B2B e-commerce platform, Udaan’s s ‘Project Iota’, which was launched to stem cash burn and drive profitability, has delivered a 50-55% year-on-year growth in its overall food business for the first half of 2024, Vignesh Ramakrishnan, business/category head, told Fe in an interaction. He said that there’s also been 40% expansion in buyer base, as compared to the second half of 2023.
Named after the smallest unit of electric charge, Project Iota breaks cities into micro-markets as small as 2-3 kilometre in radius. This granular approach has led to a consolidation from 1,000 cities down to 15 key clusters. The company has also scaled back on segments like fashion and electronics.
Talking about the company’s new approach, Ramakrishnan said, “We’ve essentially done a bunch of structural interventions, meeting both sides of the ecosystem – the demand side with kiranas and retailers, and the supply side which includes big brands, small brands, big millers, farmers, and others”.
He said that the company is now ensuring tat customers have a strong value proposition, with competitive pricing and the facility to order in small bulks. “Any complaint is handled within 24 hours, which is new for us,” he added
In Bengaluru, Udaan now reaches 70,000 of the estimated 100,000 outlets, with customer retention rates as high as 95%. It plans to expand this penetration to 90,000 outlets in the city.
“We also want to now replicate our Bengaluru playbook on to our other clusters in the country,” Ramakrishnan said, adding that it wants to scale this to its 15 key clusters. He said that private brands have become a key focus. “In private label staples, we actually grew by 55-60% in April-May-June over January-February-March,” Ramakrishnan said.
Within the broader 50-55% growth in the food business, the fast-moving consumer goods (FMCG) segment grew at 70-75% YoY in H1 2024. Quarter-on-quarter, the combined food and FMCG business grew upwards of 20%, with FMCG showing a “much more promising trend of growing upwards of 30% quarter on quarter,” according to Ramakrishnan.
“We’ll continue focusing on efficiencies and cost structures to build a more durable business. But a lot of our focus right now is to ensure we’re growing at a reasonably good pace, while remaining sustainable and durable, on the back of a systemic design,” he said.
According to recent data from Tracxn, Udaan holds an 8% market share, positioning it as the third-largest player behind IndiaMart (65%) and TradeIndia (16%).
Udaan’s gross revenue fell to Rs 5,609.3 crore in FY23 from Rs 9,897.3 crore in FY22, marking a 43.3% decline. However, the company managed to curb its losses, with net losses decreasing to Rs 2,075.9 crore in FY23 from Rs 3,123.4 crore in FY22, a 33.5% reduction. The company’s five-year compound annual growth rate for revenue stands at 231%.