Having started his career in 1995, with a company called ELECTRO, Arif Lakhani is a serial entrepreneur, operating internationally. With more than 25 years of experience in finance, entertainment, hospitality, and tech sectors, Arif Lakhani has propelled not only his ventures but a variety of others to new heights. From a 5-member company, Mr. Lakhani catapulted ELECTRO into one of the largest players in Pakistan, operating nationwide and being a major part of the computerization of all commercial banks and Stock Exchanges. His Canadian Flagship company till date is one of the largest Global players in off lease / Recycled IT equipment with operations spread over in Europe, North America, Africa and Asia.
Presently, he is the Co-founder of Qist Bazaar; a buy-now-pay-later platform for the underserved. Arif Lakhani also serves as the General Partner in a California-based VC fund called K3 DIVERSITY FUND, which has invested in over 125 startups worldwide including 14 in Pakistan. Following are the edited excerpts of a recent conversation BR Research had with him regarding his startup Qist Bazaar:
BR Research: What is Qist Bazaar, and what’s the thought behind the fintech startup?
Arif Lakhani: Qist Bazaar is a licensed NBFC fintech startup specializing in Buy Now Pay Later (BNPL) services. Targeting underserved populations, the company provides accessible and convenient financial solutions through Shariah-compliant Musawamah financing. By leveraging technology, Qist Bazaar aims to bridge the financial inclusion gap and offer innovative BNPL options to individuals who lack access to traditional banking services.
BRR: Who do you target as your customer base in the underserved category? And what are your offerings, mode of payments, incentives etc.
AL: Qist Bazaar targets unbanked and underserved individuals like students, micro business owners, and domestic servants, offering accessible products through monthly installments. We provide consumer items such as phones, computers, TVs, refrigerators, fans, and washing machines on installment plans ranging from 6 to 18 months. Repayments can be made through cash, interbank transfers, JazzCash, or EasyPaisa. In addition to the online platform, Qist Bazaar has facilitation centers in Karachi and Hyderabad for customers seeking in-person assistance and reassurance.
BRR: When was Qist Bazaar launched, and can you share the progress and performance so far?
AL: It was incorporated in November of 2021. In 18 months of operations, we have delivered over 20,000 products, valued at PKR 1.2 billion, to our diverse customer base. Through our journey, we have discovered some key insights about our customer base:
First is the income Level. Approximately 57 percent of our customers earn less than PKR 40,000 ($140) per month. This highlights the importance of providing affordable and accessible financial solutions to individuals with limited income.
Then, more than half of our customers are micro business owners like the street hawkers.
We are also a source for income generation. A significant portion of our customers have used our product to generate income. This includes gig workers who purchase refurbished laptops, Riders buying bikes and phones to be eligible for a job, and store owners who invest in equipment to enhance productivity.
And we address basic needs. Surprisingly, even basic items like ceiling fans are among our most popular product categories. This suggests that fulfilling fundamental needs and improving the quality of life is a significant focus for our customer base.
BRR: What is your revenue model - how do you make money?
AL: Qist Bazaar’s revenue model is based on two main avenues: bulk buying and special pricing, as well as incorporating an upcharge for the time value of money in a Shariah-compliant manner.
Initially, the company benefits from special pricing as a bulk buyer, allowing them to negotiate favorable prices with manufacturers and suppliers. This enables Qist Bazaar to generate revenue through the markup applied to the products sold to customers.
Additionally, Qist Bazaar follows Islamic finance principles by incorporating an upcharge that accounts for the time value of money. This means customers pay an additional amount to compensate for the deferred payment and the value associated with the extended repayment period.
As Qist Bazaar’s volumes scale and the business grows, the company plans to reduce its reliance on the time value of money component and increase its focus on the revenue generated through bulk buying and special pricing.
BRR: What has been your marketing strategy?
AL: We use diferent mediums. First is social media: Qist Bazaar utilizes social media platforms to engage with customers, raise brand awareness, and promote its monthly installment options. Platforms such as Facebook, Instagram, Twitter, and LinkedIn may be used to share product information, offers, and updates.
We also use Search Engine Optimization (SEO): Qist Bazaar focuses on optimizing its online presence through SEO techniques. By improving website visibility and ranking on search engines, the company aims to attract organic traffic and increase its online reach.
