What is Udaan?
Udaan is a B2B e-commerce tech startup that helps provide a perfect platform to all the manufacturers, wholesalers, traders, and distributors present in smaller towns and villages in remote areas. This helps in providing a lot of opportunities to growing entrepreneurs. The startup was established in the year 2016 in Bangalore by former employees of Flipkart, namely, Vaibhav Gupta, Amol Malviya, and Sujeet Kumar. Sujeet was a logistic executive in the supply chain department in Flipkart, Vaibhav was a senior vice president and Amod was a Chief Technology Officer. The start-up was set with a goal to make the products and services reach even the remotest of the areas in the country.
Investors of the Start-Up
From the time of its foundation in the year 2016, the company has been able to raise about 900 million USD of funds in about 8 rounds of funding. About 585 million USD were raised by September 2019. The company also raised 30 million USD in a funding round that happened in March 2020. Venture capitalists like Footpath Ventures, Tencent, GGV Capital, Altimeter, Citi Ventures, and Hillhouse took part in this funding round. The value of the company has risen to 2.8 billion USD and the company has decided to use the funds to work on its technicalities and core capabilities to pave way for better delivery and payment options. It reached the status of being a unicorn in the year 2018 when it raised 225 million USD from its investors like DST Global and Lightspeed Venture Partners.
How Did the Company Grow
The fact that the company achieved the title of “unicorn” in just two years, shows the amount of growth that the company has experienced. The company was started as a logistics company and is focused on this for over a year, however now the company provides payment and lending services as well in addition to logistics. Today, the company operates in about 900 cities in the country. The growth in just 4 years has been tremendous. However, with the onset of the pandemic, the company began to tumble a little bit during April and November 2020 as retailers and supply chains were shut, the reason being the nationwide lockdown. Regardless of these challenges, the company sought to have achieved sales of Rs 1 crore under the lifestyle section in the year 2020. Nowadays, the company has about 3 million users, 30,000 sellers, and 1.7 million retailers across the nation. The process of bringing wholesalers and retailers in a digitized network to form a healthy and trustable relationship is what Udaan has been successful in doing and has now taken 80% of the B2B e-commerce market share.
Business Model of the Company
The company works on a model where wholesalers are made to connect with the retailers and can sell their products or services on this online platform or mobile application. Now it has become possible for small entrepreneurs and businesses to communicate directly with the manufactures because of this platform. The company helps the entrepreneurs with logistics, sales, marketing, etc. Small business owners can now effectively tackle their accounts and payment with the help of the services provided by the company. The company also provides underwriting loans for retailers so that the small business owners are not exploited in terms of getting charged higher interest rates than usual. With being provided with a Non-Banking Financial Company (NBFC) license, the company can now help to fund Small and Medium Enterprises (SMEs)
The Reason For The Success
One of the reasons for the companies success is that the company started with the logistics at a quite subsidized price which not only helped it getting a strong foothold in the market whereas it helped the company get a better exposure as well.
The second reason being the experience of the founding members. All the three members coming from a very well-established company called Flipkart is another reason why the company has grown so much in the market because the founders already have gained so much experience in their past work that they now know how the business work and how it doesn’t. Also, the fact that many other Flipkart employees started joining this startup made the company more effective and creative.
Third and one of the most important reasons that the company is seeing success is the work that the company does and the services that it provides. The company has been successful in providing solutions to the problems of wholesalers and retailers by providing them this digital platform.
The Kirana king Udaan business is seen to pose as a big competitive threat to both Ambani and Bezos in terms of the digitized retail service that it provides. Also, with Prime Minister Narendra Modi Ji’s attempt to prioritize the nationalist economy, the company stands on the favorable side. With that said, we can also say that Ambani has an easy edge but we also can not possibly forget that Bezos is far from giving up.
With startups like Udaan and the solutions that it brings along with it, It will be difficult not to say that the fate of the retail sector of the country is likely to change.