In this article, we will shed light on the “Udaan Business Model” and will also explain its numerous revenue sources.
You won’t find a single household that doesn’t have any interaction with traders. Thanks to e-commerce you get almost every commodity ranging from daily essentials to groceries at your doorstep. But have you ever wondered how the traders get their commodities? Obviously from wholesalers! Although they take the offline route for this purpose. But won’t it be a great idea to offer e-commerce facilities to traders, wholesalers, retailers, and manufacturers? A company that utilized this golden opportunity is “Udaan.”
Did you know, it smoothened the distribution channel in India? Yes, by offering a B2B e-commerce platform to the wholesale and retail segments of the market. Udaan is one of the largest business-to-business e-commerce platforms in India. How did it achieve this milestone? You will get to know it in this write-up.
Udaan: A Brief Overview
Udaan’s prime objective is to establish itself as a trusted partner to small businesses including wholesalers, traders, and retailers. It empowers them by providing technology, financial inclusivity, and supply chain capability to cope-up with the dynamic digital world. Currently, it is acting as a market leader in this segment. Because it has a huge market share i.e. 80%.
Before diving deep into the business model, let’s have a brief overview of Udaan-
|Type of Industry||e-commerce|
|Parent Organization||Trustroot Internet Pvt. Ltd|
|Founders||Amod Malviya, Vaibhav Gupta (CEO), Sujeet Kumar|
|Headquarters||Bengaluru (Karnataka, India)|
|Operating Space||B2B (Business-to-Business)|
|Market Valuation (FY22)||$3.1 billion (Rs.25,680 crore)|
|Revenue (FY22)||Rs.9,943.8 crore|
|Expenses (FY22)||Rs.12,997.90 crore|
|Net Profit/Loss (FY22)||Loss of Rs.3,075.80 crore|
|Competitors||Lazada, Tradyl, Infra Market|
Now we will thoroughly delve into the “Business Model of Udaan.” The business model is described in three parts namely-
- Working Strategy
- Revenue Sources
- Marketing Strategies
Working Strategy: How does Udaan work?
Udaan operates with a specific working strategy to facilitate B2B trade in India. It works on a low-cost business model by leveraging technology. Not only it is cost-effective but also helps all the parties to scale, trade and grow businesses. Udaan has a network of over-
- 3 million registered users
- 25,000-30,000 sellers
- 900+ cities covering 12,000 pin codes
- 1.7 million retailers
It has over 4.5 million transactions every month. It enables small manufacturers, farmers, and brands to sell and market their products all over the country. And that too at a low cost with a secure & transparent payment system.
Here’s a breakdown of how Udaan works-
Sellers, buyers, and service providers interested in using the Udaan platform need to register and create an account. They provide necessary information such as business details, product categories, and location.
2. Product Listing
Sellers list their products on the Udaan platform, providing comprehensive details including product images, descriptions, pricing, and available quantity. They can showcase a wide range of products across various categories.
3. Buyer Discovery
Buyers explore the Udaan platform to discover products that meet their requirements. They can search for specific items, browse categories, apply filters, and access detailed information about products and sellers.
4. Ordering and Negotiation
Buyers can place orders for desired products through the Udaan platform. The app-based pricing system provides better pricing control. They have the option to negotiate prices and terms with sellers, ensuring a fair and transparent transaction process. Udaan facilitates direct communication between buyers and sellers to facilitate negotiations.
5. Logistics and Fulfillment- udaanExpress
Once an order is confirmed, Udaan manages the logistics and fulfillment process through udaanExpress. It collaborates with logistics partners to handle warehousing, packaging, and transportation. Udaan ensures that the products are delivered on time to the buyers’ designated location.
6. Payment and Financing- udaanCapital
Udaan provides a secure payment gateway for buyers and sellers to complete transactions. It also offers credit facilities through its fintech arm, i.e. udaanCapital. It enables eligible businesses to access short-term credit and supply chain financing. This helps buyers manage their cash flow and sellers receive timely payments.
7. Order Tracking and Support
Udaan’s platform allows buyers and sellers to track the status of their orders in real-time. They can monitor the movement of products and stay updated on the estimated delivery dates. Udaan also provides customer support to address any queries or issues throughout the trading process.
8. Analytics and Insights- SaaS Offerings
Udaan offers SaaS (Software as a Service) which leverages data analytics to generate insights for buyers and sellers. It provides analytics on product performance, market trends, and consumer behavior. This data-driven approach helps businesses make informed decisions and optimize their operations.
