Udaan

Group-3
Under the guidance of Team Members,
Prof.Viswanathan Venkateswaran Anjitha.K.B
Benila Paul
Naman Shroff
Sreekanth NP

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India is in the early stages of online commerce: Despite of being lower in online retail
spending ,India has the highest growth rate

When compared to other countries India has India has the highest growth rate and average spending
low online retail spending on online buyers

Country US China Japan Brazil India Mexico

Online sales
CAGR(2012-2017) 14% 35% 5% 7% 70% 14%

Average online
spending per online
buyer(2012-2017) 12% 16% -4% 23% -8%

India’s online retail market has grown at 70% (albeit over a

smaller base) over the past five years

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Source: https://www.bain.com/contentassets/8474904b23a54369ada6d628ce8f44bd/report_unlocking_digital_for_bharat.pdf
The untapped potential that helped E-commerce in India to grow

• India has the second-highest number

of Internet users(390 million) which
result in ⅕ people in India currently
having a smartphone.

• While the number of 3G/4G

subscriptions in India has quadrupled
since 2014 and is expected to continue
growing.

•Government of India has announced

various initiatives namely, Digital India,
Make in India, Startup India, Skill India
and Innovation Fund which triggered
this growth.

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Source: https://www.ibef.org/industry/ecommerce.aspx
B2B commerce is growing much faster than B2C commerce.

Zoho
Udaan

Amazon
Flipkart

Billion
Olx
Skillshare

ShutterStock
B2B commerce had a CAGR of 2.8% while B2C only had 0.8%

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Source: https://ajuniorvc.com/udaan-unicorn-b2b-flipkart-alibaba/
B2B BUSINESS MODELS

Aggregator business model follows two-fold customer strategy

GOODS/SERVICE PROVIDERS
AGGREGATOR BUSINESS MODEL

Network model where the firm collects the information about a

particular good/service providers, make the providers their
partners, and sell their services under its own brand
• Customers-Two-fold customers strategy where the service
consumers as well as the goods/service providers act as the OWNER
customers of the company.
• Brand-All the goods/services are provided under a single
brand but by different providers. Branding is done at every
customer touchpoint to have a recall value.
• Quality- Aggregator make sure that the partners provide you
with the standardized quality product/service.
• Contract-A contract is signed between the aggregator and the
goods/service provider where all the terms are cleared. The
terms provide a win-win situation for both
CUSTOMERS

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Source : https://www.feedough.com/aggregator-business-model/
 B2B BUSINESS MODELS

Marketplace business model is a platform where the buyers and sellers meet.

MARKETPLACE BUSINESS MODEL

Online marketplace is basically an e-commerce website or OWNER

an application which organizes the products and services of
different companies/sellers and sell them on its own ONLINE MARKETPLACE
website. The firm only acts as a mediator and doesn’t own
the products or services provided.
• Brand- A marketplace has its own brand but the partners
(sellers) perform their services / sell their goods under
their own brand
• Quality-Different partners working with a marketplace
have different product qualities. Similar products
provided by different producers may have different
qualities.
• Price -Since partners are responsible for deciding the BUYERS SELLER
prices, similar products may have different prices in the
marketplace. User has to find the price suiting his
requirements.

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Source : https://www.feedough.com
MARKETPLACE BUSINESS MODELS

The three marketplace business models that are seen in B2B sector

Supplier Oriented Buyer Oriented Marketplace Intermediary oriented

Marketplace ( eDistribution ) (eProcurement) marketplace( eExchange )
• Many buyers and few suppliers • Few buyers and many suppliers • There are many buyers and many
• Supplier sets up a marketplace • Most popular among the big suppliers
and intends to sell his corporates who involve in • Intermediaries in the marketplace
customized solutions to transactions with huge are the ones who provide a common
various businesses purchasing capacity and high platform for Buyers and Sellers to
• Price their solutions according volume purchases come together and interact,
to the needs of the • The sellers approach the interactions in this sector can be in
client/buyer company with their quotations the form of transactions or plain
and the company chooses to go communication
with a seller that they deem • They maintain a database of buyers
profitable after thorough analysis and sellers and their main goal is to
profit from these associations

Udaan and IndiaMart fits into Intermediary oriented

marketplace 7
Source: https://wisdmlabs.com/blog/beginners-guide-b2c-b2b-business-models/
 Even though IndiaMart and Udaan looks similar, they differ in revenue models.

Transaction business model Subscription business model

Is an online business model whereby users engage in
Is a business model in which a customer must pay a recurring
transactions, and revenue is generated by charging these
price at regular intervals for access to a product or service
users a fee or “commission” on each successful transaction.

