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UDAAN Business Model – Detailed Case Study (How it Started)

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October 1, 2019

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Udaan is a B2B trade marketplace that is specially designed to empower, retailers, wholesalers, traders, and manufacturers using technology as a source. Udaan is run by Hiveloop Technology Pvt. Ltd and is a special initiative for small and medium businesses in India. A startup has to be valued at $1 billion or above if a privately held startup wishes to be in the unicorn club. Udaan was founded in the year 2016 by the former employees of the Ex-Flipkart. Amod Malviya, Vaibhav Gupta and Sujeet Kumar is the trio who founded Udaan. Udaan is trying to build a full-stack platform for small and mid-sized enterprises which will be the combination of a marketplace, logistics, and lending. Going by the reports, there are 50 Million SME(Small and medium enterprises) in India and the total number of transactions that take place across these segments has crossed 600 billion. In the fiscal year 2018, the company Udaan reported its revenue of ₹65 crores. Whereas total expenses were ₹66 crore and losses of ₹59.5 crores. Full Detail in Blog

  UDAAN (CASE STUDY & BUSINESS MODEL

“Aise jagah jahan par buses milna mushkil hai (such inaccessible places where getting a bus is difficult), the retailers are dependent on Udaan for sourcing and procuring of materials,” says Sujeet So let’s start the Udaan Business Model..

WHATS IN IT FOR ME?

1. about udaan.com (overview), 2. initial days – how udaan started, 3. business model of udaan, 4. revenue model of udaan, 5. founders of udaan, 6. facts and figures, 7. digital links of udaan, 8. about funding and raising, 9. competitors, about udaan.com – overview.

Udaan is a B2B trade marketplace that is specially designed to empower, retailers, wholesalers, traders, and manufacturers using technology as a source.

Udaan is run by Hiveloop Technology Pvt. Ltd and is a special initiative for small and medium businesses in India.

The main idea was to connect wholesalers, traders, retailers and manufacturers on a single platform via a mobile app.

The udaan app enables users to access to real insights into active trends and many other premium B2B trade features.

It has enabled small and medium business owners to use the power of technology to nurture and scale their businesses.

How Udaan Started – Initial Days

Have you ever heard about the Unicorn club for start-ups?

A startup has to be valued at $1 billion or above if a privately held startup wishes to be in the unicorn club.

Udaan has recently entered into the Unicorn club.

We will be talking about the growth and also its secrets but before let us first discuss the initial days of the Unicorn startup – Udaan.com

Udaan was founded in the year 2016 by the former employees of the Ex-Flipkart.

Amod Malviya, Vaibhav Gupta and Sujeet Kumar is the trio who founded Udaan. We will be talking more about the founders and their contribution further in the blog.

Initially, Udaan was started only as a logistic platform for small buyers and sellers in electronics, staple and apparels. That time they only focused on logistics for approx. 8 to 10 months. They got very much exposure within India which was very significant for the startup at that time.

During those days, Udaan has built a huge data database of buyers and sellers before they stepped into the supply business.

Also, Very soon Udaan is eyeing to become a lending platform for merchants.

Udaan is trying to build a full-stack platform for small and mid-sized enterprises which will be the combination of a marketplace, logistics, and lending.

Udaan business Model

Let me explain to you the whole business model of Udaan in very straight-forward and simple words.

Udaan is a Business to business marketplace on which manufacturers and wholesalers can sell their products to retailers via an online platform or mobile app. And, the company provides logistics, secure payments, and technical support also.

They are the asset-light player based on their Business Model. They do not believe in owning assets and also are not planning to go asset-heavy as of now.

Udaan helps businesses discover customers, suppliers, and products across categories and connect them to get the best deal. The platform also facilitates secure payments and gives logistics support.

The company also offers accounting, order management and payment management solutions to merchants on their platform.

The Promoters of the company found that financing working capital has been a major headache for end retailers. The retailers end up borrowing from local lenders who charge exorbitantly. Udaan intends to provide working capital(funds) to them at a reasonable rate.

So, apart from being a platform for retailers and wholesalers, it has also started underwriting loans for these small businesses.

