The B2B e-commerce space is going through a burgeoning phase of growth in India, with potential to change the business landscape in the country in the years to come. According to Statista.com, in 2021, the market size of business-to-business (B2B) e-commerce was worth 5.6 billion USD in India and the market size of B2B e-commerce in the country is likely to increase to 59.8 billion USD in 2025.
According to India Brand Equity Foundation, India’s business-to-business (B2B) online marketplace would be a 200 billion USD opportunity by 2030. Now India allows 100 percent FDI in B2B e-commerce.
Amidst this buoyant market sentiment, the flight of Udaan is expected to reach great heights. Founded in 2016 by Amod Malviya, Sujeet Kumar and Vaibhav Gupta, Udaan is possibly the largest B2B e-commerce platform in India. All the three Co-Founders of Udaan are former senior executives with Flipkart.
Udaan was founded with a vision to change the way trade is being done in India through leveraging technology and has operations across categories including lifestyle, electronics, home & kitchen, staples, fruits and vegetables, FMCG, pharma, toys and general merchandise.
Massive Fund Raise
Recently, the Bengaluru-based B2B e-commerce platform Udaan attracted news when it raised 340 million USD Series E financing. It can be easily described as one of the largest start-up fundraises in India, during 2023. The funding round was led by M&G Plc, a London-based savings and investment firm and had participation from existing equity investors Lightspeed Venture Partners and DST Global. The funding is subject to regulatory approvals.
A combination of fresh equity investment and the conversion of existing debt (convertible notes) into equity is being included in the funding. The funding is expected to strengthen the balance sheet of Udaan.
Envisaging and Restructuring
Udaan envisages to channel these funds to further bolster its customer experience, market penetration and strategic vendor partnerships and also to reinforce long-term capabilities of supply-chain and credit. The company also informed that the fundraise would support its aim of reaching profitability and preparing for the public market within the next 12-18 months.
Regarding this recent funding, Vaibhav Gupta, Co-founder and CEO of Udaan said, “Series E round strengthens our balance sheet and fully funds our business plan. It enables our continued journey of growth and profitability, positioning us well to be public-market ready in the next 12-18 months.” Prior to founding Udaan, Vaibhav held several leadership roles over a five-year period at Flipkart. Most notably, he built and scaled Flipkart’s Business Finance & Analytics function.
However, just after the massive fund raise, as a part of its restructuring exercise, Udaan did lay off more than 100 of its employees. Udaan restructured its business units in 2023 September to merge its essentials business and discretionary business.
Massive B2B Operations
Here it deserves a mention that Udaan has a network of over 3 million registered users and thousands of sellers. It delivers to1200 towns and cities in India. Udaan enables small manufacturers, farmers, and brands to market and sell their products across the country at low cost with payment security and transparency. While doing so it enables small businesses to source from a large selection of high-quality products at competitive prices while facilitating efficient and transparent transactions with convenience.
The platform’s SaaS offerings such as analysis of real time marketing feedback through app data analytics enables brands and manufacturers to make well-informed decisions about product launches and testing of new products in different markets. While the app-based pricing system gives better pricing control, the product listing advertisements and in-app advertisements facilitate manufacturers and wholesalers to reach their targeted, specific, and ready-to-purchase retailers on the platform.
Udaan has enabled logistics focused on b2b trade built on strong technology and operations for fulfilment and delivery service through udaanExpress. udaanCapital, focused on SME trade financing, provides financial products and services for sellers and buyers to expand their business.
Shipping to Growth Shores
During 2022, Udaan shipped over 1.7 billion products across 22 million orders and according to Udaan, these orders were shipped to 1200 towns and cities in India, covering an ambit of 12,500 pin codes. During the same year, Udaan achieved the distinction of catering to 17 million orders and shipped over 9 lakh tonnes of products under the essentials category which includes fresh products, FMCG, staples and pharma. In the essentials category, Udaan’s repeat purchase rate was over 89 percent during 2022.
However, Udaan’s gross revenues decreased by a significant 43.1 percent from FY22 to FY23; from Rs.9900 crore to Rs.5629 crore. During the same time frame, the losses of Udaan too decreased by 33.7 percent to reach Rs. 2,076 crore in FY23 from Rs. 3,132 crore in FY22. Through this funding Udaan’s business is now fully funded and is on its way to attain its objective of emerging profitable in the next 12-18 months.