We also have partnerships with E-commerce platforms: Qist Bazaar expands its distribution channels by partnering with popular e-commerce platforms such as Alfa Mall and Telemart. This enables customers to access Qist Bazaar’s monthly installment options while shopping on these platforms.
We also have physical presence and carry out offline activities: Qist Bazaar establishes a physical presence in multiple locations, including Karachi and Hyderabad, through its nine different branches. Additionally, the company participates in offline activities such as exhibitions, kiosks in malls, and Sunday markets. These offline initiatives help create awareness, engage with potential customers, and provide opportunities for in-person interactions.
By employing a mix of online and offline marketing strategies, Qist Bazaar aims to maximize its visibility, attract customers, and expand its reach to the target market seeking accessible monthly installment options.
BRR: Are you operating in a competitive market? What is your USP?
AL: Qist Bazaar faces competition from unregulated corner installment stores, which have the freedom to sell substandard products as they operate without regulations. However, Qist Bazaar has several inherent advantages over these corner stores:
Qist Bazaar has an online presence, allowing customers to conveniently browse and purchase products from the comfort of their homes. This provides a seamless and accessible shopping experience.
Qist Bazaar’s offers are transparent and straightforward, with no hidden fees or charges. Customers pay exactly what they see, eliminating any unexpected surprises or additional costs.
Unlike corner stores run by individuals with limited scope and regulatory oversight, Qist Bazaar operates as a licensed NBFC and adheres to relevant regulations. This ensures that customers receive reliable and quality products.
The Unique Selling Proposition (USP) of Qist Bazaar lies in providing convenience and affordability for purchasing everyday essential products. Waiting to accumulate enough funds to buy electronics products can lead to falling behind due to rising prices. By offering installment options, Qist Bazaar enables customers to make rational purchases and stay up-to-date with their needs while managing their finances effectively.
In summary, Qist Bazaar differentiates itself by offering an online platform, transparent pricing, compliance with regulations, and the convenience and affordability of buying essential products on installments.
BRR: Have you raised or are you looking for capital in the local or global funding market?
AL: Recently, Qist Bazaar has secured a partnership with Bank Alfalah Limited. This collaboration involves equity investment and embedded financing, amounting to a total of Rs500 million. The partnership aims to strengthen Qist Bazaar’s balance sheet and provide additional support for its operations.
Furthermore, Qist Bazaar is currently in discussions to raise additional equity. This initiative is intended to further enhance the company’s financial position and facilitate future growth opportunities.
BRR: How do you view the startup funding boom of 2021-22 and the recent slowdown in 2023?
AL: The boom in startup funding during 2021-2022 led to inflated valuations that may not have been justified by the underlying merit of some companies. However, the recent slowdown in startup funding has presented both challenges and opportunities.
While the slowdown has been difficult for many startups, it has also created opportunities for those that have demonstrated pragmatism and a clear path to profitability. Investors are now seeking companies that generate profits or have a clear roadmap to achieving profitability.
Qist Bazaar stands out in this context as it has been generating EBITDA from the first day. This indicates the company’s ability to generate operational profitability and potentially makes it more attractive to investors in the current investment climate.
BRR: How do you view the local funding space for tech and fintech startups?
AL: Most of the local VC’s are in between funds and so dry powder is not available. Nevertheless, Bank Alfalah coming in as an equity partner in Qist Bazaar is going to open the doors to many other local financial institutions into doing VC investments They will be looking for more practical market fits than the traditional VC’s.
BRR: What is the potential for e-commerce in the country?
AL: Pakistan has significant potential for e-commerce growth due to its large population, increasing internet penetration, rising smartphone adoption, and a growing middle class. The convenience and accessibility of online shopping, along with improvements in logistics and payment infrastructure, contribute to this potential. Government support and initiatives further bolster the e-commerce sector. However, challenges such as digital literacy and logistical issues remain. With continued development and strategic measures, Pakistan’s e-commerce market is poised for significant expansion and offers lucrative opportunities for businesses in the country.
BRR:What are your plans for Qist Bazaar over the next 5 years?
AL: Qist Bazaar’s future plans over the next five years involve expanding its market presence to additional cities in Pakistan, diversifying our product offerings, leveraging technology to improve our online platform and user experience, forging strategic partnerships, and prioritizing customer satisfaction through enhanced service and personalized features. We want to be the goto place for all household essentials for every Pakistani.