It has also received a non-banking financial company (NBFC) license to provide finances to SMEs.

Revenue Model – How Udaan earns?

Before getting to the revenue model, let’s talk about market size and opportunity, Going by the reports, there are 50 Million SME(Small and medium enterprises) in India and the total number of transactions that take place across these segments has crossed 600 billion.

The sector has also been characterized by a lot of inefficiencies such as in Logistics, Capital as well as in sales and marketing.

These are the main pain points as well as opportunities for a B2B business online portal like Udaan.

Talking about the revenue model, I have tried to get in touch with the team of Udaan for interaction but unable to achieve so. So, all the data about the revenue has been collected from anonymous but credible sources.

Udaan has been the combination of a marketplace, logistics, and lending.

To understand the demand and supply aspects across the different categories, the founders of Udaan Focused only on the logistics part for about 8-10 months.

It helped them to establish a relationship with the buying and selling community.

Now, Udaan has been the combination of a marketplace, logistics, and lending.

Udaan charges a percentage on sales as a commission which varies in different categories.

Udaan also charges for the logistics in the form of delivery charges from the buyer which also varies according to the product and quantity.

They provide credit limit to the only verified buyer that too if is eligible for the limit. At first, they will provide Rs. 10000/- credit with no interest charges then the credit limit will be increased to a maximum of Rs. 250000/-.

At the moment, Udaan doesn’t intend to make money through providing funds for working capital for its buyers so they do not charge any interest on the credit.

Who initiated Udaan – Founders of udaan.com

The initial idea of Udaan.com was of the ex-Flipkart employees – Amod Malviya, Vaibhav Gupta and Sujeet Kumar.

Vaibhav Gupta  was the former Senior VP at Flipkart.

Whereas  Sujeet Kumar  worked as a supply chain, built operations and logistics executive at Flipkart.

And  Amod Malviya  was the Chief Technology Officer at Flipkart. 

Facts and figures about Udaan

In the fiscal year 2018, the company Udaan reported its revenue of ₹65 crores. Whereas total expenses were ₹66 crore and losses of ₹59.5 crores.

Digital Links

Udaan  Mobile app has approx. 22,657 monthly downloads and is increasing with a growth of 42.98% every month.

Udaan’s official website is  Udaan.com  which is ranked 36,420 among websites globally based on its 1,277,588 monthly web visitors.

Funding Round

Investor’s Interest in the B2B E-Commerce platforms has been increasing considerably.

Udaan – Bangalore based B2B e-commerce marketplace for retailers, wholesalers, traders, and manufacturers have raised a total of $681.3 M in over 7 rounds of funding.

Starting from raising $10 M in Series A funding on Nov 23, 2016, which was lead by Lightspeed Venture Partners. Till the latest funding of $300 M in series D on August 30, 2019 lead by Altimeter Capital and DST Global.

I have listed the details of all the fundings that the startup has raised to date.

Competitors of Udaan

Top Competitors of Udaan are –

• ZoomTail ZoomTail is seen as one of Udaan’s top competitors. Bengaluru-based Zoomtail Technologies Pvt. Ltd offers e-commerce enabler solutions for a fashion retailer.ZoomTail Technologies is building India’s largest B2B e-commerce platform for fashion consumer goods.
• Big trade  One of the top rivals of Udaan is Big trade which was founded in the year 2017.BigTrade having its headquarters is in Bangalore, Karnataka is one of Udaan’s top rivals.
• Tradekosh TradeKosh is a Pune based startup which was founded in the year 2018.TradeKosh is Udaan’s #3 rival as it is also an online B2B marketplace that connects retailers and manufacturers.

