Udaan: Flight of the Indian B2B ecommerce Economy

By- Abhishek Sharma, PGDM-General ( 2019-21)

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Udaan.com founded in late 2016 by three former executive employees of B2C e-commerce giant Flipkart. It took only 24 months for the beta version of Udaan to become the fastest and youngest unicorn of the India startup ecosystem. Sujeet Kumar, former President of Operations at Flipkart, Amod Malviya, former CTO of Flipkart and Vaibhav Gupta, former Senior VP at Flipkart say that Udaan is a marketplace on which manufacturers and wholesalers can sell their products to retailers directly. The company provides logistics, payment and technology support. At present, it is focusing on three categories - clothing, electronics, and FMCG and staples.

The Indian e-Commerce is expected to grow to US$200 billion by 2026 with YOY growth rate of 51% from 2019.This phenomenal growth is a function of increased internet and smartphone penetration throughout the country with the onset of Jio 4G.

Globally we have seen B2B ecommerce almost doubling in size vis-à-vis the B2C ecommerce market and India will be no exception to this. As the country is backed up by huge investments from global players, India is expected to be the next battleground in the fight for this huge pie of B2B e-commerce and Udaan becoming the fastest unicorn only proves that the evolution has already started. Currently, India has 42.5 million SMEs/MMEs which have 95 percent industrial units, employ 106 million people, 40 percent of India’s workforce and are potentially ready to disrupt the market with increased sales and marketing efforts backed up by logistics and technology solutions.

The potential for scale in this sector is just massive and so are the inefficiencies in the current system. So there is high scope for disruption through technology, and the founders of Udaan.com know this. They leverage the foundation of digitized supply chain laid by the proliferation of B2C e-commerce while trying hard not to be the prejudiced by the B2C products while building Udaan because the matter of fact is both have similarities but it is the details and nuances that cater to the B2B segment players that will make or break their platform.

Some of the factors, which will differentiate B2C vs B2B ecommerce are:

· Impulsive purchases vs rational buying

· EMI’s vs credit payments

Single delivery with faster times vs multiple deliveries over a fixed periodLower transaction values of items vs higher value transactions

All these differences are vital for the B2B segments and Udaan has ticked all of the right boxes for them. Udaan.com is gearing up to own the entire supply chain and logistics. It understands the nuances like the weight profile of the B2B consignments will be higher hence the existing B2C cannot cater to the B2B segments. It has also learnt that unlike EMI’s for large ticket items in B2C, credit is life line of the B2B industry. It provides credit to all its accounts based on their size and demands.

All this implies that B2B market has the depth available for platforms that can leverage technology to overcome and own challenges of supply chain & logistics while catering to its market specific nuances and expectations to scale at a prolific rate.

Udaan.com will use technology to help Manufacturers introduce new products into the market within shorter times while increasing their Production quality. It will help high-quality no-name brands to become a brand and challenging the status quo change the market share and demand customer recall. More manufactures will move to just in time manufacturing to reduce inventory cost increasing their dependence on Udaan as it will strengthen and spread its supply chain infrastructure. While easy credit and reach to suppliers will make new retailers from Tier 2&3 cities come to the market and increase demand.

B2B e-commerce as we know is undergoing a major transformation and companies Like udaan.com that can disrupt through technology and evolve their supply chains will act as catalyst for the Industry to reach its true potential being a major contributor to the GDP and create jobs.