That title is a mouthful, but Khareed’s charge is just as ambitious. Founded by Haroon Sethi, a former McKinsey consultant with experience in the Pakistani manufacturing sector, the UAE-based B2B startup’s mission is to “professionalize” the way the procurement business is done in Pakistan, as well as improve pricing transparency and give enterprise customers a more “trustworthy” procurement experience.
First, a quick overview of Khareed’s offering.
The company isn’t a conventional e-commerce provider, nor is it strictly limited to construction procurement. Instead it’s a marketplace connecting buyers and sellers of heavy commercial and industrial equipment, without any retail offers. And although most users of the site are currently companies, anyone can get request a quote for products on the site, whether purchasing in bulk or browsing its more expensive offerings. (In Pakistan, and other emerging markets where trust and transparency is vital to buyers, that’s key.)
Still, the site is primarily geared for larger companies, with 18,000 vendors, over 25,000 products (including close to 700 in the “construction” category), and 40 corporate clients who are using it to purchase 100M (in Pakistani rupees, around $900K) worth of products monthly.
Pakistan is a big market, especially for infrastructure investment.
Pakistan is a big market. With 190M people and a $3B GDP, it’s the seventh largest in the Middle East, Africa, and South Asia. The country grew by over 4% from 2014-2016, and is projected to clock above 5% for 2017 and 2018, boding well for Khareed’s chances to scale and meet its objectives. From a broader perspective, the B2B marketplace model for construction could prove to be an interesting litmus test for similar ventures in other geographic locations should Khareed succeed.
Why e-commerce for construction is tough and how to solve for it.
As we’ve said here before, e-commerce solutions for construction present a difficult challenge. Products are bulky, heavy, and therefore difficult and expensive to package and ship; traditional providers like FedEx or UPS typically can’t or won’t enter construction sites; the AEC industry has an entrenched way of doing business; and the construction supply chain is highly fractured, localized, and difficult to aggregate in a meaningful and cost-effective way.
At least to date, startups have confronted it mostly outside of North America, particularly in India. The reasons for this could include regulatory restrictions on foreign investment and retail offerings and a lack of B2B competition from Amazon and Walmart in that part of the world to date, among others (although this could change.)
So perhaps the marketplace B2B model is the way to go – indeed, academic papers going back as far as the 1990s have suggested that online procurement for construction materials and other heavy equipment presents a real opportunity for the AEC industry to improve its efficiency and productivity in a way that has eluded it to date.
India, Pakistan, Germany. Where do you see construction and industrial equipment e-commerce solutions heading geographically in 2018 and beyond?