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'Udaan': Tata Salt's Endeavour to Grow Market Leadership

By: Kapil Tuli, Havovi Joshi, Jyoti Patankar

This case is set in September 2007, and revolves around the Head of Sales & Marketing at Tata Chemicals Limited wondering how he could boost the market share of Tata Salt, one of the flagship…

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• Publication Date: Oct 25, 2012
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This case is set in September 2007, and revolves around the Head of Sales & Marketing at Tata Chemicals Limited wondering how he could boost the market share of Tata Salt, one of the flagship products of the company. The dilemma is particularly interesting as Tata Salt had been ranked as the 'Most Trusted Food Brand in India' for the fourth year in a row and had very high brand equity - and yet its market share of 46% in the national branded segment and 18% in the total packaged iodised salt market, did not appear to grow in reflection of that high brand equity. Some of the key factors that the protagonist had to consider while devising a strategy was the complexity of the different markets within India across geographical areas, as well as the intensifying competition from other brands and types of salt.

Learning Objectives

Through this case, students would have an opportunity to analyse the various alternatives available to the company for boosting market share, such as promotional pricing or launching an advertising push to strengthen the consumer pull for the brand. They would also understand the pros and cons of specific Key Performance Indicators, for instance boosting market share; and the challenges in implementing the 4 Ps, namely product, price, place and promotion.

Oct 25, 2012

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Singapore Management University

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Udaan-Building an Alternative Distribution Network for Small & Medium Businesses

The case study, ‘Udaan – Building an Alternative Distribution Network for Small & Medium Businesses’, describes how three ex-Flipsters (Flipkart employees) came together in 2016 to establish Udaan as an alternative distribution network for millions of small and medium businesses across the Indian sub-continent. The case then focuses on the business model developed by Udaan that used a ‘first-principles approach’. The case touches upon several long-standing issues that have been plaguing the Indian B2B retail market, like lack of inclusive credit financing and unreliable last mile delivery services. The company sought to address the various needs of all the players in the B2B value chain by offering a full stack B2B mobile platform that comprised several features, services, and tools designed to plug the various issues in the B2B market and consequently streamline the business transactions of retailers, wholesalers, manufacturers, and importers. These included an easy-to-use trading platform; easy availability of finance products; secure payment collection services and facilities; a low-cost yet efficient distribution network; demand and supply prediction tools, and a chat service on its mobile application. The case finally touches upon the various future plans of Udaan which include expanding the number of categories on its website, expanding its distribution network across India, and leveraging historical and real-time data and data processing tools to predict demand and supply of agricultural produce.

• Understand the importance of identifying pain-points and offering solutions using digital, Internet, and mobile technologies.
• Become aware of the long-standing problems faced by the smaller retailers and suppliers.
• Examine the role of trust among channel members in a distribution channel.
• Learn how digital technologies can be applied to democratize traditional business systems in India.
• Analyze the pros and cons of multiple funding rounds in a short period.

Logistics, Supply chain; B2B marketing; Distribution; Procurement management; Platform model; Digital disruption; E-commerce business models; Technology in retailing; Channel relationships; Value chain; Channel management; Lending; Payments; B2B analytics; Price Discovery

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Publication Date: August 10, 2021

Source: Indian Institute of Management-Bangalore

Industry: Retail and consumer goods

Founded in 2016, udaan operated India's largest B2B e-commerce platform, which catered to millions of vendors registered on its app and trading a wide range of products. Its Capital arm focused on enabling the country's multitude of micro-enterprises with financial services and products, so that sellers and buyers could grow their business with easily accessible trade credit. Having crossed the "small start-up" stage, the HR team at udaan Capital was weighing its options to grow the organization with structured yet empowering processes and policies. The case goes over how the Head of HR architected a performance management framework along contemporary lines. Its philosophy laid emphasis on combining organizational targets with employee aspirations via constructive dialog around goals. Skill ladders were drawn up to help employees at different career stages to navigate their path within the organization. The case reader is invited to contrast this approach with rank-and-yank approaches, which rely on assessments that craft a score to guide actions on rewards and layoffs. Managers were integral to this framework rollout and had to be carefully equipped to conduct productive conversations with employees. A technology tool captured the reviews and tracked the milestones of the exercise. Insights derived from these conversations informed the HR organization about the next steps.

