After initial success, Popinjay fails to achieve economies of scale

Published: June 14, 2018
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 Popinjay, which made handbags, wallets and scarfs, attracted thousands of customers in over 30 countries, especially in the US

PHOTO: EXPRESS

Popinjay, which made handbags, wallets and scarfs, attracted thousands of customers in over 30 countries, especially in the US PHOTO: EXPRESS

KARACHI: In the backdrop of Silicon Valley’s slogan ‘Go Big or Go Home’, Saba Gul, the founder of Popinjay, has decided to step away from her brainchild project as she could not achieve economies of scale where businesses flourish on higher production and sales.

This appears to be the greatest challenge for all start-ups emerging in Pakistan.

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“My start-up philosophy ‘Go Big or Go Home’ is not the right approach for everyone, but it is what works best for me as it helps me take on challenges, fuels my ambition and helps me perform to the best of my abilities,” said Popinjay founder and former CEO Saba Gul.

Popinjay, one of the few sizeable start-ups in Pakistan, had got attention of many prominent media outlets such as BBC, Financial Times, Daily Mail, The Express Tribune, The Guardian, Gulf News, The Huffington Post, CNN, Al Jazeera, Vogue, NBC and others.

It secured half a million dollars in seed funding and lasted four years.

Gul said Popinjay, which made handbags, wallets and scarfs, attracted thousands of customers in over 30 countries, especially in the US. It also entered into dozens of retail partnerships with stores and online third-party sellers including large US retailers like Anthropologie, One Kings Lane and others.

Over the course of its lifetime, Popinjay employed roughly 150 to 200 artisans in Hafizabad, Punjab and worked with 50 leather artisans in Saigon, Vietnam, she added.

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“For the artisans, we were able to increase their income by 200-300%,” she said, adding many of the start-up’s female artisans were contributing up to 60% to their household expenditures.

Despite the initial success, Popinjay could not scale heights, which is the biggest challenge for all start-ups in Pakistan and no e-commerce player has achieved it so far.

“I agree that e-commerce is still in its infancy in Pakistan, though it is growing rapidly,” she commented.

For example, China’s e-commerce giant Alibaba has come to Pakistan by acquiring Daraz e-commerce portal that reflects the industry’s growth potential. Gul had started Popinjay with the vision to become a $100-million company. Two biggest challenges in the way of scaling were the lack of access to growth capital and the absence of a co-founder.

In addition, the start-up had a pretty complicated supply chain spanning multiple countries – Pakistan, Vietnam, China and the US – which made scaling up harder, Gul told The Express Tribune.

“Our products were handmade and manufactured ethically, which took more cost and time. This made it necessary to invest more capital for growth of the business.

“Lastly, we were selling a luxury item in a saturated, highly competitive industry that is pretty fickle when it comes to making purchase decisions.”

According to the World Bank, 90% of the start-ups fail worldwide. Less than 1% of new businesses started each year in the US receive venture funds and total venture capital investment accounts for less than 0.2% of gross domestic product (GDP).

The results of those investments, however, disproportionately propel the entire economy. Venture capital-backed companies create 11% of all private-sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP. Indeed, the dozen largest tech companies were all venture-backed.

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Together, the 12 companies were worth more than $2 trillion, more than all other tech companies combined, Gul said.

According to technology incubator Nest I/O, more than 80% of its start-ups are still functional.

The government has opened five national incubation centres in Lahore, Islamabad, Peshawar, Karachi and Quetta. Many private organisations are working on this, but still Pakistan has not seen any hope.

“You can’t expect to see scale simply by making an exceptional product. You have to compete with thousands of other brands and spend a lot of money on marketing to create a desire in the customer’s heart and mind for your product.” 

Published in The Express Tribune, June 14th, 2018.

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Reader Comments (1)

  • pashtun
    Jun 14, 2018 - 12:58PM

    I visited her website. Worse part she represent half of Pakistan map, ignoring GB !!Recommend

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