24SEVEN, a retail and eCommerce startup with headquarters in Pakistan, has announced the conclusion of a $6 million pre-Series A financing. The startup focuses on making it possible for local mom-and-pop stores to provide both B2C and B2B (business-to-business) services.
Jarrar Shah, the company’s CEO, founded it in 2016 as an online grocery business. In early 2021, the startup suspended its grocery delivery services and changed its name to 24SEVEN to offer its B2B2C model a new identity.
Jarrar said in a conversation that they stopped plans for the grocery delivery service after discovering that it couldn’t grow in Pakistan. Jarrar made the observation that it was impossible to implement unit economics for food delivery in Pakistan.
The startup changed its focus in order to enroll merchants and thoroughly prepare them for B2B2C services via digital channels under the name Apni Dukan. Mom-and-pop shops are rebranded and digitally transformed by 24SEVEN to become Apni Dukan resellers.
Jarrar informs us that the concept has been in use for more than a year and that it has more than 2,000 mom-and-pop shops participating in Lahore, Gujranwala, Sheikhupura, Multan, and Faisalabad.
The business also claims that with favorable contribution margins, its GMV has increased by 40% month over month.
Jarrar detailed the thinking behind the pivot, saying, “The communities have trust with the corner store so if we could partner with them, we could utilize the underlying trust, digitize them and brand them, and instead of using dark businesses, we could use them for the fulfillment.”
The strategy seems clever. Because there are so many kiryana businesses in Pakistan’s low-, middle-, and high-income neighborhoods, it not only has an influence in terms of making micro-entrepreneurs more effective but it can also be highly scaled up.
In Pakistan, there are thought to be 850 000 mom-and-pop shops.
According to Jarrar, the model’s fundamental unit economics are quite robust, and the firm is incredibly capital-efficient because no CAPEX burn is necessary to establish these brick-and-mortar locations.
These neighbourhood shops with new branding will sell FMCG items that 24SEVEN will send to them, as well as organic goods from 24SEVEN such fruits and vegetables.
Our model fosters a closer engagement with these stores than that of other B2B players, We won’t be going after every single one of ten kiryana retailers in a neighbourhood, for example, to supply the goods, adds Jarrar. “We’ll choose one or two of these stores, and then we’ll go deep into a relationship where we’ll rename them, manage their supply chain, and take care of digital order placement — it’ll be like a one-stop shop for them.”
24SEVEN has digitalized these Apni Dukaan’s, enabling customers to order delivery to these shops online. Additionally, these businesses will receive POS devices from 24SEVEN for use with in-store orders.
The ambitions don’t end here; 24SEVEN will provide local families with access to these businesses for last-mile grocery deliveries through an app-based service, closing the B2B2C loop, after rebranding and digitization.
Additionally, 24SEVEN claims that it will soon be able to evaluate the credit worthiness of these stores in its network and provide loans to them through partners like Finja and HBL based on the transaction history obtained through this digitalization, says Jarrar.
When all of these services are implemented, 24SEVEN will have a profitable business model that relies on product margins and other incentives. Since 24SEVEN won’t be opening any physical locations, CAPEX will be modest. Financial service offers would bring in additional revenue.
Initially concentrating on the digitization, rebranding, and onboarding of retailers, 24SEVEN is now concentrating on other aspects of the business, such as developing the fintech product that will evaluate the credit worthiness of Apni Dukan partners.
The pre-Series A round’s revenues will also be put to use for adding more kiryana outlets and creating new services and goods.
“Mom and Pop stores are the building block of communities across Pakistan, and 24SEVEN is helping them to not just sell physical but also digital goods,” said William Bao Bean, general partner at SOSV, in response to the investment.