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Diebedo francis kere- first african to win pritzker architecture prize, thomas heatherwick – fascinating architect, oscar niemeyer- hero of the modern architecture, chichu art museum: portrayal of japanese brutalism, biomimicry architecture: eastgate centre – harare, zimbabwe, vastu direction for home, top 10 fabulous wooden structures in the world, 10 upcoming futuristic projects in the world: a glimpse into architecture…, architecture of indian cities: top 10 cities for architects., are the skins of larger buildings prefabricated, what is 3d printing technology how it is used in architecture, the best designing software that every architect must use, best laptop for architecture students in 2021, 5 representations of technology in the world of architecture, unveiling the essence of architecture: a comprehensive exploration, architecture juries – 10 things to remember before them, top 20 architecture colleges in the world, top 20 architecture colleges in india, top 20 architecture colleges in canada, udaan: low-cost housing project by sameep padora and associates.

Udaan is a low-cost mass housing project in Mumbai Sameep Padora for the families that serve the privileged classes of the city. A home for under wraps!

Considering the intact conditions of the city, this project is exemplifying new lessons of Architecture for affordable low-cost housing. However, in metropolises, 50-60 % of the population work for daily wages and find it difficult to buy their own house. Instead of informal settlements, Low-cost urban housing projects can bring assets to the city.

Concept of Udaan: Low-cost Housing project

Structure of udaan: low-cost housing project, design flexibility.

Mumbai is one of the densest metropolises in the world. Escalating land prices in Mumbai is forcing out the secondary working class to move out of their age-old houses and settle in remote areas far from their workplaces. Evaluating this issue Udaan was proposed at Karjat near Bhivpuri station. This is on the Central railway route between Neral and Karjat. It is also connected to NH4. And this has road links to both Panvel/Navi Mumbai and Badlapur/Thane.

• Total BUA proposed: 19080 sq.mt
• Total Units proposed (assuming 300 sq.ft): 522
• 1st Phase : 255
• 2nd Phase 2: 267

Housing is addressing people of the service sector. All possible ways use to keep the social fabric intact. However, design inculcates local context and traditional concepts of low-cost housing. Problem was to cater work-life conditions of people. So the site was so selected, which connects well to all workplaces. Use of new technology for low cost and rapid construction. FSI of this area is 1.2. The project explores the flexibility of modules and units that suit the typology and category of people. At the same time, rather than consolidating the 10% amenity into the  de-facto  club house disconnected from daily use, the design integrated it as a series of dispersed common social programs throughout the building.

Also, read related article: Cargotecture: The Architecture of Shipping containers

The Architect of this low-cost housing is Ar. Sameep Padora, a Mumbai-based Architect. However, his practice is widely regarded for its research-oriented projects that take a deep dive into not just the context. But also the socio-cultural and socio-economic dynamics of the projects.

Standard developers’ practice is to separate clusters based on typology. Also, upstanding the philosophy Architect tried to club together all types of units in the same building, allowing a mix of user groups and creating a richer social fabric.

Based on the requirements of each family four types of units were designed.

• Mezzanine Unit
• Mixed Unit.

Also, read related articles: LIC Housing, Ahmedabad by BV Doshi

All units are in the same grid 3.6×5.9 & 3.6 x 8.9. Which is generated by the Wet Pod requirements Design is modular. In addition, the Wet Pods act as structural, precast, loadbearing modules between which the slabs spanned and eliminate the need for extra columns and beams. Since the module is pre-fabricated and simply put into place on-site. However, the time taken for construction is much less than a conventional RCC framed one both in terms of time and labor involved. In addition, through this method, it became possible to build up to G+4 in 21 days as opposed to casting one slab in 21 days using conventional RCC frame construction.

The use of modular construction techniques made it possible to keep design flexible all units in a grid of 3.6m can merge with adjacent in case of an increase in family size or typology. Also, mixed-used units are on the ground floor to increase the economy. A modular, but non-repetitive scheme can combine to form permutations suiting the fluid requirements of users, with a minimum area of 300sq.ft as mandated.

Also, Read: Kanchanjunga Apartments by Charles Correa: A climate-based

However, the use of corridors, courtyards, and staggering of all types of units inspired by the Chawl Architecture of traditional Mumbai. However, Mumbai has a humid climate, the most simple way to provide comfort conditions is to ensure cross ventilation. The design also addresses this by using the staggered corridors to have cross-ventilation through each unit and vertically ventilate the community areas by staggering the corridors and generating a stack effect cooling through the sloping roof over the circulation zone, completely resembling chawls!

