Never did we feel a greater need for online delivery services than we did during the Covid-19 pandemic. Even those who had little faith in online shopping were converted to e-commerce amid lockdowns and social distancing directives.
Online grocery shopping, especially, saw a huge spike. As new delivery startups mushroomed, foodpanda’s grocery delivery service ‘pandamart’ also emerged as a big help right when it was needed. As stepping out wasn’t risk-free amid the virus spread, such services helped us get our groceries delivered right to our doorsteps in no time.
E-Commerce was suddenly Q-Commerce (Quick Commerce). People were getting instant grocery deliveries. The convenience that Q-Commerce services like pandamart offered was now being fully realized. Today, online grocery shopping is a norm that is saving us much hassle.
To take a deeper dive into what big Q-Commerce companies like pandamart in Pakistan are presently thinking, we sat with Ibad Ur Rehman Ahmed, Director pandamart & New Verticals, and discussed matters like the opportunities, challenges, market potential, entrepreneurship game, and the way forward in the Pakistani e-Commerce and Q-Commerce spaces.
Here’s how the discussion went:
Tell us a little about yourself – your background, your role, your inspiration, and how you ended up working for foodpanda.
I did my undergrad from GIK which really helped develop a love for detail, problem-solving, and process orientation. I joined Engro as a graduate trainee, eventually transitioning from fertilizer to the energy sector, and worked for Shell for about 5 years.
After this, I proceeded to do my MBA from INSEAD in France, post which I worked for about 6 years at a diversified conglomerate in Saudi Arabia in its automotive and retail divisions.
Since I am an only child, I wanted to come back to Pakistan and with my background of having run a convenience retail business, foodpanda wanted someone to start their groceries vertical in Pakistan and that’s how the marriage happened.
What was the philosophy behind choosing the name ‘pandamart’, and does it have an impact on the business?
foodpanda is the APAC subsidiary of Delivery Hero which operates out of 65+ countries.
pandamart is the brand that we’ve chosen to go with across all countries in APAC, for our dark stores business. Of all the businesses that we have delved into, ‘pandamart’ is the most recognized brand that we have under foodpanda’s umbrella.
As a company having a mission to deliver convenience and simplify lives, I believe it resonates quite well with consumers as it immediately:
i) Gives clarity around foodpanda’s extension outside of food delivery into a different category and shopping mission.
ii) Gives some indicative clue that this is not a retail partnership with a supermarket and is foodpanda’s own mart – which is true because we run everything in this business from sourcing, supply chain, operations, and last mile logistics end to end.
How committed do you think foodpanda and pandamart are to the Pakistani market?
I’d like to ask a counter question: how many tech startups in Pakistan are a decade old?
Delivery Hero is committed to being in the Pakistan market because from the perspective of the total serviceable market, Pakistan is perhaps one of the last bastions in APAC. Additionally, with pandamart, you have a business that has architected a model routed in sustainable growth from day 1.
While we could have grown even faster, we purposefully chose to have strong fundamentals from the outset so we remained a going concern for all the stakeholders whose lives we touch – be it our employees or the personnel at our marts, be it our riders or smaller SME vendors whom we support via procurement.
Please walk us through the scale of pandamart’s operations.
pandamart operates out of 6 cities in Pakistan. We have about 1,400 shops listed on our platform out of which about 800 are unique accounts since we also have chain vendors with multiple branches.
We have listed about 12,500 stock-keeping units (SKUs) on our platform of which we actively carry about 7,500 SKUs on average.
What sort of companies is pandamart currently collaborating with?
We already work directly with all the top consumer products companies in Pakistan be it in foods, dairy, beverages, and snacking or in non-food categories of personal care, hygiene, beauty, health, and wellness as well as household care.
We are always looking to partner with smaller enterprises willing to grow their brands in Pakistan.
What is your perspective on the need for diverse and inclusive ideas for better problem-solving in Pakistan vis-Ã -vis other global markets?
If you take a look at any of the true marvels of societal progress, most of those were not individual feats but a group of people coming together and building something great.
Team is everything and I believe the people you choose to be with you on your journey should be ones who complement you with skills that you do not possess as an individual.
Diversity and inclusion are the first step towards reducing similarity bias and ‘yes, sir’ behavior and when those teams learn how to collaborate with each other, then the levels of output and performance are unmatchable.
What are some of the strengths and weaknesses of the Pakistani market that help or discourage investment in the country?
That’s a great question.
I reckon the clear strengths of Pakistan are the unique number of smartphone users with access to 3G/4G and demographically, a growing middle class with multiple earners within a household as opposed to the sole breadwinner model a decade or so ago.
