the CEO is eyeing another round from an investor that could open up new markets. Sethi, a former investment banker and consultant, is flanked by a c-suite — Farhan Shamir and Hamad Malik — with experience in developing enterprise solutions and scaling tech startups, respectively.
Why do businesses need their solution though? After all, majority those who can afford — the big industry — already have far broader software, such as Oracle or SAP, in place.
Why would they go for a local product with a more limited mandate?
“These two softwares are quite difficult to use and require proper training so their adoption is already limited in Pakistan. We, however, have tried to make Khareed.pk very easy to use keeping in view the local practices. Plus, now it’s increasingly becoming about being the ‘best in breed’ where you stick to a niche and excel at that, rather than doing everything at once, which is where I feel we have an edge over the two giants. Moreover, it’s not like a choice in any case since we are compatible with both SAP and Oracle,” Sethi explains. They are hoping to bring on-board small and medium businesses where he hopes Khareed’s comparative cost advantage will help grab a share.
What’s the total market Khareed is eyeing? “While the total procurement value goes as high as $70 billion, the segment we are looking at — the non strategic goods — is worth around $10bn,” Sethi claims.
While that is indeed a huge pie, much of its value is created by a few big conglomerates and business groups and given Khareed’s current business model in place, what matters more is the number of players demanding e-procurement solutions.
“That is a challenge considering such a major part of the economy is undocumented but the recent governmental drives to expand the formal net will surely help us,” the CEO believes.
In the meanwhile, the startup wants to spread its wings to other geographies, potentially through local investors.
The writer is member of staff:
Published in Dawn, August 25th, 2019