Udaan Success Story: Transforming B2B Commerce in India Through Technology and Financial Inclusivity

Introduction

Udaan operates as a prominent business-to-business (B2B) e-commerce platform, dedicated to fostering business growth through cutting-edge technology. Functioning as a substantial online marketplace within the Indian business landscape, Udaan serves as a nexus for sellers and buyers to establish meaningful connections. Since securing a significant funding of $225 million in 2018, the platform has ascended to the status of a noteworthy player in the industry, often referred to as a unicorn.

The core philosophy driving Udaan revolves around simplifying business operations in India. By creating a dynamic space, Udaan not only facilitates the expansion of markets but also extends a range of financial products tailored for the benefit of sellers and buyers. The overarching objective of the company is to unite traders, manufacturers, wholesalers, and retailers on a singular, cohesive platform. Through this approach, Udaan endeavors to streamline and simplify the business ecosystem for all participants involved.

Udaan Sellers

Becoming a Udaan seller on the Udaan platform has been streamlined for ease and accessibility. Udaan facilitates individuals seeking to showcase and sell their products through a straightforward process, offering:

Seamless Registration and Onboarding: Our platform simplifies the onboarding experience with a user-friendly registration process that requires only essential details.

Effortless Catalogue Creation: Udaan provides a user-friendly interface for creating and managing product catalogues, ensuring a seamless and effective process.

Support for Trade Constructs: We understand the importance of commonly used trade constructs, and our platform is designed to support these structures, fostering a conducive environment for business transactions.

Efficient Logistics System: Udaan boasts an effective logistics system, supported by leading courier service providers in India, ensuring reliable and timely delivery of products to customers.

Full Compliance: We prioritize compliance with industry regulations, offering sellers a secure and trustworthy platform to conduct their business with confidence.

Hassle-Free Returns: Udaan ensures a smooth and straightforward returns process, enhancing the overall customer experience and instilling confidence in sellers.

Udaan – Industry

The landscape of the Indian eCommerce industry is well-established, with numerous players, both large and small, contributing to its growth. Ecommerce has become a ubiquitous term in households today, with the industry projected to reach $99 billion by 2024, according to a recent Goldman Sachs report. While B2C remains the largest segment, B2B is gaining prominence and is poised for substantial growth.

Udaan, a key player in the B2B eCommerce space, is anticipated to experience a growth rate of around 20% CAGR until FY25. In a dynamic industry characterized by innovation and evolving market trends, Udaan stands out as a leading platform, offering a robust and scalable solution for businesses operating in the B2B segment.

Udaan – Pioneering the Empowerment of Small Businesses

“Almost 94% of product sales in India are conducted through mom-and-pop stores. However, small store owners grapple with significant sourcing and supply chain challenges. Recognizing this gap, we identified catering to their needs as a substantial opportunity,” stated Sujeet Kumar, Co-founder of Udaan.

The genesis of Udaan, initiated by former Flipkart employees, was driven by their aspiration to empower small and medium-scale businesses in India.

In its nascent stages, Udaan operated as a logistics platform specifically tailored for small buyers and sellers in the electronics sector. During the initial 8-10 months, the company strategically focused on electronics, garnering substantial attention within the national boundaries.

 This strategic emphasis was pivotal for Udaan as a burgeoning startup. Establishing a robust database was the primary prerequisite before venturing into the supply business. Presently, the B2B trading platform is poised to evolve into a lending platform for merchants.

Udaan – Envisioning the Future

Udaan’s vision is succinctly defined as “transforming the way trade is done in India through the leverage of technology.”

Positioned as the premier e-commerce platform in India, Udaan is dedicated to being a reliable partner for small businesses. Its overarching goal is to empower these businesses with cutting-edge technology, financial inclusivity, and robust supply chain capabilities, enabling them to compete and thrive in an increasingly tech-driven and digital landscape.

Udaan – Professional Business Model Overview

Udaan distinguishes itself as an asset-light player through its carefully crafted business model, strategically eschewing ownership of physical assets. Positioned as a B2B e-commerce platform, Udaan serves as a pivotal link, connecting businesses with diverse customers, suppliers, and an extensive array of products spanning various categories. 

The primary objective is to facilitate optimal deal-making opportunities within the business ecosystem.

Functioning as a comprehensive B2B solution, Udaan extends support to registered merchants by offering robust accounting, order management, and payment solutions. Beyond these services, the platform goes the extra mile by providing additional logistical support, ensuring a seamless and secure transactional experience.

One of Udaan’s notable offerings is its commitment to empowering merchants with working capital at competitive rates. In essence, Udaan transcends its role as a mere intermediary for retailers and wholesalers, evolving into a dynamic facilitator of financial solutions. By underwriting loans for small businesses, Udaan plays a pivotal role in bolstering the financial foundation of enterprises within its ecosystem.