From an investor’s perspective, unfortunately, our weakening currency makes our market quite attractive to invest in but ultimately, it also dilutes any return on investment when it’s time to pull some money out.
Also, the macroeconomic landscape has long-term potential to shrink consumer demand which obviously makes things less attractive to investors.
What are the key challenges for entrepreneurs in Pakistan, and how in your view can they be met?
I think my last answer partly addresses some of those questions as what makes things unattractive for investors is also what makes life difficult for an entrepreneur. What I would suggest is to
a) Look at unexplored or recently tapped opportunities at the intersection of decent demand and a higher intrinsic gross margin – unfortunately, many players go for a market that is either already a red ocean and/or has razor-thin margins with a low margin for error where if they are unable to build strategic moats, then new entrants keep coming in until price wars drown everyone out.
b) Focus on customer segmentation from day 1 – know who you want and do not want to serve – if the price is the only USP that you have to offer, chances are you will be running into trouble.
c) Funding is a milestone along the journey; not the destination in and of itself.
What advice would you offer to someone looking to do business in Pakistan?
Build strong fundamentals and understand the challenges that come with scale.
Think of the SOPs and controls you will build at scale; where would manual processes stop serving you and you cannot proceed without automation or the experience breaks.
Lastly, genuinely care about the small details in the customer experience journey – rather than considering it a personal affront, thank people for their feedback as the same could be a pain point for hundreds and thousands of other customers and only one was willing to share that insight with you.
What is the future prospect of Q-commerce in Pakistan? Do you think that we have reached the inflection point here?
I don’t think we have reached the inflection point for Q-commerce in Pakistan. If anything, the eruption of multiple operators in this space proves that there’s definitely a need for this use case.
What companies now need to focus is on consumers who have this need as opposed to casting a wide net by promoting voucher/coupon usage and deal-seeking behavior only.
In the service industry, growth relies on performance; they are almost inextricably linked – eventually that is what builds brand loyalty, so relentless, obsessive focus on improving customer experience is what spurs future growth.
Do you think the global recession is affecting the e-commerce industry in general, and pandamart in particular?
I don’t think there’s any sector that hasn’t been negatively impacted by the recession globally. When Sundar Pichai, the CEO of Google, starts talking about productivity and efficiency, one knows that the impact is far and wide.
The biggest impact on foodpanda’s business obviously comes from rising fuel and utility costs as well as the impacts of inflation on medium to long-term demand.
With falling Virtual Capital (VC) funding across startups, have there been any changes in your business model?
I disagree; I don’t think that VC money has stopped inflowing into Pakistan. In fact, after a slower Q1 and Q2, there was a clear bounce back in terms of capital inflow.
I opine that while foodpanda was already quite diligent as an operator, we became even more prudent in terms of how we grow and how we acquire our customers as well as our approach to retaining them via improvements in experience as opposed to deals and discounts.
What are pandamart’s plans for the next couple of years?
Lots of exciting things are on the way for pandamart in Pakistan.
We are branching out into a few new categories to bring variety and choice to our consumers. We are in the process of building new competencies that would enable us to service larger grocery baskets and fortnightly/monthly grocery shopping missions.
Lastly, we are utilizing our existing strengths in procurement to see how we could service select B2B niches, especially for the restaurant and home chefs who have already partnered with us. This last one is particularly close to my heart as this vertical integration helps create value at each leg of the chain with the eventual benefit going to the end consumer.
What are your future plans in relation to new products or features that can improve customer experience and positively impact local communities?
In relation to new products, we’re looking at improving the ranges within our health and wellness categories and look at certain specific segments such as diabetes-impacted consumers.
Services excite me a lot more – we are looking at how we could utilize the ecosystem to partner with telcos, banks, fintechs to both facilitate grocery buying cycles as well as support payments for other services.
Lastly, we are looking to bolster app features that allow for easier ordering for repeat purchases as well as product recommendation algorithms. We are also exploring how we could support takeaway/’click-n-collect’ on our marts as well as pre-ordering/scheduling deliveries for later, in addition to our current on-demand model.
For almost two years, I’ve been advocating urgent policy interventions to help bridge the digital divide and enable the telecom industry in bringing connectivity at par with that of developed countries which, in turn, may also improve Pakistan’s unimpressive standing in the global ICT indices.
Even though all key stakeholders admit the current situation calls for a digital emergency, no palpable measures to tackle it have been taken.
Even though all key stakeholders admit the current situation calls for a digital emergency, no palpable measures to tackle it have been taken.