Examples:

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https://dealflowbrokerage.com/online-business-models-explained/, https://en.wikipedia.org/wiki/Subscription_business_model
Udaan became a platform for small businesses to connect with retailers online

Objective Connect SME manufacturers and wholesalers with retailers

online, provide logistics, payment and technology support
Udaan In Snapshot
† B2B Unicorn • Technology-based supply chain model
† 900 cities Approach • One-stop solution fulfilling orders placed on its platform
† 2852 employees through third-party logistics providers
† Founded in 2016 • Additional services include order management,
† Their Logistics : Udaan accounting and payment management solutions to
Express merchants
† Founders : Executives of
Flipkart
• Amod Malviya Impact • Delivers to 900+ cities across India
• Sujeet Kumar • Sellers in 90+ cities
• Vaibhav Gupta • Strong commercial momentum
• Customers purchase ~ 7 times a month
• Conversion rate up to 40%

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Source: https://www.bain.com/contentassets/8474904b23a54369ada6d628ce8f44bd/report_unlocking_digital_for_bharat.pdf
Inventories funded Udaan seeing the growth potential upcoming years

Capital Ventures

$225mn $585mn
$10mn $50
mn

Nov 2016 Feb 2018 Sept 2018 Oct 2019

Funding Series A Series B Series C Series D

Light speed • DST Global • Light Speed • Citi Venture

Investors •
venture India • Altimeter Capital
• LightSpeed
partner Partner
Venture • GGV Capital
partner • DST Global
• Footpath Ventures
• LightSpeed • LightSpeed India Partner
India partner
• DST Global
• Hill House Capital Group
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Source : https://the-ken.com/ • Tencent Holdings
The journey of Udaan began as a horizontal marketplace on which manufacturers and
wholesalers could sell their products to retailers

Udaan started as 3rd party logistics for a Onboarded about 1,80,000 sellers and
80% of buyers comprising of SME’s
year and a half buyers on the platform

For more than a year and a half: Within a short span of about 22 • 80 percent of this is buyers
• Udaan did logistics on months of operations: comprising of small-scale retailers
subsidized rate. • It has been able to onboard about • Remaining 20 percent are
• It helped them to gain 1,80,000 sellers and buyers on the manufacturers who are selling
significant exposure within the platform inventories on Udaan’s platform
community
• Logistics allows Udaan to gain
insight on who is buying what.

Large catalogue coupled with efficient and cheap logistics have made Udaan
popular amongst buyers in smaller cities.
Besides adding sellers from India, Udaan also has started sourcing
manufacturers from China.
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Source: https://entrackr.com/2018/10/sourcing-logistics-lending-udaan-b2b/
From FY17 in order to increase the revenue, Udaan moved to finance and logistics

Being a 3rd party logistics company, Udaan couldn’t As part of increasing revenue, first move made by
make any revenue till FY’17 Udaan around finance and logistics

Revenue and Expenses of

Udaan(In Crores)
• In December 2016, it set up Hiveloop Capital Pvt
Ltd which offered credit facilities to its customers

• For a buyer, Credit is available quickly and can be

paid off interest-free in 30 days, after which a 10%
interest rate is applicable

• It sets up Hiveloop Logistics its logistics network

across India

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Source : https://the-ken.com/
 Major revenue for Udaan comes from commission and credit facilities

SELLER SIDE
Gets commission

• For the goods sold, 0.6% to 1% commission is taken by

Udaan from sellers from Jan 2019

UDAAN BUYER SIDE

• Buyers are charged 1-2% delivery charges

• Quick Cash Plus -Credit is available quickly and can be
SELLER
paid off interest-free in 30 days, after which a 10%
BUYERS
interest rate is applicable
• Udaan gives credit to buyer for a particular period of
time after which an interest rate of 15-18% will be
charged additional to the amount given.

Largest revenue for the firm were made through credit business
(14.71 crore) via interest on loans during FY19
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Source: Expert advice
Udaan uses two method of distribution channel for logistics according to the
type of sale

Distribution Channel

Logistics of Udaan is termed Udaan Express, which manages 65% of its logistics

Warehouse Sales

First Mile Middle Mile Last Mile

Seller Hub Hub Buyer

In warehouse sales, logistics pass through first mile, middle mile at times and last mile.

Just in time Sales

Seller Buyer

In Just in Time sales, the logistics passes directly from first mile from seller to buyer. 14
Source: Expert advice
 Apparel retail in India is expected to grow upto $59.3 billion in 2022
Categories in which Udaan operates
Clothing & Accessories
Clothing& Electronics &
Accessories Appliances

Fruits & Food &

Vegetables FMCG

Medicines Fulfilment
Material

Home& Stationery &

Kitchen Office supplies

Footwear Toys &

• Taking an average the apparel market has 32% organized in the 2019
Baby Care • India’s apparel market will be worth $59.3 billion in 2022, making it
the sixth largest in the world which talk about the hidden potiential in
this category in the upcoming years.

