B2B e-commerce startup Udaan gives Reliance's JioMart a run for its money

Nearly 45% of the total 301 retailers in a survey said they selected Udaan as distribution partner versus 33% for JioMart

Udaan, the business-to-business (B2B) e-commerce startup is giving tough competition to Reliance’s online grocery platform JioMart to capture the market. Nearly 45 per cent of the total 301 retailers interviewed by Kotak Institutional Equities mentioned that they selected Udaan as a distribution partner versus around 33 per cent for JioMart.

“Our survey suggests that in Gurugram, headline margins offered by JioMart, Udaan and existing distributors are similar, although JioMart seems to be offering better promotional schemes as well as credit terms as compared to others,” said the Kotak Institutional Equities report.

Kotak Institutional Equities surveyed 100 grocery retailers in Gurugram who have been in a partnership with JioMart for an average of the past six months. The report said JioMart seems to have captured a decent 26 per cent market share after being in a partnership with these stores for an average of about six months. This is in line with its observations in other markets that the firm has surveyed in the past.

The survey at grocery retail shops in Gurugram revealed that JioMart is offering cheaper product price to retailers compared to other distributors. Food and grocery is the most important category accounting for bulk of sales at these retailers. JioMart has improved its service levels but there is headroom available to onboard more kiranas on the JioMart B2B and B2C platforms. For the shops surveyed, JioMart seems to have a much larger share of the distribution pie compared to competitors such as Udaan.

“However, Udaan seems to have higher penetration (more partner stores) than JioMart,” said the report. It said that Udaan has had a partnership of 14.7 months with 55 surveyed retailers in Gurugram. “Udaan seems to be ahead of JioMart in this region in terms of tenure,” said the report.

JioMart seems to have cornered a healthy 26 per cent share in the overall distribution business offered by the retailers that Kotak surveyed. This is relevant in the context of the fact that most retailers deal with multiple distributors. This is in line with the 25 per cent share cornered by JioMart in Mumbai (100 retailers surveyed in December 2020) and higher than the 19 per cent and 20 per cent share cornered by JioMart in Ahmedabad and Bengaluru (100 retailers surveyed in May 2021 and February 2021).

Kotak had to interview 301 retailers in Gurugram, 306 in Ahmedabad and 500 retailers in Bengaluru to find 100 JioMart partner retailers. Its survey thus estimates JioMart’s penetration rate at 33 per cent in Gurugram and Ahmedabad each and 20 per cent in Bengaluru.

“Surveying the 201 retailers who did not partner with JioMart, we found out that some of them source products from Udaan as well,” said the report. “Udaan does have a first-mover advantage and is proving to be a decent competitor to JioMart’s B2B network scale-up.”

Besides JioMart, Bengaluru-based Udaan competes with e-commerce giants Amazon India, Flipkart, and the Tata group for a share in the grocery market. It is eyeing the grocery market to be worth $850 billion by 2025 and will focus on community grocery e-commerce (CGE) to tap the sector growing sharply in the pandemic, according to the sources. The firm recently launched Price Company for CGE, an app that uses the firm’s relationship with small retailers, community influencers and customers to enable e-commerce on a mass scale.

Price started operations in Bengaluru after testing in southern Karnataka, clocking 100 per cent week-on-week growth on orders in Karnataka’s capital. It plans to cover southern India by December end and will onboard 5 million retailers in 1,500 towns and cities next year.