Business-to-business (B2B) e-commerce platform udaan plans to tie up with 400 brands and make its FMCG division among its largest, accounting for about 25% of the firm’s total revenue over the next year up from the current 20%, business head, FMCG, Vinay Shrivastava said.
In FY21, udaan reported a revenue of `5,919 crore, a 6X increase from FY20’s `978 crore. Its expenses, however, skyrocketed to `8,742 crore from `3,675 crore in the year, resulting in a total loss of `2,482 crore.
The growth in the topline can partly be attributed to its increasing partnerships. Over the past six months, udaan has already onboarded about 150 companies like Mars Wrigley and Unibic Foods, and now has about 220 brands on its platform.
It claims to have about 1,000 stock-keeping units available in every city for its retail partners. The Lightspeed-backed company has three million registered users, or retailers, who purchase in bulk from udaan to resell from their kirana shops.
“The FMCG division is growing at 77% year-on-year and we are becoming a platform of choice for most major FMCG brands. Of the total three million registered users, we have about two lakh retailers who buy for more than `30,000 per month; in our heads that is a good amount. The plan going forward is to increase the number of buyers who make purchases for more than that amount,” Shrivastava told FE.
From thes transactions, udaan makes a gross profit of around 6%, according to analysts.
“udaan is working with most of the established brands. Overall, FMCG business has grown 3X from pre to post Covid, while branded FMCG business for udaan has (increased) 7-8X. (The) management also highlighted that on the products which udaan sources directly from brands, it is making a gross profit margin of 6%, while the remaining company is yielding a gross margin of 3-4%,” Venugopal Garre, managing director, Bernstein, said.
“Over 80% of the grocery demand in India is fulfilled by unbranded products … (but the) management highlighted that sourcing directly from brands has increased tremendously post-Covid. Products directly sourced from brands used to constitute 10% of the overall FMCG business for udaan, which has grown to 55-60% of FMCG business,” he said.
For companies, a partnership with udaan helps them service over 12,000 pin codes and understand customers’ buying behaviour.
Piyush Jain, sales director, Mars Wrigley India, said, “Our partnership with e-commerce partners like udaan has helped promote brand penetration amongst relevant retailers in certain selected geographies, especially around the diverse variety of relevant pack and price within the Mars Wrigley portfolio. Insights from such partners are also helping us to innovate.”
Founded in 2016 by ex-Flipkart employees Amod Malviya, Sujeet Kumar and Vaibhav Gupta, udaan has raised more than $1.6 billion from investors like SoftBank, Tencent, GGV Capital, Microsoft and DST Global, and hit a valuation of over $3 billion. The company plans to list in the first half of 2023 and has been aiming to reduce its cash burn to turn profitable.
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