Source:https://udaan.com/,https://www.mckinsey.com/industries/retail/, www.businesswire.com/news 15
 Footwear Fruits & Vegetables

▪ India is the second largest footwear manufacturer in ▪ India is the second-largest producer of fruits and
the world after China. vegetables at 259 million tonnes
▪ In India, the unorganized footwear market accounts ▪ Retail market is likely to touch $1.2 trillion by
for 85% of total market(2018) and give stiff 2021
competition to organised sector players. ▪ Unorganized segment comprises of around 14
million outlets
▪ Ecommerce market projected to reach $84 billion
Electronics &Appliances by 2021 and $ 200 billion by 2026

▪ Electronics and appliances market reached Rs.2.05 Toys and Babycare

lakh core (USD $31.48 bn) in 2017) and it expected
increase at CAGR of 9% to reach Rs.3.15 lakh crore Baby care market in India is expected to grow at an
(USD $48.37bn in 2022) annual rate of over 17% in terms of revenues during
2014-19 period to reach over $31billion from $14 billion.
▪ Organised market for electronics and appliances
consists of ~60% Toy industries market size is about 250 crores where 10%
consists of organised sector and 90% consists of
unorganised sector

Source: https://www.researchandmarkets.com/, /www.ibef.org/, https://www.livemint.com/ 16

http://www.technopak.com/, https://wikibizpedia.com/Baby_Care_Industry_In_India
 Pharmaceuticals Stationery

▪ Pharmaceuticals sector is valued at $33bn USD in 2017 ▪ India’s stationery market counted for USD $3.1 bn in
and the countries pharmaceuticals industry is 2016 and is expected to surpass USD $4.83 bn by 2024
expected to grow at CAGR of 22.4% over 2015-20 to ▪ More than 80% of the Indian stationery market s
reach UD $55bn. unorganised.

Source: https://www.goldsteinresearch.com 17
Out of the 10 categories of Udaan 6 falls into unorganized sector

100 % ORGANIZED Electronics & Appliances(60%)

~45
bn Pharmaceuticals(70%)

~$55
bn
Buyers

Toys (10%) Footwear(15%) Apparels &

$2.5bn clothing(32%) Baby Care

Fresh vegetables & ~$8.1 bn ~$

fruits(5%) 52.3
bn ~$14bn
~$4.8bn

Stationery(20%)
~$1.2 tn

Sellers
0 % ORGANIZED 100 % ORGANIZED
Udaan started to face different challenges from different areas

Initially Udaan has no

membership fees, no
Udaan shelled out Rs 40.62 Udaan focussing on
delivery charges, and no
crore on buyer refunds Perishable products such as
listing charges but now
during 2019 which grew 95x foods and staples, write- off
they started
compared to 43.12 lakh of unsold goods are really
to charge for its services.
in 2018. Majority of its high in 2018. that is, 9.84
The number of buyers and
revenue has trickled in crore of inventory were
sellers who were using the
from being a credit provider wrote off
platform wont be same
when they start to charge

Source :https://entrackr.com/2018/10/sourcing-logistics-lending-udaan-b2b/ 19
 Agro Machinery Leather

▪ The Indian agricultural equipment market was worth ▪ The Indian leather industry is expected to achieve
INR 908 Billion in 2018. a turnover of $27 billion by 2020, from its current
▪ The market is further projected to reach a value of INR annual turnover of $12.5 billion(2015)
1,289 Billion by 2024, growing at a CAGR of 6% during
2019-2024.
Chemicals

Furniture  Market size of the Chemicals industry in India stood

at $ 163 bn in 2017-18 and it is estimated to reach $
304 bn by 2025
▪ India’s furniture market is valued at US$25.7 Billion in
2016 and is expected to grow at a CAGR of 12.91%
during the forecast period of 2016-2023 Finished Steel
▪ The major part of the Indian furniture market of
approximately 85% is in the unorganized sector. The  India was the second largest steel producers with
remaining 15% comprises of organized players the production of 106.5 million tonne in 2018.
including Godrej & Boyce Manufacturing Co. Ltd., BP  70% of the steel industry is organized
Ergo etc

Source: http://www.in.kpmg.com/pdf/KPMG_Chemtech_Report.pdf , 20
Further unorganized categories Udaan can venture will be Furniture & chemicals

100 % ORGANIZED
Buyers

Furniture 15% Finished Steels(70%)

Chemicals(40%)
~$26 Agro-Machinery(70%)
bn

~$163bn
~$12.7bn

Sellers
0 % ORGANIZED 100 % ORGANIZED
Thankyou

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