A study on Udaan as a company in-order to understand the business model followed by the company,its business problems and also to understand which sectors will suit the Udaan as it caters to SME retailers done as part of MBA cirrculum

1. Udaan
Under the guidance of
Prof.Viswanathan Venkateswaran
1
Presented By,
Benila Paul
Group-3

2. 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
low online retail spending
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 has the highest growth rate and average spending
on online buyers
India’s online retail market has grown at 70% (albeit over a
smaller base) over the past five years
Source: https://www.bain.com/contentassets/8474904b23a54369ada6d628ce8f44bd/report_unlocking_digital_for_bharat.pdf
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3. The untapped potential that helped E-commerce in India to grow
3
• 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.
Source: https://www.ibef.org/industry/ecommerce.aspx

4. B2B commerce is growing much faster than B2C commerce.
Zoho
Udaan
Amazon
Flipkart
Olx
Skillshare
ShutterStock
B2B commerce had a CAGR of 2.8% while B2C only had 0.8%
4
Source: https://ajuniorvc.com/udaan-unicorn-b2b-flipkart-alibaba/
Billion

5. 5
Aggregator business model follows two-fold customer strategy
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
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
AGGREGATOR BUSINESS MODEL
Source : https://www.feedough.com/aggregator-business-model/
B2B BUSINESS MODELS
GOODS/SERVICE PROVIDERS
CUSTOMERS
OWNER

6. 6
Marketplace business model is a platform where the buyers and sellers meet.
Online marketplace is basically an e-commerce website or
an application which organizes the products and services of
different companies/sellers and sell them on its own
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
prices, similar products may have different prices in the
marketplace. User has to find the price suiting his
requirements.
MARKETPLACE BUSINESS MODEL
Source : https://www.feedough.com
SELLER
BUYERS
ONLINE MARKETPLACE
OWNER
B2B BUSINESS MODELS

7. The three marketplace business models that are seen in B2B sector
7
Udaan and IndiaMart fits into Intermediary oriented
marketplace
• Many buyers and few suppliers
• Supplier sets up a marketplace
and intends to sell his
customized solutions to
various businesses
• Price their solutions according
to the needs of the
client/buyer
Supplier Oriented
Marketplace ( eDistribution )
• Few buyers and many suppliers
• Most popular among the big
corporates who involve in
transactions with huge
purchasing capacity and high
volume purchases
• The sellers approach the
company with their quotations
and the company chooses to go
with a seller that they deem
profitable after thorough analysis
Buyer Oriented Marketplace
(eProcurement)
• There are many buyers and many
suppliers
• Intermediaries in the marketplace
are the ones who provide a common
platform for Buyers and Sellers to
come together and interact,
interactions in this sector can be in
the form of transactions or plain
communication
• They maintain a database of buyers
and sellers and their main goal is to
profit from these associations
Intermediary oriented
marketplace( eExchange )
Source: https://wisdmlabs.com/blog/beginners-guide-b2c-b2b-business-models/
MARKETPLACE BUSINESS MODELS

8. 8
Even though IndiaMart and Udaan looks similar, they differ in revenue models.
https://dealflowbrokerage.com/online-business-models-explained/, https://en.wikipedia.org/wiki/Subscription_business_model
Is an online business model whereby users engage in
transactions, and revenue is generated by charging these
users a fee or “commission” on each successful transaction.
Is a business model in which a customer must pay a recurring
price at regular intervals for access to a product or service
Transaction business model Subscription business model
Examples:

9. Udaan became a platform for small businesses to connect with retailers online
9
Udaan In Snapshot
† B2B Unicorn
† 900 cities
† 2852 employees
† Founded in 2016
† Their Logistics : Udaan
Express
† Founders : Executives of
Flipkart
• Amod Malviya
• Sujeet Kumar
• Vaibhav Gupta
Objective Connect SME manufacturers and wholesalers with retailers
online, provide logistics, payment and technology support
Approach
• Technology-based supply chain model
• One-stop solution fulfilling orders placed on its platform
through third-party logistics providers
• Additional services include order management,
accounting and payment management solutions to
merchants
Impact • Delivers to 900+ cities across India
• Sellers in 90+ cities
• Strong commercial momentum
• Customers purchase ~ 7 times a month
• Conversion rate up to 40%
Source: https://www.bain.com/contentassets/8474904b23a54369ada6d628ce8f44bd/report_unlocking_digital_for_bharat.pdf