9. Mobile Application
Udaan primarily operates through its mobile application, available for Android and iOS devices. The app provides a user-friendly interface for buyers and sellers. You can access the platform, browse products, place orders, track shipments, and manage your accounts.
10. In-app Advertisements
Udaan encourages manufacturers and wholesalers to advertise their products on this platform. This helps them (advertisers) to reach their targeted, specific, and ready-to-purchase retailers on their platform. It also acts as a significant source of revenue. We will discuss it later, in the section on “revenue sources.”
In short, it enables the buyer (retailer) to select a product and place an order with sellers who pack it and dispatch it through udaanExpress. The sellers can be wholesalers, brands, or manufacturers. The buyers can pay through udaanCapital which is a secured payment gateway developed by Udaan.
Revenue Sources: How does Udaan make money?
Here comes the most awaited part of this write-up. When a startup is successful, the most sought question of folks is the revenue sources of the respective business. The same goes for the Udaan business model. Being a B2B platform, it generates revenue through various channels. Some of the crucial ones are-
1. Commissions and Service Fees
Udaan charges commissions and service fees from sellers based on the transaction value. When a seller successfully completes a sale through the platform, Udaan takes a percentage of the transaction as a commission. This revenue model incentivizes Udaan to drive sales for its sellers.
2. Logistics Services
The sellers who are registered on the Udaan platform can utilize the storage and warehousing services provided by it. But for this, they need to pay fees. Udaan collaborates with logistics providers to manage warehousing, packaging, and last-mile delivery. While logistics costs are incurred in the process, Udaan charges sellers and buyers for these services, generating additional revenue.
3. Financing and Credit Facilities
Udaan’s fintech arm i.e., udaanCapital offers credit facilities to eligible buyers and sellers. This includes short-term credit options and supply chain financing. Udaan earns revenue by charging interest or fees on these financing services.
As you have read in the previous section, manufacturers, and wholesalers can advertise their products on the Udaan platform. This means, it provides opportunities for brands and sellers to promote their products or services to a targeted B2B audience. By displaying ads, Udaan can monetize its platform and generate additional income. Thus, Udaan generates revenue through ads on its platform.
5. Value-Added Services
Udaan offers value-added services to enhance the trading experience for businesses. These services include data analytics, market insights, and other specialized solutions. Udaan can charge fees for these value-added services, creating an additional revenue stream.
Thus, by diversifying its revenue streams, Udaan aims to create a sustainable business model while providing valuable services to its B2B customers.
Marketing Strategies of Udaan
To make your startup visible in the crowd, you need to showcase it in the media. That’s why the Udaan business model is incomplete without an explanation of marketing strategies. Some of the key marketing strategies of Udaan are-
1. Television Commercials
Pankaj Tripathi (an Indian actor) is the brand ambassador for Udaan. In the video commercials, he acts as “Dimple Bhaiya” who gathers people into his business and makes a lot of money by doing business on the Udaan platform. Through these ads, they encourage small business owners to use udaan to multiply their revenue. They persuade them to become digital-oriented businessmen.
2. Digital Marketing
This marketing strategy has become the core of startups to reach the target audience. Udaan heavily relies on digital marketing to reach its target audience. It invests in online advertising, search engine optimization (SEO), social media marketing, and email marketing to create brand awareness and engage with potential users. Digital channels enable Udaan to target specific demographics and industries effectively.
3. Targeted Events and Trade Shows
Udaan’s founders participate in industry-specific events, trade shows, and conferences to showcase its platform and connect with potential users. These events allow Udaan to engage with the B2B community directly, generate leads, and establish its presence in key industries.
These marketing strategies work together to create brand awareness, attract a diverse range of buyers and sellers, and establish Udaan as a leading B2B e-commerce platform in India.
So, here comes the final part of this article. Let’s summarize the business model of Udaan by consolidating the crucial facts. It is an Indian B2B e-commerce platform that connects manufacturers, wholesalers, traders, and retailers across various sectors. Its business model revolves around simplifying and streamlining the traditional supply chain processes. Udaan offers a digital marketplace where businesses can discover products, place orders, and manage inventory efficiently. It eliminates intermediaries thereby helping the sellers to contact the buyers directly. Also, it enables small and medium-sized enterprises (SMEs) to access a wide range of goods at competitive prices. Udaan monetizes its services through commissions and fees charged to sellers, leveraging its extensive logistics network to ensure timely delivery. By empowering SMEs, Udaan aims to foster economic growth and transform the way businesses trade in India.