How Udaan Became India’s Fastest B2B E-Commerce Unicorn

Author: Dev Patel | EQMint

Company History

Udaan was founded in 2016 with a mission to digitize India’s massive but fragmented wholesale and retail trade network. Traditional B2B commerce in India relied heavily on middlemen, credit cycles, and informal supply chains, making it inefficient and opaque.

They sought to solve this by creating a B2B e-commerce marketplace that directly connects manufacturers, wholesalers, traders, and retailers. Through its platform, small shopkeepers (kiranas), pharmacies, farmers, and businesses could discover products, compare prices, and order directly at scale.

The company was started by three former Flipkart executives — Sujeet Kumar, Amod Malviya, and Vaibhav Gupta. With their strong experience in e-commerce and technology, they envisioned Udaan as a digital bridge between India’s millions of small businesses and organized suppliers.

The company grew rapidly and by 2018, just two years after launch, it became one of the fastest Indian startups to reach unicorn status, valued at over $1 billion. Over the years, it has raised billions in funding from global investors like Lightspeed, DST Global, and Tencent.

Today, it is one of India’s largest B2B commerce platforms, operating across lifestyle, electronics, home & kitchen, food & FMCG, pharmaceuticals, and agriculture categories. It serves over 3 million retailers and small businesses across 900+ cities, making it a cornerstone of India’s digital trade revolution.

Founders

Udaan was co-founded by:

- Sujeet Kumar — Former operations head at Flipkart, responsible for supply chain and logistics. He brought deep expertise in managing large-scale operations.

- Amod Malviya — Former CTO at Flipkart, an engineering leader who built the core technology platform at Udaan.

- Vaibhav Gupta — Former head of business finance at Flipkart, contributing expertise in strategy, finance, and growth.

Together, the trio leveraged their Flipkart experience to build Udaan as the “Flipkart for businesses,” but instead of serving end consumers, they focused on empowering India’s millions of small retailers and enterprises.

Business Model

It’s business model is centered on digital B2B commerce. Its core pillars include:

Online Marketplace

- Retailers and small businesses can browse products across categories on the Udaan app.

- Suppliers list products with transparent pricing, allowing buyers to order directly.

- The marketplace reduces layers of middlemen, cutting costs for retailers.

Logistics & Supply Chain

- The company operates its own logistics arm, Udaan Express, which handles warehousing, first-mile pickups, and last-mile delivery.

- This gives it control over speed, reliability, and cost in fulfilling B2B orders.

Udaan Capital (Fintech Arm)

- Many small retailers struggle with working capital. Udaan Capital provides BNPL (Buy Now, Pay Later) and short-term credit to buyers on its platform.

- This boosts purchasing power and increases transaction volumes.

Technology & Data

- The app leverages AI and data analytics to provide personalized recommendations, credit risk assessments, and demand forecasting.

- Suppliers benefit from insights into sales patterns, enabling them to plan better.

Revenue Streams

- Commission on transactions made between buyers and sellers.

- Logistics fees for delivery and warehousing services.

- Interest/fees on credit and financing solutions.

- Premium services like featured listings and promotional tools for suppliers.

Category Expansion

- Initially focused on lifestyle goods, Udaan quickly expanded into FMCG, groceries, pharma, and agriculture.

- This made it relevant to kirana stores, chemists, restaurants, and farmers alike.

Current Competitors

Udaan competes in a growing B2B commerce space where both startups and established giants are trying to digitize supply chains:

- Jumbotail — Focused on grocery and kirana digitization.

- ElasticRun — Provides last-mile logistics for rural commerce, backed by Reliance.

- Ninjacart — Specializes in agriculture and fresh produce supply chains.

- Amazon Business & Flipkart Wholesale — Large e-commerce companies entering the B2B segment.

- Reliance Jiomart — A massive competitor leveraging Reliance’s retail and telecom presence.

- Traditional distributors — Though informal, they still dominate large sections of the market.

Despite these competitors, Udaan’s early entry and wide adoption across small towns give it a strong market presence.

Challenges & Risks

While Udaan’s growth story is remarkable, the company faces significant challenges:

- Profitability pressures: High logistics costs and thin margins in B2B trade make profitability elusive.

- Credit risk: Providing BNPL and working capital loans exposes Udaan to defaults.

- Competition: Giants like Reliance and Amazon have deeper pockets and distribution power.

- Operational complexity: Managing millions of small transactions across India’s fragmented markets is logistically tough.

- Regulatory risk: Lending activities must comply with India’s tightening fintech and NBFC regulations.

- Supply chain disruptions: Events like COVID-19 showed how fragile logistics networks can be.

Future Outlook

Udaan is positioning itself as the backbone of India’s digital commerce. Looking forward, the company’s focus areas include:

- Achieving profitability by optimizing logistics and improving margins.

- Expanding Udaan Capital to offer more fintech products like insurance and longer-term loans.

- Deepening rural penetration, bringing small-town kiranas and farmers into the digital fold.

- Building partnerships with FMCG and pharma companies to strengthen supply chains.

- IPO ambitions: Udaan has hinted at going public in the coming years, which will require strong financial discipline.

- Leveraging data to create advanced analytics services for suppliers and brands.

If Udaan executes well, it has the potential to become India’s largest B2B e-commerce platform, bridging millions of small retailers and suppliers in the country’s $1 trillion retail economy.

References

Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.