Interview with Arif Lakhani, the co-founder of Qist Bazaar, a buy-now-pay-later platform for the underserved.
Tell us about Qist Bazaar and your ideology behind it.
Qist Bazaar is a licensed NBFC fintech start-up that specializes in Buy Now Pay Later (BNPL) services. The company’s primary objective is to enable the common man to afford everyday necessities such as electronics, computers, and other essential items.
Qist Bazaar aims to bridge the financial inclusion gap by offering accessible and convenient financial solutions through Shariah-compliant Musawamah financing.
The ideology behind Qist Bazaar revolves around providing affordable and accessible options to underserved populations who have limited access to traditional banking services. The start-up recognizes that many individuals face challenges in affording essential items due to financial constraints.
By leveraging technology and innovative BNPL options, Qist Bazaar aims to empower these individuals and enable them to make purchases without the burden of upfront payments or exorbitant interest rates.
Who is your target audience, and how do you cater to each
Qist Bazaar targets the 80% of Pakistani’s who are unbanked and underserved, like students, micro business owners, domestic servants etc. 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.
Qist Bazaar has a hybrid model, which caters to both online and offline populations with facilitation centers in dense areas of Karachi and Hyderabad for customers seeking in-person assistance and reassurance, as well as a user-friendly online site.
What is the risk-to-reward ratio of a conversion – what percent of customers default or fraud?
Qist Bazaar benefits from special pricing as a bulk buyer, allowing us to negotiate favorable prices from manufacturers and suppliers.
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.
Qist Bazaar’s founding principle is trust in the common person, reflected in our delinquency ratio below 3% after 19 months of operation, affirming the validity of our belief
Who do you identify as your biggest competitors in Pakistan?
Qist Bazaar faces limited competition as no other financial institution, or fintech addresses the majority of Pakistani households’ small, real household needs. Unregulated corner installment stores, operating without regulations, are our primary competitors.
However, Qist Bazaar possesses distinct advantages over these stores, including regulatory compliance, offering reliable products, diverse options, flexible payments, and promoting financial inclusion.
These advantages enable Qist Bazaar to provide a superior alternative to unregulated corner stores, ensuring customers have access to quality products and services that meet their household requirements.
What are some of the major challenges for a BNPL company in Pakistan?
Buy Now, Pay Later (BNPL) companies in Pakistan face several challenges:
Financial Literacy
The general publics limited understanding of credit systems hamper BNPL adoption. Consumer education about BNPL benefits is crucial.
Credit Risk
Absence of comprehensive credit bureau coverage and data makes credit risk assessment difficult. Luckily Qist Bazaar has a legacy database of around 250,000 people who at one point or the other have bought something on instalments.
Trust Issues
Online fraud and security concerns discourage consumers from using BNPL services. Building trust and ensuring robust security measures are key.
Cultural Factors
BNPL could face resistance due to cultural attitudes towards credit and debt in Pakistan. Adapting marketing and business models to align with values is necessary.
Partnerships
Establishing partnerships with manufacturers and retailers can be challenging but is essential for service availability.
Competition
Existing traditional corner stores and the entry of international BNPL players may intensify competition.
How different is buying a product on installments from a bank versus buying it from Qist Bazaar?
Eligibility
Traditional installment plans offered by Banks often require customers to have a credit card or maintain a banking relationship. In contrast, BNPL services are accessible to a wider range of customers. They normally offer through e commerce platforms or mobile applications without the need of a banking relationship.
Approval process
Banks have a thorough approval process whereas BNPL services require minimal information for their eligibility. The process is easier, faster, less tedious and more convenient.
Terms and flexibility
Banks offer plans with predetermined terms such as fixed interest rates and specific repayment periods. These may be less in BNPL services allowing customers to choose from different installment durations and adjust the repayment schedule according to their preferences.
User experience
BNPL services are simplified and generally focus on a seamless and user friendly experience where as Banks user experience might not be very streamlined.
Any plans to expand operations nationwide?
Besides Karachi, we have recently opened a facilitation centre in Hyderabad and a digital presence in Lahore and intend to expand our market presence in other cities in Pakistan gradually.
What is the potential for BNPL platforms in the country?
Pakistan has significant potential for e-commerce growth due to its large population, increasing internet penetration, rising smartphone adoption, and 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.
Where do you see Qist Bazaar in the coming years?
We want to be the GO-TO place for all household essentials for every Pakistani
Qist Bazaar aspires to be Pakistan’s one-stop solution for all household essentials. It plans to achieve this by expanding its reach, diversifying its product range, enhancing the user experience on its platform, forging strategic partnerships, and prioritizing personalized customer service.
What is your advice to budding entrepreneurs and upcoming start-ups?
Today’s founders need a balance of fervor and practicality. Their start-ups should not just be driven by passion but also by pragmatic solutions benefiting not only customers but investors too.
Source: Pro Pakistani