Pakistanis are opting for cheaper brands, be it cooking oil, hand wash, or soaps, as inflation has caused significant changes in consumer behaviour in the country, said co-founder of a delivery startup.
“People are now losing interest in brands that were supposed to be healthier in a category, for instance take cooking oil. They are now buying cheaper oil,” Mohammad Ahsan Kidwai, co-founder and chief commercial officer (CCO) at Krave Mart, told Business Recorder in a recent interview.
The delivery startup hosted the ‘Krave Mart Partner Summit Q12024’ with multiple facets, including announcing its merchandise partnership with Quetta Gladiators in the upcoming Pakistan Super League, the country’s biggest sports event.
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“Our unit economics is positive. We have observed financial discipline. Our sales have doubled, but we haven’t hired people according to the way our sales have increased,” Kidwai said.
The Karachi-based company raised a $6.25 million round in 2023 – year’s third largest funding. Its team is upbeat that they will break even in 2024 and perhaps become profitable.
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“But, it will depend on favourable conditions. For instance, you don’t know where exchange rates will go. And most importantly fuel prices. If fuel prices go up, we will be forced to increase rider percentage, otherwise they won’t work with us,” Kidwai said.
Earlier, in a presentation, he shared the company’s average basket size – the price of one order or parcel by a customer – stood at Rs350 initially.
“It now stands at Rs2,100,” he said.
About changing consumer behaviour, Kidwai added that if a person’s grocery budget was Rs40,000, the cost for the same basket has now increased to around Rs75,000. “Certainly buying behaviour has to change.”
It may be noted that the country’s headline inflation spiked to a record 38% back in May, 2023, and it’s still standing at 28.3% as of January, 2024.
To double down on this changing buying behavior, Krave Mart introduced eight private label brands offering some 150 products, its co-founder mentioned.
“It’s 10% of our total sales right now. For instance, there’s 18% or 19% margin on selling other brands, we have somewhere around 40% margin on private label brands. We would love to see it around 35% or 40% of our total sales,” he said.
Kidwai said they have somewhere around 30%-40% market share right now.
During a presentation, the other co-founder and chief executive officer (CEO) of the company Kassim Shroff said the startup’s goal was to increase basket size two times and GMV 10 times.
“We have a very sustainable business. It is due to very high financial discipline,” Shroff told Business Recorder.