Don’t miss the latest developments in business and finance.

With $280 mn war chest, Udaan to fight Flipkart and Amazon in little India

The B2B e-commerce startup, backed by investors such as Lightspeed, DST Global and Tencent, plans to further increase warehousing capacity equal to around 875 football fields

Udaan co-founders Amod Malviya, Vaibhav Gupta and Sujeet Kumar
Udaan co-founders Amod Malviya, Vaibhav Gupta and Sujeet Kumar
Peerzada Abrar Bengaluru
5 min read Last Updated : Feb 10 2021 | 11:14 PM IST
After raising mega funding from investors like Lightspeed, Yuri Milner’s DST Global and Tencent, Udaan is gearing up to take on Amazon and Flipkart by making deeper inroads into Bharat (tier 2 and tier 3 cities and rural India). 

The Bengaluru-based business-to-business e-commerce startup is strengthening its tech-enabled and cost-effective supply chain and logistics platform to tap small businesses including kiranas in small towns and cities and rural parts of the country. It is expanding the selection of products and categories available on Udaan and improving user experience. The firm is also expanding small and medium enterprise financing capabilities.

“We are committed to offering world-class, tech-enabled and cost-effective supply chain and logistics solutions, in addition to the benefits of e-commerce scale, to small businesses of Bharat,” said Sujeet Kumar, co-founder of Udaan. “This is in line with our objective of transforming the trade ecosystem and empowering small businesses of Bharat while creating local employment opportunities in these towns and cities.”

The year 2020 posed one of the biggest leadership tests for Kumar and other Udaan co-founders Amod Malviya and Vaibhav Gupta, who founded Udaan, in 2016. After raising $585 million from marquee investors in October 2019 and gaining recognition as India’s fastest-growing unicorn, Udaan’s business model found itself severely disrupted by the Covid-19 pandemic. At one stage during the lockdown, Udaan is learnt to have lost almost 60 per cent of its business. 


But the founders and their team have been able to pull Udaan out of the carnage. Now the pandemic has accelerated the digital-led evolution of a highly fragmented and unorganised Indian trade and retail industry. The pandemic has also highlighted the unique structure of the Indian economy, with millions of kiranas and neighbourhood stores becoming the lifeline of the country at the time of crisis. 

Udaan raised $280 million in additional financing from its existing and new investors in January this year at a valuation of over $3.1 billion. The funding is helping Udaan to strengthen its supply chain and logistics capability and serve small businesses across the country, through UdaanExpress. This includes increasing warehousing capacity which is now equivalent in size to 175 football fields or approx 230 acres of open space. The achievement of this milestone has been made possible through capacity expansion and addition of new warehouses, taking the total number of warehouses to 200, spread across the country. It plans to further increase the warehousing capacity which would be equal to around 875 football fields (over 50 million sq. ft).

“The latest capacity expansion allows our customers better and hassle-free inventory management, faster and reliable delivery cycle and better working capital management,” said Kumar. “This is increasing their (customers) operational efficiency and the opportunity to enhance profitability. Looking at the growth volume we are witnessing in our business, we plan to enhance our capacity.”

The expansion makes UdaanExpress one of the largest organised players in supply chain and logistics in B2B e-commerce. The enhanced capacity will help the platform serve small businesses efficiently, especially those operating in Bharat. It would enable faster and reliable delivery, better inventory management while enhancing their working capital efficiency.


Udaan now delivers over 4.5 million shipments per month across 900 cities and 12,000 pin codes through a vast supply chain and logistics network of UdaanExpress. The firm is wooing small businesses, brands, retailers, chemists, Kirana shops and manufacturers, especially those in tier 2 and tier 3 towns. Udaan said the huge warehousing space and vast distribution network is enabling better inventory management for them due to faster and reliable delivery cycles.

Udaan has operations across categories including lifestyle, electronics, home and kitchen. The other categories include staples, fruits and vegetables, fast-moving consumer goods (FMCG) pharma, toys and general merchandise. It enables kiranas, restaurants, street vendors, chemists, small factories and contractors to source from a large selection of high-quality products at the best prices with the convenience of e-commerce. The company said the platform provides brands, and manufacturers access to new markets and regions with greater cost-efficiency and better price control. 

However the booming online retail sales last year showed that smaller cities and rural areas of the country are now a key market not only for Udaan, but e-commerce giants Amazon and Flipkart as well. Despite having a first-mover advantage, Udaan is witnessing serious competition from these players in the business-to-business e-commerce space. Flipkart Wholesale, the digital business-to-business (B2B) marketplace launched by the Walmart-owned e-commerce giant a few months ago is now betting big to tap the grocery business in the country. Flipkart Wholesale, which went live with the fashion category in September last year, will now also offer grocery on its app. Flipkart Wholesale has plans to scale up its business across the country. It aims to provide kiranas and small retailers one-stop access to a wide selection of products using technology.

Udaan witnessed rapid growth in its revenue in the financial year ended March 2020. Its fiscal year-end (FYE) 2020 revenue (from contracts with customers) stood at Rs 978 crore ($134 million), over 21x higher than in FYE 2019. But it sustained $315 million (over Rs 2,000 crore) loss on top of $134 million in revenue, according to the sources.

Udaan in numbers

3 million users on the Udaan platform.

200 warehouses, the supply chain network for national distribution.

900 towns and cities, where Udaan has access across Bharat.

875 football fields, the warehousing capacity that the company plans to increase.

$3.1 valuation, the company achieved after raising $280 million from investors in January.

Topics :Lightspeed Venture PartnersB2B startupsAmazonFlipkart in small townsIndia ecommerce market

Next Story