Retail Management

Instructor: Qaiser Raza Sheikh

Final Report

AIRLIFT TECHNOLOGIES

Group Members & Ids

Amna Chaudhary 23010063
Hira Mansoor 23010067
Nabeera Ali Naqvi 23010066
Safee Ullah Khan Babar 23010071
Sana Saeed 23010068
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AIRLIFT TECHNOLOGIES

Background: Prior to COVID-19, Pakistan’s mobility space saw an exponential boom. Pakistan had startups
like Careem, Bykea, Uber and many others. Founders of Airlift Technologies saw this as an opportunity and in 2019
expanded into the mass transit services. Post COVID-19, Airlift Technologies was forced to shift to instant grocery
delivery model.
Business Model: A simple explanation to Airlift technologies business model: Airlift Technologies secured deals
with suppliers to source goods below market rate and attracted customers by passing on the savings. Airlift Technologies
had its own fleet of riders, providing delivery services across the country. Moreover, it established dark stores and
warehouses across Pakistan to expand its delivery services. It had two mothership warehouses, one for fresh produce and
the other for retail inventory. Stock would be replenished on daily demand. Fresh produce operations took place in the
evening and retail inventory operations in the morning. The initial parameters for success were growth and market share
targets. Market share targets were split into quarterly targets with monthly targets for the number of orders and revenue.
Funding: Soon after raising series A fund, Airlift Technologies raised series B funding. For series B, Airlift
Technologies had 50% of the amount and the rest was to be allocated by Aug 2022. The team was confident about their
strategy and aimed at raising series C. Airlift Technologies was planning to expand into Egypt and Bangladesh. In 2022,
global venture funding saw a dramatic drop of 27% as a reaction to a hike in interest rates, a crunch in the capital market,
and a looming recession. Specifically in Pakistan, Imran Khan’s government was toppled. Pakistan Stock Market crashed.
Russian invaded Ukraine. This caused panic in the market and investors backed out. Since Airlift Technologies did not
prioritize multistage institutional investors, it faced the brunt of lack of capital. At this stage, Airlift Technologies should
have adopted cost-cutting strategies but instead it burned cash. In a span of two months, Airlift Technologies was drained
out of cash.
Business Model Failure:
1. Large Disposals Rate: There was no proper storing system present. Warehousing lacked SOPs and inventory
management systems to efficiently run day to day operations. One of the employees claimed that there was no
expiry system present. All of this resulted in high damages and shrinkage. According to our interviewee,
roughly around 40% of the procurement would result in disposal. The 60% delivered had 2-3% returns due to
damage or expiry.
2. Untrained Staff: Warehouses lacked trained staff to lead day-to-day operations. Majority of the workers
were young male and females who had no prior experience. This lack of business acumen, strategy, and
vigilance in inventory management lead to inefficient business processes.
3. Inefficient Demand Management: Airlift Technologies had an ineffective system of demand management.
The forecasting model had a lot of flaws. It did not cater to geographical fluctuation in demand. For example,
the demand model would suggest the opposite of actual demand in various regions of Karachi. This meant
overstocking at some warehouses.
4. Lack of Legal Binding: Contractual agreements were non-existent. There were no proper contracts locked
between Airlift Technologies and its partners. For example, Airlift Technologies’ logistics partner would keep
on changing prices. Fluctuation in charges meant no formal agreements to support business operations.
5. Technology Company or Not: Despite being a technology company, Airlift Technologies didn’t develop
proper software and applications to manage its inventory, pricing, warehousing, delivery, and procurement
operations.
6. Hyper Growth Model: Airlift Technologies was running a hyper-growth model, rapidly expanding into
Pakistan and foreign markets. All of this came at a hefty cost along with improper execution. For example, in
three months, there were 23 warehouses in Lahore. Every warehouse had 20-30 million inventories. This
meant improper allocation of warehouses irrespective of demographic requirements.
7. Retailers kept trying to hack the system. They would purchase stock from Airlift Technologies and then
resell it in the market. This was a huge obstacle because it would manipulate the sales data.
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8. Unnecessary Warehouse openings: Airlift had an extreme take on its growth at all costs which led to their
downfall as they couldn’t maintain it i.e., they would open 20 warehouses in a matter of month without any
pre-analysis on the matter first.
9. Extreme development in South Africa that emptied their pockets: Cash was being burnt at an exponential
rate in South Africa which was an already expensive place to expand to, hence it led to Airlift’s financial
strength be compromised.
10. Friction between the novice vs experts: There was friction between the fresh graduates in position of power
and the experts with 10+ years of experience who were brought in later. They did not agree on the same
position which sank Airlift.
11. Airlift was too late in consolidation: Even after series B funding they just weren’t in the mindset to talk
about balance sheets, profit, and loss statements, consolidating SOPs and control but they were behind on it
which causes the financial leakages, and it toppled once the financial market had a turnaround.

TAJIR TECHNOLOGIES
Tajir technologies is a one-stop shop for buying inventory. Tajir is an app-based platform for retailers. It offers
24/7 ordering facility, next-day delivery, and transparent prices. Tajir operates in Punjab, specifically in Lahore with
about 24,000 retailers in its coverage.
Reasons for Sustainability:

 Real-time Inventory: Initially inventory for both pulses and FMCG products was purchased and stored in
warehouses. Recently, the model shifted to a seven-day credit purchase. Day sales inventory varies from
product to product, depending on demand and historic sales trends.
 Low Fixed Costs: Tajir operates through small warehouses called dark stores. It drastically reduces the cost
of inventory storage and shipment. Moreover, these warehouses are rented, reducing any fixed cost that may
have been incurred.
 Options for Scalability: Tajir has realigned to become official distributors of 2 nd tier and 3rd tier brands.
Offering them the same margin and more coverage compared to traditional distribution models.
 3rd Party Credit Facility: Tajir has onboarded fin-tech to support its credit end, providing credit to retailers.
Credit in the Pakistani retail market is a big pull for the retailer.
 New Streams of Revenue: Tajir’s mainstream revenue is FMCG products. Pulses have high withholding tax
and consume more volume per vehicle. Tajir has generated a new stream of revenue through on-app
advertising and product placement.
 Role Assignment: Each category is managed by a category manager. Margins for each category vary
depending on the contract locked. Each category manager is responsible for his/her targets and margins.
KRAVE MART
Krave Mart is a Q-commerce retail startup. The startup operates in certain regions of Rawalpindi, Lahore, and
Karachi. The model offers a 10-minute quick delivery service.
Reasons for Unsustainability:

 Extremely high cost for last mile and distribution services. Needs to earn PKR 150-200 per delivery to cover
last mile and distribution costs. This means an average margin of 12%, which is not possible.
 Low penetration in the market is due to a minimum delivery size of PKR 1500 and delivery charges.
 Warehousing is expensive. Krave Mart has developed warehouses in DHA, costing two-threefold more.
 Unlike Panda mart that has its own riders, Krave mart needs to be hired. Unit economics are tough.
 Quick delivery models are failing across the globe. For example, Kozmo, 1520, Instacart failed.
 Krave Mart is facing high pilferage, damages, and leakage from warehousing.