The approach explores the flexibility available in the clever repetition of a module. The project, being precast pods, can execute with speed and allows for a number of units that can configure to suit individual requirements of space for individual families over time. Sameep Padora and Associates

Also, Read: Aranya Low-cost Housing by BV Doshi

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Udaan found the perfect partner in Squadcast in their journey to deliver super-reliable services

As a fast paced growing startup, Squadcast helped us in automated alerting with proper deduplication in place to reduce bandwidth on figuring out issue owners enabling us route them correctly without fatigue. Coming from a monitoring infrastructure background, the journey from an alert to RCA seemed a huge gap in process management and Squadcast is tackling that quite well.

Udaan, one of the fastest-growing startups to achieve unicorn status in 2018, is a network-centric B2B platform designed specifically for small & medium businesses. Serving large number of retailers across India, Udaan has become the platform of choice for B2B transactions across verticals like electronics, home appliances, lifestyle products, and many more. ‍

To keep things running smoothly, Udaan depends on a multitude of microservices. As their platform grows, user expectations grow in sync which is reflected in the ever-growing number of requests they handle per second, that can run into thousands or even more, at peak load. Even a few minutes of downtime can have a significant impact in terms of their revenue. ‍

Udaan was on a lookout for an SRE platform that could handle multiple integrations and track changes in their complex architecture in real-time, which included a web of interconnected microservices and mobile applications. As Udaan’s infrastructure scaled in complexity, there was a need for an SRE platform that was up to the challenge and which could make the lives of on-call engineers easier.

Ineffective On-call Management: Since alerting, monitoring and issue support were completely owned by different teams, whenever an outage occurred, there was a lag between incident discovery and acknowledgement leading to an increase in MTTR.

Better and Easy On-call Scheduling: Automated scheduling enabled quick & accurately routed on-call notifications.

Non Existence of Escalation Policies: Their current incident management process did not provide room to set up escalation policies when an incident goes unacknowledged leading to increase in MTTA.

Escalation Policies: With Squadcast’s highly configurable escalation policies, it is possible for Udaan to alert specific support engineers depending on the severity of the problem thus reducing MTTA drastically.

Alert Fatigue: As Udaan’s infrastructure grew in size, support engineers faced on-call fatigue as multiple alerts for the same incident were sent out.

Deduplication of Alerts: By automatically combining alerts for the same incident Squadcast dramatically reduced the number of unnecessary alerts.

Manual Alert Forwarding: Udaan had a manual alerting system where support engineers would attempt to call the concerned department. This quickly became impractical with their rapidly growing infrastructure.

Alert Routing: With smarter routing and diverse notification modes , there is reduction in time to acknowledge since engineers get alerted only on relevant events.

Analytics: No metrics in place to measure reliability and team productivity.

Discoverability of Metrics: Squadcast dashboard provides a quick snapshot of MTTA/MTTR allowing to instantly deduce the volume and the speed at which team is acknowledging and resolving incidents.

Reduced Alert Fatigue

The deduplication feature within the platform ensures that on-call engineers are not bombarded with similar and/or acknowledged alerts. All alerts from a specific outage are now automatically grouped and routed to the right responder (event tagging).

Detailed Dashboard to Track Metrics

A feature-rich dashboard allows for a granular view of incidents and responses. Thanks to this, Udaan was able to keep better track of their SLAs. Number of service outages came down by 215% after adoption!

Easy and Flexible On-call Scheduling

The team is now able to reach the right folks faster with our intuitive and customizable on-call scheduling, conditional routing, and flexible escalation policies.

Outstanding Customer Support

Squadcast’s stellar customer support service helped Udaan to stay on top of critical incidents in real time.

Improved SRE Focus

Udaan is now confident that they can go beyond conventional IT alerting and incident management processes by using Squadcast’s SRE-focused features to enhance their incident response capabilities.

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