What do Samastipur, Champaran, and Muzaffarpur in the backlands of Bihar have to do with the tech-savvy startup ecosystem in Bengaluru?
In the way that only technology can, the small businesses and retailers in this underserved region of India are now as equipped as their counterparts elsewhere in India to manage and grow their business. And this is all thanks to a three-year-old Bengaluru-based startup that has become the fastest-growing unicorn in India today.
Udaan, which is disrupting offline distribution with its unique B2B model, was started in 2016 by former Flipkart intrepid trio Amod Malviya, Vaibhav Gupta, and Sujeet Kumar, and is fast becoming the wind beneath the wings of India’s B2B ecommerce space.
It is bringing the benefits of online commerce to manufacturers, traders, suppliers, wholesalers, in smaller towns and creating new entrepreneurs in the process.
“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, talking about Udaan’s spectacular journey to penetrate the length and breadth of the country.
With over 30,000 sellers and more than two million buyers as retailers, Udaan is present in more than 900 cities today. At its core, Udaan accelerates domestic trade economy by virtue of it being a full-stack ecommerce platform for B2B businesses.
In the words of the co-founders, Udaan is merely using technology to the already existing system of how India does business. And that, according to them, is its most unique proposition.
“To answer the question how did we penetrate deep into India so fast, definitely we have feet on the street. But my hypothesis is different,” says Sujeet.
According to him, if you build a product that suits the business of the traders, retailers, and manufacturers, and it is for their benefit, that in itself is a validation of how relevant the product is.
The founders, all of whom come from small towns, were clear about this right at the beginning. They wanted to create a product that would solve problems native to India, have a uniquely Indian flavor, and that could empower a large number of people with technology.
With more than 8000 boots on the ground to create such a far-reaching network, Sujeet attributes Udaan’s success to building a platform that solves the most pressing problems of the small business owner.
Valued at $2.7 billion today, Udaan’s first investor – Lightspeed Venture Partners – came on board even before the product was ready, when there was no analogy in the world to compare it with, and at a time when the founders weren’t actively scouting for funding.
Amod credits this to the “team of eight very accomplished people” they had. Lightspeed and Yuri Milner also invested in their Series B round before DST Global came on board for Series C. The unicorn has so far raised $285 million.
The proof of the pudding is in its eating and what better way to illustrate Udaan’s impact than through the success of its customers.
In its fresh category, for example, the startup procures produce directly from farmers around Bakhtawar near Delhi, and Chikkaballapur and Kolar in Karnataka among other places. Before Udaan, the farmers were sending their produce to mandis (offline marketplace) through commission agents and only supplying goods in one place. With Udaan, they no longer have to worry about who will buy their entire produce thus generating a consistent demand. Udaan also helps them get transparent pricing and payment security.
Similarly, Udaan has helped small-town manufacturers grow and scale like the Rajkot-based home appliance manufacturer that Vaibhav cites as an example. “When we approached them, they said, ‘kya karein, dhanda kam hai, aap dekh lijiye (our business is down).’ Since we came into the picture, their demand has shot up and they have set up another manufacturing unit,” says Vaibhav.
To help it grow further and set up yet another unit, Udaan is financing the manufacturer through its Udaan Capital programme.
This leveling of the playing field for the smallest of businesses is what the startup aspires to solve. “Any category of trade has a distribution network behind it. Distribution is a huge and complex industry on its own. With Udaan, we are trying to build a large-scale distribution network in the country at the core base of mobile, internet, and ecommerce technology,” adds Vaibhav.
Going forward, the startup is looking at providing deeper, analytical insights to the businesses on Udaan to help with better decision-making. Maybe even a SaaS-based solution to better manage their inventory and working capital.
This works in Udaan’s favour too – it benefits from offline buyer intelligence. While it was always a challenge to be selling unbranded goods, they also benefited from the fact that their buyers (retailers) were also intelligent – they know from years of experience what the quality of a product will be when it is at a particular price point.
While the biggest categories on Udaan are garments, footwear, electronics, kitchen and home, and staples, changes are most apparent in the staples business (food grains and produce), where trading has traditionally taken place at the mandis.
“We knew staples would be a big category for us because the category itself is so huge,” says Vaibhav. “But we were surprised at the speed at which we went from zero to thousands of orders – it took just a few days.”
“When we thought about it, we realised that price discovery in that category was one of the biggest problems in the market. The scale was huge, but the players were small and there were no official prices. What Udaan did was bring transparency in the pricing. Retailers check our app every day. Millers check the price in particular markets,” he explains.
And yet, it is not about doing away with the middleman.
In providing a B2B ecommerce and credit platform for India’s offline entrepreneurs, Udaan has become a way for them to grow their business and profitability levels. But more importantly, Udaan has become a force of empowerment for the community of tens of millions of small businesses that form the backbone of India’s economy.
Udaan Co-founders tell me the greatest sense of accomplishment comes from their role in powering the dreams of many in places and sectors where such stories were rare or previously unheard of.
As Amod aptly says, “The gratification of seeing people fulfill their dreams is what drives us.” Agencies