In the field of tech startups, Udaan has added another feather to India’s cap. Providing small entrepreneurs with the benefits of online commerce, it is one of the fastest-growing unicorns in India. Udaan offers a platform and an opportunity for all retailers, wholesalers, distributors, and manufacturing companies in smaller towns and villages to grow as entrepreneurs.
Udaan, founded in June 2016, is a startup company based in Bangalore. The founding members of the company were Amol Malviya, Vaibhav Gupta, and Sujeet Kumar, who previously worked for Flipkart. During their time working at Flipkart, they observed how despite having a strong distribution network, the company was still unable to reach these locations. Their main aim of starting this business was to make the goods reach the remotest areas of the country like Bhabua in Bihar. Udaan targets the back-end of a market. This is the part or process that takes place behind the scenes in an exchange or an e-commerce website.
Udaan portrays the axiomatic example of a B2B (business to business) model. Business-to-business is a situation where one business makes a commercial transaction with another, such as wholesalers and online retailers. It is a type of electronic commerce (e-commerce) which involves exchange of products, services or information between businesses, rather than between businesses and consumers (B2C). There are two B2B models to be considered- a vertical model and a horizontal model. The vertical model can further be divided into two categories- upstream and downstream. Upstream suppliers, including manufacturers, can supply producers and commercial retailers and form a sales relationship. Horizontal B2B is the transaction pattern for the intermediate trading market. It concentrates similar transactions of various industries into one place, as it provides a trading opportunity for the purchaser and supplier, typically involving companies that do not own the products and do not sell the products.
Udaan is an example of vertical model. The company operates primarily in 3 verticals- food (staples, fruits, and vegetables), non-food (electronics and fashion), and pharmaceuticals. The manufacturers can present their product on this platform, and interested traders have the freedom to select and buy it. Retailers and wholesalers also have the same freedom to advertise and buy a product. Even the Kirana(groceries) stores and chemists have started registering for the platform. The platform facilitates secure payments and gives logistics support as well.
The company also offers accounting, order management and payment management solutions to merchants on their platform. Apart from that, it also provides the business owners with the option of borrowing at much more reasonable rates, which helps them avoid being exploited.
An interesting element about this unique start-up is that the company doesn’t have a CEO. The three founders decided to keep it this way, which truly sets this company apart.
In 2020, Udaan claimed itself to be valued at $7.5 billion, as per its valuation report, becoming the fourth-highest valued start up in India. Depending on the category, Udaan charges a commission based on a percentage of sales. As part of its logistics package, Udaan also charges the buyer for delivery fees. Likewise, this fee varies with the product and its quality. Udaan offers a credit limit to verified buyers.
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/-.
Udaan became the fastest unicorn in 2018. Since its inception in 2016, the company is now operating in a total of 900 cities. Having grown exponentially in just 5 years, the company plans to expand even further.