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UDAAN: How India’s Largest Food & FMCG Platform is Transforming the Life and Business of Retailers and Sellers

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After establishing its chops as the wunderkind of India’s Food and FMCG retailing business by attaining the much coveted unicorn status in just two years and with 5 lakh retailers on its platform within 5 years of its founding, udaan’s hunger and passion for reinventing and reimagining the food and grocery retail eco-system in India remains insatiable.

The company has set upon itself the Holy Grail quest to keep simplifying the lives and business routine of retailers by constantly improving its offerings to them retailers, serving them with better pricing and promotions and with a host of other improvements to its own business practices, including better sourcing and supply-chain efficiencies. 

 At the same time, by selling and supporting thousands of products and hundreds of small, medium and large fast-moving consumer goods brands across FMCG, Staples, and Fresh products, it wants to be the one platform that multinationals, Indian FMCG conglomerates, regional and local entrepreneurs turn to for scaling up the growth and reach of their products.

Over the next 5 years, udaan wants to corner a 10-12% of the food and grocery retail market in India with over 3 million retailers on its platform and become a $100 billion Indian company 10 years from now.

A report by the India Brand Equity Foundation says that E-commerce in India will reach $ 99 billion by 2024, growing at a 27% CAGR over 2019-24, with grocery and fashion/ apparel likely to be the key drivers of incremental growth. The report estimates that Indian E-commerce market is expected to grow to $ 111.40 billion by 2025 from $ 46.2 billion in 2020.

The implementation of demonetization and GST in 2016-17 spurred thousands of small and medium enterprises to use digital means to do business. Ever since, B2B digital companies in India have not only been able to secure a strong beachhead but also been able to expand to new territories and penetrate further and deeper into the mainland. 

Contributing to the spectacular growth and spread of E-commerce in India is the B2B E-commerce and retail-focused startup udaan, which was founded in 2016. Over the past couple of years, udaan’s sales across business divisions such as food, pharma, lifestyle, and electronics have vaulted to dizzying highs, signifying that the future of India’s retail business is E-commerce. 

The company achieved unicorn status ($1 billion in market value) in the fastest span of time, just two years after its inception. It reached $3 billion in gross merchandise value (GMV) in 2020 and is currently valued over $3.1 billion.

udaan FoundersSujeet Kumar, Amod Malviya, and Vaibhav Gupta – who were formerly with Flipkart, understood the big picture of India’s retail industry. They realized that technology could be the game changer and believed that udaan could become the change agent for India’s retail industry. 


In leading the digital wholesale E-commerce business for udaan, its Food & FMCG division has been acting as the spearhead. “The digital B2B retail business in India is now growing very fast and this is clear from the growth numbers in our food business. Over the past 12-15 months, we have been able to triple the number of grocery buyers on our platform. The scale and frequency of purchase from those buyers have gone up almost 2.5 times and the repeat rate of our buyers has also gone up to 94% now,” says
Vivek GuptaHead – Food & FMCG Business, udaan.

udaan’s mission to bring the technology of the future into the existing retailing landscape has been a revolutionary and hugely disruptive move for India’s Food & Grocer Retail industry. When the platform was launched in 2016, B2B E-commerce business was still incubating and in its early days. udaan created many of the B2B digital products that are in use today and was a true pioneer in the B2B digital E-commerce space.

Gupta says that udaan has created a very compelling need for its kind of B2B digital E-commerce platform to exist in India. “It is very obvious that there is a need for retailers to have transparency in the pricing, transparency in the services they use and over the quality of their goods. They need to have control over sourcing, in the choice and selection of products…and this is where udaan has been able to create that need and work towards building and introducing the right solutions for the retailers.”

Creating a One-Stop Shop Model for Grocery Retail 

In its mission and pursuit to serve, improve and develop India’s food retail eco-system, udaan has transformed into a complete one-stop shop model for the grocery retail business. 

The company sells over 5 lakh products across 2500 brands on its platform and its food business supports over 100+ brands and over 5,000+ SKUs from small and large fast-moving consumer goods brands. udaan’s Food Business – comprising FMCG, staples, and Fresh products – currently offers over 20,000 products across grocery, beverages, cereals, pulses, spices, edible oils, home & personal care, fresh and dairy categories across major cities and towns.

“Our platform offers the widest range of products across diverse categories, which gives the buyers a big spectrum of choices to pick from. That is one reason why a retailer, once he buys on the platform, gets hooked to it, which explains how we have been able to maintain a peak rate of repeat buying at 94%,” asserts Gupta, adding that the platform also offer a host of services to its buyers like transparent pricing, convenience in the selection of goods, next-day delivery, easy payment and access to credit, quality assurance, and return of goods if the recipient is not satisfied, among many other facilities. 

No Weak Links in the Chain: Back-and-Front Integration 

In fact, udaan’s business fulcrum pivots on three important levers: a digital marketplace, logistics and lending. Grocers download the udaan app and can order products, track shipments and handle payments, all on the app. This is a significant shift from the traditional way most Food & Grocery retailers source their goods — from physical markets or via third-party suppliers over the phone or through text. udaan, on the other hand, is creating an entire ecosystem where it provides credit and transportation apart from a messaging platform for businesses.

Once a grocer orders something on the platform, udaan’s logistics arm udaanExpress kicks into gear to handle the delivery of the products. Like the other non-food businesses on udaan’s platform, the food business operates in a very fast-moving environment serving almost 1,30,000-1,50,000 orders regularly on a daily basis with some 9,000-10,000 MT of goods and products in movement every day.

