PriceOye stopped recommending phones and started delivering them

Most Pakistani ecommerce companies began by selling everything. PriceOye began by telling people where to buy a phone, and moved into selling only after it learned that its own advice was sending customers to bad shops. Today the Islamabad company, led by cofounder and chief executive Adnan Shaffi, runs what it calls a managed marketplace for consumer electronics, where only brands and their official representatives may list. The growth figures below are the company's own.

Cheap phones, bad shops

Shaffi told BR Research that PriceOye was founded in 2015 as a price comparison platform. The founders had done market research suggesting online retail would grow in Pakistan, but they lacked the money to launch a marketplace, so they built a site that listed prices from other stores.

The comparison model worked until it did not. Shaffi said users who bought the cheapest phone on the list sometimes received refurbished handsets or devices with a foreign SIM card. At the same time the Pakistan Telecommunication Authority was pushing for type approved phones, and complaints about unregistered devices sold online were growing.

PriceOye first dropped some sellers from its recommendations after customer service feedback. Then it decided to take over fulfilment itself, starting with mobile phones.

Brand sellers only

Phone sales began on 1 March 2020, shortly before the first COVID lockdown. The company chose a controlled model over an open marketplace. Only a brand or its official affiliate could sell, every product had to carry a one year brand warranty, and every product had to have regulatory approval. Shaffi told TechCrunch at the time of the 2022 funding that "the only way a marketplace can work is the managed marketplace model".

The trust problem was practical. A phone costs a month or more of salary for many buyers, and the average PriceOye order, Shaffi said, was above Rs40,000, compared with Rs1,000 to Rs2,000 on a traditional marketplace. The team followed strict packing procedures and, he said, the management team itself delivered the first 100 orders. Some courier firms later sent staff to learn how PriceOye packed parcels. The company had started offering open box delivery in a few cities.

Brands with no official presence in Pakistan were a gap. Shaffi said PriceOye might pitch to brands without a local presence and partner with them directly. Apple stayed off the list until it authorised a local distributor, after which the company began selling its products. The company's website today carries a banner for its status as an authorised Apple reseller.

PriceOye found its footing by noticing that its first model was failing its users, and by carrying the risk of delivery itself, with brands as its suppliers.

Lockdown, then a climb

Timing hurt first. Shaffi said business stood still for about a month and a half early on because courier deliveries were initially not allowed. Then came the climb. He said growth had run above 40 percent month over month, reaching 60 percent a month in the latest quarter he described.

Users found the site through word of mouth and other organic means rather than paid marketing, Shaffi said. PriceOye was then the second most visited online shopping site for new products in Pakistan after Daraz, with more than two million monthly unique visits, he said, citing SimilarWeb data.

His target customer was an educated, early career, time pressed city dweller who cares about service and speed. Phones came first because buyers replace them about every two years. Washing machines, air conditioners, refrigerators and televisions come around far less often, so a good first phone purchase was meant to be the hook for the rest.

His main competitor was the neighbourhood shop. Shaffi said physical retailers are often told not to buy from online marketplaces or they will get faulty products.

From $450,000 to $7.9 million

PriceOye ran on its own resources for a long time. In 2019 it raised $450,000 from Fatima Ventures and Artistic Ventures, among others, choosing a group of investors that offered experience and help over others that offered higher valuations, Shaffi said.

The larger round came on 30 August 2022, when the company announced $7.9 million in seed funding led by JAM Fund, the venture firm of Tinder cofounder Justin Mateen. Investors included Beenext, DG Daiwa, Mantis VC, HOF Capital, Palm Drive Capital and Atlas Ventures, plus the angels Peter Thiel, in what TechCrunch said was his first investment in Pakistan, Immad Akhund of Mercury, and Asif Keshodia of Souq. Fatima Gobi Ventures, SOSV and Artistic Ventures returned from the earlier round.

At that point the company claimed more than 2.5 million monthly active users and 45 million unique users over the prior two years, equal to 37.5 percent of Pakistani internet users. TechCrunch reported that 30 percent of customers were repeat buyers and that 35 percent of orders came from smaller cities. The company also claimed 500 percent revenue growth year on year.

In the funding statement, Shaffi framed the problem as "the presence of counterfeit products and price discrepancies".

Offline centres and more categories

In 2022 the company planned to open three offline experience centres in malls in Islamabad, Karachi and Lahore, and to add categories beyond phones. Shaffi had earlier pointed to seasonal demand: air conditioners and freezers in summer, heaters and microwaves in winter. The company's website now lists phones, accessories, tablets and laptops.

The company had a 97 member team, which Shaffi described in partnership terms.

“We treat everyone in our company as a partner instead of an employee”

Shaffi has said he wants PriceOye to be a specialist rather than a general store. He put it plainly.

“We don't want to become an everything store”