10. Inventories funded Udaan seeing the growth potential upcoming years
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Funding
Investors
Series A Series C
Series B
• DST Global
• LightSpeed
Venture
partner
• LightSpeed
India partner
• Light speed
venture
partner
• Light Speed
India
Partner
• DST Global
Series D
$225mn $585mn
Nov 2016 Sept 2018 Oct 2019
$50
mn
Feb 2018
Capital Ventures
$10mn
• Citi Venture
• Altimeter Capital
• GGV Capital
• Footpath Ventures
• LightSpeed India Partner
• DST Global
• Hill House Capital Group
• Tencent Holdings
Source : https://the-ken.com/

11. 11
Source: https://entrackr.com/2018/10/sourcing-logistics-lending-udaan-b2b/
The journey of Udaan began as a horizontal marketplace on which manufacturers and
wholesalers could sell their products to retailers
Within a short span of about 22
months of operations:
• It has been able to onboard about
1,80,000 sellers and buyers on the
platform
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.
Udaan started as 3rd party logistics for a
year and a half
Onboarded about 1,80,000 sellers and
buyers on the platform
80% of buyers comprising of SME’s
For more than a year and a half:
• Udaan did logistics on
subsidized rate.
• It helped them to gain
significant exposure within the
community
• Logistics allows Udaan to gain
insight on who is buying what.
• 80 percent of this is buyers
comprising of small-scale retailers
• Remaining 20 percent are
manufacturers who are selling
inventories on Udaan’s platform

12. 12
Revenue and Expenses of
Udaan(In Crores)
Being a 3rd party logistics company, Udaan couldn’t
make any revenue till FY’17
• 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
As part of increasing revenue, first move made by
Udaan around finance and logistics
Source : https://the-ken.com/
From FY17 in order to increase the revenue, Udaan moved to finance and logistics

13. Major revenue for Udaan comes from commission and credit facilities
13
• For the goods sold, 0.6% to 1% commission is taken by
Udaan from sellers from Jan 2019
SELLER SIDE
BUYER SIDE
• Buyers are charged 1-2% delivery charges
• Quick Cash Plus -Credit is available quickly and can be
paid off interest-free in 30 days, after which a 10%
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.
SELLER
BUYERS
UDAAN
Gets commission
Largest revenue for the firm were made through credit business
(14.71 crore) via interest on loans during FY19
Source: Expert advice

14. Udaan uses two method of distribution channel for logistics according to the
type of sale
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Logistics of Udaan is termed Udaan Express, which manages 65% of its logistics
Seller Buyer
Seller Hub Buyer
First Mile Last Mile
Hub
Middle Mile
Distribution Channel
In Just in Time sales, the logistics passes directly from first mile from seller to buyer.
In warehouse sales, logistics pass through first mile, middle mile at times and last mile.
Warehouse Sales
Just in time Sales
Source: Expert advice

15. 15
Apparel retail in India is expected to grow upto $59.3 billion in 2022
Clothing&
Accessories
Food &
FMCG
Home&
Kitchen
Fruits &
Vegetables
Medicines
Stationery &
Office supplies
Electronics &
Appliances
Footwear
Fulfilment
Material
Toys &
Baby Care
Categories in which Udaan operates
Source:https://udaan.com/,https://www.mckinsey.com/industries/retail/, www.businesswire.com/news
Clothing & Accessories
• Taking an average the apparel market has 32% organized in the 2019
• 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.