Udaan – Revenue Model

Udaan’s revenue model encompasses various strategic components that contribute to the sustained growth and financial viability of the company:

Logistics Revenue:

Logistics stands as a pivotal element within Udaan’s service framework and serves as a significant revenue driver. The company levies delivery charges on market participants for its comprehensive logistics services, encompassing the pickup of goods from sellers’ premises and their efficient delivery to buyers. Additionally, Udaan garners fees for managing the return process, further enhancing its revenue stream.

Warehousing Services:

Udaan extends storage and warehousing services to registered sellers on its platform, facilitating expedited delivery of goods to buyers. The provision of these services contributes substantially to the company’s revenue, underscoring its commitment to optimizing the supply chain for enhanced efficiency.

Receivable Collection Services:

Udaan plays a pivotal role in receivable management by collecting fees for services that involve the receipt of payments from buyers, both in cash and online, on behalf of sellers. This streamlined approach to managing financial transactions adds another dimension to Udaan’s revenue generation strategy.

Advertisement Services:

Udaan’s commitment to promoting product listings for better visibility among platform buyers is monetized through advertisement services. By offering targeted promotional solutions, the company not only enhances the market reach of sellers but also generates revenue through this integral component of its business model.

Interest from Credit Services:

Udaan extends credit facilities to its merchants and traders through its NBFC arm, addressing their working capital requirements. This unique service not only fosters financial inclusivity but also serves as a notable revenue stream for Udaan through the accrual of interest on the credit extended to its users.

Udaan’s Strategic Challenges and Corporate Developments

Challenges in Udaan’s Business Journey

Udaan, a prominent player in the B2B marketplace, grappled with a central challenge: identifying the optimal product and market combination to maintain its competitive edge. Despite having carved out a niche, sustaining leadership posed a formidable task for the company. Convincing retailers and wholesalers to transition their businesses online presented another early hurdle for Udaan.

A crucial ongoing initiative for the Bengaluru-based B2B startup involves establishing a robust supply chain network. This, indeed, is a significant challenge in the landscape of B2B e-commerce, and Udaan is actively addressing this complexity.

Udaan’s Workforce Optimization Strategy

Reports dated June 28, 2022, revealed that Udaan implemented a strategic workforce reduction, affecting approximately 180 employees. The decision aimed at cost-cutting, though Udaan affirmed its commitment to supporting affected employees. The comprehensive support package includes medical insurance for employees and their families, compensation, placement assistance, and more. Sources suggest that this reduction is just the initial phase, with potential numbers reaching up to 600.

A more substantial workforce adjustment occurred in November 2022, with over 1,000 employees affected. This included a mix of on-roll and contract employees, reinforcing Udaan’s strategic alignment.

Legal Developments: Udaan vs Parle

Udaan initiated an antitrust case against Parle Products Private Limited, alleging market dominance abuse. The Competition Commission of India (CCI), however, rejected these claims, citing a lack of evidence for abuse. Udaan contended that Parle’s refusal to directly supply highly demanded products lacked “objective justification,” particularly concerning the under-supply of the widely popular Parle-G biscuits.

Parle responded by critiquing Udaan’s business model, emphasizing its inclination towards fundraising and debt accumulation. Parle expressed skepticism about Udaan’s long-term viability as a reliable partner compared to Parle’s traditional brick-and-mortar distributors.

Financial Landscape: Funding and Investors

In its journey, Udaan successfully raised a total of $1.6 billion through 14 funding rounds. The latest funding round on November 24, 2022, involved Debt Financing with an undisclosed amount and an additional $35 million through convertible notes. This financial support underscores investor confidence in Udaan’s strategic vision and operational trajectory.

Udaan – Investment

Udaan – Competitors

Udaan :Partnerships

On January 18, 2021, Udaan forged a strategic alliance with Danish sportstyle brand, Hummel, marking a significant milestone in its pan-India distribution partnerships. Amidst the challenges posed by the coronavirus pandemic, Udaan successfully onboarded over 2500 brands, with one-fourth of them joining as esteemed Udaan partners.

Reliance Retails

In April 2023, Reliance Consumer Products (RCPL), the FMCG division of Reliance Retail, entered into a strategic partnership with Udaan, a prominent B2B e-commerce platform. This collaboration aims to facilitate the nationwide distribution of Reliance Retail’s recently acquired beverage brand, Campa, across Kirana stores throughout India.

Udaan – Awards and Achievements

Udaan was honored with the FILA Outstanding Startup of the Year award by Forbes in 2019, recognizing its exceptional contributions and achievements in the startup landscape.

Udaan – Future Plans

With a focus on utilizing fresh capital, Udaan is steadfast in its commitment to expanding its supply chain network across India. The company is also dedicated to fostering growth within its marketplace, encompassing both new and existing categories. The visionary founder trio is driven by the belief that they are actively constructing a superior platform for the benefit of small businesses in India.

Conclusion 

Udaan has emerged as a prominent player in the Indian B2B e-commerce landscape, undergoing significant growth and transformation since its founding. The company’s success is attributed to its commitment to simplifying business operations, fostering meaningful connections between buyers and sellers, and empowering small and medium-scale businesses.