A $280-million funding in January 2021 has valued B2B unicorn udaan at $3.1 billion. Udaan is a marketplace that connects small retailers with wholesalers and traders across categories such as lifestyle, electronics, home and kitchen, fruits and vegetables etc. The Bengaluru-based company founded in 2016 by Sujeet Kumar, Vaibhav Gupta and Amod Malviya, who were also part of the founding team of Flipkart, has raised $1.15 billion till date. The experience of working on B2C in Flipkart has helped the trio sort out supply chain and sourcing needs of retailers in Bharat, and establish udaan as India’s biggest eB2B platform with an estimated market share of 80%, distributing 0.5-million products across 2,500 brands to 3 million of the estimated 12-million distribution outlets in 900 towns.

The Idea!

Sujeet Kumar: We started the udaan journey in 2016. All of us were working in Flipkart. Since we had worked on B2C in Flipkart, we were aware of the possibilities of e-commerce. When we started, we knew GST would happen since it was already announced. It happened in July 2017. GST made moving goods across the country easier.

We started with four-five ideas, but we felt it had to be big, working on our strengths and be suited to India. Almost 94% of product sales in India happen through mom-and-pop stores. But these small store owners have major sourcing and supply chain problems. We felt that catering to their needs is a huge opportunity.

Early Struggle

Given our e-commerce experience, it was not that difficult. The confidence levels were high. Like Flipkart, here also we had to solve supply chain and sourcing issues. More than getting it off the ground, the struggle for us was to find the right product-market mix. We had to unlearn a lot from our B2C experience while doing B2B. It involved meeting retailers, understanding what they want, giving credit, underwriting them, and running an NBFC. Now we have three wings— udaanCapital for funds deployment; our e-commerce platform, udaan. com, and our supply chain logistics wing called Udaan Express.

Make Or Break Moment

It’s a combination of things going right and things going wrong. If you try 10 things, two-three will work, and seven-eight you will have to dispose. We have gone through the same journey in B2B commerce. We have looked to provide the best quality and consistency in the experience for retailers.

The Business Model

Our model focuses on markets where consumption is fragmented. The small-time retailer has some 8-10 suppliers whom he knows over the years and meets personally to buy stock based on need and experience. What we ensure is that the retailer gets his supplies on time. But, we have to convince the retailer that we can do a better job. After all he has to disassociate from old-time suppliers. A retailer takes time to get on the platform, but joins if he sees success in other stores in the region. What we need to do is move from 5-10% of the retailers’ wallet share and then mature to 70-80%. Commodity prices change by the day, but a half per cent makes a big difference to a small retailer.

Tech Challenge

Around the time we started, there were 10-15 other B2B platforms. All of them were vertical platforms. We decided against following the vertical route and emerged as a horizontal platform, which means serving retailers across industries. It needs capital, but is sustaining. We realised that horizontal platforms can expand much faster, which is what happened.

HR Challenge

The profile of people has not changed. In the last five years, we have developed the capability in colleges in Tier II and III cities. We give them training. We are hiring people in more than 500 locations.

Managing Investors

Based on early success, the first funding was easy. After the first funding you have to perform. Then there is nothing to do with your background. We raised $10 million in 2016. Till date we have raised $1.15 billion. After that people have seen our execution, performance and the way we run our business. Every round was based on our performance.

Marketing & Sales Lessons

Staples don’t need marketing, but how can you supply reliably to all kiranas? We used trade fairs very wisely in the initial two-three years. Trade fairs are very supplier aligned. Barring fashion, other categories are quite normal despite the pandemic. B2B marketing is regional in nature, and means feet on street sales. You need to do trade marketing like in trade fairs. We do gorilla marketing, which is regional in nature. In clothing, for example, there is a national trade fair in Mumbai, followed by state-level fairs and local-level fairs.

When Did You Think You Had Arrived?

We have not arrived, but are in the right direction. We take credit as a B2B e-commerce player. We have found some of the best solutions in B2B. In 10 years, we want to be 10% of the overall trade. This is a huge market and there is space for two-three large players. Others have started just two years ago, so let’s see how they shape up.

Riding Through Toughest Times

The pandemic was the true challenge for us. There was no precedent on how to handle it. There was no clarity initially on what was essential and what was non-essential. At that time half of our business was closed. Those three-four months were challenging.

What Next?

We want to go deeper into the country and into the wallet of consumers. We also more warehouses across states.

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