16. 16
Source: https://www.researchandmarkets.com/, /www.ibef.org/, https://www.livemint.com/
http://www.technopak.com/, https://wikibizpedia.com/Baby_Care_Industry_In_India
Fruits & Vegetables
▪ India is the second-largest producer of fruits and
vegetables at 259 million tonnes
▪ Retail market is likely to touch $1.2 trillion by
2021
▪ Unorganized segment comprises of around 14
million outlets
▪ Ecommerce market projected to reach $84 billion
by 2021 and $ 200 billion by 2026
▪ India is the second largest footwear manufacturer in
the world after China.
▪ In India, the unorganized footwear market accounts
for 85% of total market(2018) and give stiff
competition to organised sector players.
Footwear
Electronics &Appliances
▪ Electronics and appliances market reached Rs.2.05
lakh core (USD $31.48 bn) in 2017) and it expected
increase at CAGR of 9% to reach Rs.3.15 lakh crore
(USD $48.37bn in 2022)
▪ Organised market for electronics and appliances
consists of ~60%
Toys and Babycare
Baby care market in India is expected to grow at an
annual rate of over 17% in terms of revenues during
2014-19 period to reach over $31billion from $14 billion.
Toy industries market size is about 250 crores where 10%
consists of organised sector and 90% consists of
unorganised sector

17. 17
Source: https://www.goldsteinresearch.com
▪ Pharmaceuticals sector is valued at $33bn USD in 2017
and the countries pharmaceuticals industry is
expected to grow at CAGR of 22.4% over 2015-20 to
reach UD $55bn.
Pharmaceuticals Stationery
▪ India’s stationery market counted for USD $3.1 bn in
2016 and is expected to surpass USD $4.83 bn by 2024
▪ More than 80% of the Indian stationery market s
unorganised.

18. Out of the 10 categories of Udaan 6 falls into unorganized sector
Buyers
Sellers
100 % ORGANIZED
~45
bn
Electronics & Appliances(60%)
Baby Care
~$1.2 tn
Fresh vegetables &
fruits(5%)
~$55
bn
Pharmaceuticals(70%)
~$
52.3
bn
Apparels &
clothing(32%)
Footwear(15%)
~$8.1 bn
0 % ORGANIZED
100 % ORGANIZED
Toys (10%)
$2.5bn
~$14bn
Stationery(20%)
~$4.8bn

19. 19
Source :https://entrackr.com/2018/10/sourcing-logistics-lending-udaan-b2b/
Udaan started to face different challenges from different areas
Udaan shelled out Rs 40.62
crore on buyer refunds
during 2019 which grew 95x
compared to 43.12 lakh
in 2018. Majority of its
revenue has trickled in
from being a credit provider
Initially Udaan has no
membership fees, no
delivery charges, and no
listing charges but now
they started
to charge for its services.
The number of buyers and
sellers who were using the
platform wont be same
when they start to charge
Udaan focussing on
Perishable products such as
foods and staples, write- off
of unsold goods are really
high in 2018. that is, 9.84
crore of inventory were
wrote off

20. 20
Source: http://www.in.kpmg.com/pdf/KPMG_Chemtech_Report.pdf ,
Leather
▪ The Indian leather industry is expected to achieve
a turnover of $27 billion by 2020, from its current
annual turnover of $12.5 billion(2015)
▪ The Indian agricultural equipment market was worth
INR 908 Billion in 2018.
▪ The market is further projected to reach a value of INR
1,289 Billion by 2024, growing at a CAGR of 6% during
2019-2024.
Agro Machinery
Furniture
▪ 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
▪ The major part of the Indian furniture market of
approximately 85% is in the unorganized sector. The
remaining 15% comprises of organized players
including Godrej & Boyce Manufacturing Co. Ltd., BP
Ergo etc
Chemicals
 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
Finished Steel
 India was the second largest steel producers with
the production of 106.5 million tonne in 2018.
 70% of the steel industry is organized

21. Further unorganized categories Udaan can venture will be Furniture & chemicals
Sellers
100 % ORGANIZED
Agro-Machinery(70%)
~$163bn
Chemicals(40%)
0 % ORGANIZED
100 % ORGANIZED
Buyers
Buyers
Buyers
~$12.7bn
~$26
bn
Furniture 15% Finished Steels(70%)

22. Thankyou
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