After years of chasing scale across hundreds of cities, B2B e-commerce platform Udaan has pivoted to a smaller footprint, doubling down on city-level density, and targeting the vast “mass India” consumer that continues to rely on kirana stores for daily essentials. In a conversation with Ayanti Bera, CEO Vaibhav Gupta explains how the company has narrowed its losses on a reduced scale, how private labels and HoReCa are emerging as new growth engines, and why he is in no hurry to take the company public until profitability. Excerpts:
Udaan has gone through a strategic pivot over the last few years. How did the business perform in FY26?
Post-Covid, we shifted to operating in tightly defined city clusters instead of spreading ourselves thin across India. Within each cluster, we focused on building demand density and scale of supply. Over the last 12 quarters, this has resulted in predictable growth and improving profitability. In FY26, we’ve grown roughly 40% while improving gross margins by about 200 basis points. Every city we operate in is now unit economics positive, and we’ve reduced Ebitda burn by 40%.
How extensive is your current footprint, and will you expand further?
We operate in about 16 city clusters, that is roughly 20 cities. For the next three years, we plan to stay focused on these markets since the opportunity even within these cities is massive. For example, in Bengaluru alone, the kirana market is about Rs 2,000 crore a month, and we still have less than 7-8% share. So there’s significant headroom for growth without expanding geographically.
You’ve spoken about ‘mass India’ being your core market. How big is the opportunity?
The per capita income of the bottom 90% is less than $1,000. These households typically spend `150-200 per grocery order, and are fundamentally different from quick commerce or modern retail customers. They buy `1 sachets, loose staples, and low-ticket items. This is a market that only kiranas serve effectively today, and that’s where Udaan operates. This segment forms nearly 80-85% of India’s grocery consumption by value, and 90-95% by volume. They are served only by kiranas because no other model in India today can serve a basket size of Rs 150 given the high supply chain costs. So, the mass grocery market continues to be dominated by kiranas.
Udaan has significantly reduced losses over the last few years. What’s holding back net profitability?
At a city level, we’re already profitable. The only remaining drag is corporate costs, that is, technology, HR, finance, and admin. Our goal is to grow into these costs. If we sustain around 35% growth, we expect to achieve full profitability in about 18 months.
What’s your thinking on IPO?
We want to wait until we are fully profitable. The Indian public markets are evolving, and investors are asking tougher questions around sustainability. We want to be seen as both a growth company and a profitable one before listing.
Private labels seem to be a big focus. How important are they to your strategy?
Staples in India are largely unbranded. For example, in Bengaluru’s Rs 400-450 crore monthly rice market, only about 3% is branded. That creates a huge opportunity for us. In Bengaluru, private labels already account for about a third of our staples business, and we’re scaling this up across other cities.
You’ve also entered the HoReCa (hotels, restaurants, catering) segment last year. How is that shaping up?
We launched HoReCa about a year ago, and in Bengaluru, it already contributes around 25% of our business. It is also present in Hyderabad and Chennai, and overall it forms 15% of revenues at the moment. While most competitors serve top-tier restaurants, we focus on the smaller establishments, which aligns with our mass-market approach.
After acquiring ShopKirana last year, are you looking at more acquisitions?
Grocery is a regional business, so we remain open to small, strategic acquisitions, especially in markets where local players have built strong positions.