Imagine running a restaurant in say, the bustling streets of Bengaluru. In the early morning, you’ll have to arrange to pay a visit to the vegetable market in order to obtain fresh new ingredients for your restaurant and even the weekends will be invested in visiting several outlets in order to purchase staple ingredients such as wheat and rice.
The scenario has been revolutionized presently with restaurateurs now holding the advantage of being able to have their required ingredients dropped at their doorsteps. One of the firms that have contributed to providing this convenient facility would be Udaan, a B2B e-commerce startup that concentrates on small and medium retailers across the nation.
The Indian startup has been rapidly situating its place in the market, achieving billions of dollars in a mere couple of months. By aiding small-sized business owners in adopting technology for expanding their businesses, Udaan has made its place in a short period of time, amidst the high competition and earned the title of being India’s fastest unicorn.
Established in 2016, Udaan is a B2B e-commerce startup that collects and brings all the manufacturers, traders, wholesalers, and retailers under a common platform. This simplifies the whole business to business procedures in the nation. This allows the manufacturers to display their items through the platform with prospective traders having the liberty to choose and purchase them. Likewise, the wholesalers as well as retailers hold the same liberty to promote and purchase an item.
Udaan’s platform features a variety of categories such as electronics, home and kitchen supplies, stationery, toys, as well as fruits, vegetables, and various other household items.
“There are 50 million to 60 million small business entities, and we are providing a way for them to earn more and get more returns on their capital. Our growth and scale are a by-product of that. We are not changing their life. We are just helping them make more money through selection, prices, discovery, credit, logistics, payments, etc.”
- Sujeet Kumar, Udaan co-founder
As reported by Economic Times, the platform presently claims to have over 3 million users and more than 30,000 sellers on its platform. It has over 1.7 million, including retailers, Kirana shops, HoReCa, chemists, and farmers, and more than 5 lakh different products curated across 2,500 brands.
Initially, Udaan had been established as a platform restricted to small buyers and sellers and which was mainly fixated on logistics during the initial 8 - 10 months. The platform witnessed a great degree of exposure in the Indian nation, which played a crucial role in its growth.
The company set up a comprehensive database of buyers and sellers prior to heading towards the supply business and emerged as a dominant platform for dealers in a short period of time. The firm is on the lookout to emerge as a lending platform for merchants.
The platform has been founded by Amod Malviya, Vaibhav Gupta, and Sujeet Kumar.
Amod Malviya is the founder as well as the engineer of Udaan. Prior to Udaan, he had been at the position of Chief Technology Officer at Flipkart. He also possesses a degree in B.Tech at Kharagpur's Indian Institute of Technology.
Yet another founder of Udaan is Vaibhav Gupta. Prior to Udaan, he had also worked at Flipkart. He possesses a B.Tech degree in Computer Science and Engineering from Delhi’s Indian Institute of Technology. He also possesses an MBA degree from the Darden School of Business, University of Virginia.
Yet another co-founder of the platform is Sujeet Kumar who possesses a B.Tech degree in Civil Engineering from Delhi’s Indian Institute of Technology. He also holds work experience from Flipkart.
As per a recent report by Business Insider, the co-founders of Udaan have witnessed their wealth grow 274% over the past year.
The Business Model of Udaan
The platform is the asset-light player on the basis of their Business Model, as they do not plan on owning assets. Udaan aids businesses in discovering customers, suppliers, and items in varied categories in order to facilitate them with an appropriate deal. The platform likewise provides secure payments as well as logistics backing.
Udaan also provides accounting, order management, and payment management solutions to the merchants residing on their platform. The platform aims to facilitate working capital (funds) to their retailers at rational rates. Hence along with being a platform for wholesalers and retailers, the company has also begun underwriting loans for small-scale firms.
Udaan basically charges a percentage on sales as commission which differs in varied categories. Alongside sales, the platform also charges for the logistics in the name of delivery charges from the buyer. This charge also differs in accordance with the item and its quality.
In the month of April, after the government announced its initiation of the nationwide lockdown, Udaan undertook the lay off of around 10-15% of its contract staff, since it gauged a drawn-out influence of Covid-19 upon its non-essentials business.
In an exclusive interview with ET, Udaan’s founders, Vaibhav Gupta and Sujeet Kumar stated that the apprehension of the Covid-19 pandemic has also resulted in the platform witnessing rapid application from both retailers and manufacturers since the restraints such as travel and persistent lockdown in many areas of the nation have shaken up their conventional routes.
Recently this year, Udaan also introduced its new app named Pickily, as reported by Entrackr, which was launched at a time when the COVID19 pandemic has prompted new businesses to experiment in fresh sectors and take a shot at new offerings. The Android app facilitates FMCG items across five Bengaluru locations.
As reported by Economic Times, the platform aims to expand warehouse capacity by fivefold to 50 million square feet across several states in the next 7-8 years. This includes states like Uttar Pradesh, Bihar, Madhya Pradesh, Chhattisgarh, Odisha, and Karnataka, among others.
Udaan has also started lending to its merchants through its merchants through its own NBFC arm.
Over the lockdown period, Udaan has witnessed a great degree of growth with its present valuation being $7.5 billion, as reported by Inshorts.
As reported by TechCrunch, the platform has hoisted almost $900 million from investors which include Lightspeed Venture Partners, Tencent Holdings, GGV Capital, and Hillhouse Capital.
The initial funding round of the platform, which was headed by Lightspeed Venture Partners, had taken place in November 2016, in which a total amount of $10 million was hoisted, valuing the company at $40 million.
Following the success of the initial funding round, various companies joined in supporting the startup. The second funding round was initiated in February 2018 in which a total sum of around $50 million was raised, valuing the startup at $200 million. This round was the balancing point for the startup after which it began witnessing marginal profits. This round involved the participation from investor Lightspeed Venture Partners, Yuri Miner, as well as Lightspeed India Partners.
The third funding round of the startup was initiated in September 2018, at a time when the startup had occupied a dominant place among the transactions and markets within the business. The amount raised during this round was around $225 million, resulting in a valuation of almost $1 billion. This was the turning point that marked Udaan as one of India’s fastest unicorns. The round involved participation by Lightspeed Venture Partners as well as DST Global.
The fourth funding round or series D funding round was initiated in October 2019 in which a total amount of around $585 million was raised through a clutch of investors. This huge late-stage round valued the startup at almost $2.8 billion. As reported by the Economic Times, the investment was headed by Tencent, Altimeter Capital, Hillhouse Capital, GGV Capital, Footpath Ventures, and Citi Ventures with present investors DST Global and Lightspeed Venture Partners also contributing.
In March 2020 Udaan hoisted around $30 million through its Singapore-based parent entity Trustroot Internet Private Limited.
Udaan's most recent investment took place in early January 2021 when it raised $280 million from new investors Moonstone Capital Partners and Octahedron Capital.
Udaan sets an inspirational ground for various other startup companies that have sought to gain success in the e-commerce sector. Udaan is one of the few firms which has occupied a dominant position in the sector in a very short period of time, making its success story a pretty interesting one.
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