Through udaan Express, which delivers 80-85% of the company’s orders, the company has built an extensive supply chain and logistics network with daily delivery covering over 900+ cities and 12,000+ pin codes. The logistics arm provides point to point service, directly from the point of pickup to the point of delivery. Customers get access to a single point dashboard on udaan Express website, which makes it extremely easy to track shipments in any location. Today, udaan Express is one of the largest logistics networks in the country with over 200 warehouses offering more than 10 mn sq. ft. of storage space.

Just like its logistics subsidiary, udaan has also created its own credit-lending arm – udaan Capital – through which it provides one week to 15 days of credit for buyers and sellers. All transactions are done online, enabling transparency while also being a hassle-free transaction.

Drivers of Udaan’s Food Business Boom

udaan’s food business contributes about 60-65% share to its overall top line. The operational expanse and reach of the food business extends to 70 cities across the country and the count is expected to go up to nearly 250 cities in India by the year-end. The food business currently has 5 lakh retailers on its platform, from every region of the country, and the number is expected to climb to three million retailers over the next few quarters.

Retailers see a lot of value in buying from the udaan platform. At the end of the day, retailers and their consumers are looking for quality assurance. And maintaining the quality consistency of the products that it sources and sells on the platform, especially those in the unorganized and unbranded segments, is among udaan’s foremost priorities.

To ensure quality standards of the products sold on its platform, udaan has created its own quality testing lab near its Gurgaon office. Whenever a product is listed on the platform, it is run through the quality testing process at the lab. Doing so ensures that udaan is able to verify the quality claims of a particular product and establish its quality authenticity. 

udaan’s warehousing capabilities also play a key role in expanding the footprint of its food business. The company has its 200+ warehouses in 50 cities currently where its food business now operates, and it is looking at expanding its local operations to 600 cities by year-end through the existing and new warehouses in its fold. To cater to the growing demand, udaan plans to scale its warehouse capacity to over 50 million sq. ft. across the country over the next 7-8 years. 

Focus on Routine Excellence Innovations that Simplify Retailers’ Business

The company believes in keeping things simple and creating basic and fundamental solutions, which actually help to simplify the lives of retailers. “For us, true innovation lies in making the lives of the retailers very simple and hassle-free. Toward this end, we keep innovating continuously on the product side so that our buyers can search the products they are looking for faster and we are able to deliver them the goods the way they want. This means that we are constantly involved in doing routine excellence innovation, which helps us to reduce cost, deliver better products, and make the experience very easy and convenient,” explains Gupta.

One of the things that the company is contributing innovatively toward is “Project Bharat”, an initiative under which it has set out a roadmap of reaching out to 600 Tier II and Tier III cities and towns by end of the year, using its existing network and infrastructure. Through this initiative, udaan is building a model so that a town that is 150-200 km away from Bangalore gets the products with the same degree of freshness that it delivers to a retailer in the heart of the metro city. 

The second element of Project Bharat initiative is to personalize the products for the retailers. Thanks to udaan’s large and wide network of vendors and retailers and its close association with them, the startup wants to personalize the product offerings for its retailers. 

“I think it’s going to be a great innovation. For instance, we know from our data that a retailer in Barabanki in Uttar Pradesh prefers buying a particular brand of rice or a certain type and quality of product and based on the data that we have, we will be able to personalize the product offerings for that particular retailer in our network through our recommendations, which will be based on the retailer’s buying behavior. So, using the power of data analytics and through it personalizing the buying experience for the retailers, we will be able to sell him exactly the type of products he wants,” reveals Gupta.

The company is also doing a lot of innovation in improving its supply-chain system. It is constantly improving and upgrading its racking system, picking system, delivery modes, making its transportation network more sustainable and eco-friendly through use of electric vehicles for ferrying goods, and working on other multiple areas of operations in order to make its supply chain more efficient, robust and sustainable.  

Simultaneously, udaan has been successfully piloting and guiding its staples business by launching its own brands in more product categories. udaan has partnered with exclusive brands and launched Annabhumi in the flour/atta segment; Jayabhumi in the rice category; Captain Harvest in the bulk staples segment; and Vetadrop in the mustard oil segment on the udaan platform. 

In the past 12-18 months, udaan has invested more than Rs. 4000 crore across different pillars of business – technology, supply chain, category, credit, people, compliance – to accelerate and strengthen the capabilities to serve its customers better. The company has also undertaken various initiatives to enhance overall customer experience by leveraging deep customer analytics as well as improving the speed of the app.

Roadmap for the Future

Over the next five years, udaan’s target is to reach over 10,000 towns and cities and have at least three million retailers in India on its platform. Gupta says that over the next five years, udaan will be able to corner a 10-12% of the food and grocery retail market in India. 

“We are already at a 5-6% mark in many of the cities that we operate in. Our ambition is to serve Bharat and be a $100 billion Indian company in 10 years from now. I think we are moving along the right track even though there is a long runway to grow. So, we need to continuously evolve and improve in order to reach the goal we have set for the platform. I am sure that our platform will become an important part of the life, business and daily routine of the total 50 million retailers in India and, particularly, its nine million grocers.”

The full, unabridged version of this story on udaan appears in the October 2021 issue of Progressive Grocer. Subscribe to the magazine to read many such exciting stories on India’s Food & Grocery retailers. 

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