Udaan .... How is it winning?

Other than the mind-boggling valuations, most people would be barely aware of Udaan, a 3 year old $7.5B valued firm.

Few stats about Udaan:

• Udaan got < $7 M of revenues in FY2019 
• Udaan was doing $1.2 B of GMV in CY2019 

How do these numbers make any sense?

They however actually do - because Udaan is essentially offering its platform for free. And gives lucrative credit and logistics options at almost no cost

This is creating massive disruption in thousands of SMEs and Enterprises that have adopted Udaan. This is reportedly in the region of 50,000 to 100,000 active users of the platform.

Now for a little bit about Moglix, another firm that also operates in the B2B space. Few quick comparisons from these articles. 

While selling products at very low margins, Moglix does business in the “normal way” that several businesses used to do. It purchases MRO materials and supplies it to thousands of factories spread across India and now across South-East Asia.

While growing rapidly, Moglix hopes to serve these customers with a range of other services and products. So within the “hot space” of B2B commerce, there are two distinct models:

While Moglix has scaled to about $50 M of revenues in 3 years, Udaan claims $1.2 B of GMV in the same period, since it supports existing sellers on its digital platform.

Will Udaan continue to scale-up dramatically in the next 2-4 years?

B2C parallels

This battle of business models has interesting parallels to what happened in the B2C ecommerce in 2015.

Few years back when ecommerce, the press fiercely argued on which business model will survive – Flipkart or Snapdeal? Full-stack or marketplace? Is it better to own inventory + logistics or let the sellers do it?

That battle is all but settled by 2019. Flipkart and Amazon have invested FBA, Inventory, 100,000+ logistics team members and have vanquished Snapdeal, Shopclues et al.

While Amazon and Flipkart do NOT own most of their inventory, they control the logistics and end-user-experience to a great degree. (besides of course a slick control over consumer acquisition, consumer repeats etc)

So what?….

If you are serving corporates or SMEs in the B2B space (think Khatabook, Zoho, Freshdesk etc), it is clear that the Udaan model is hear to stay.

While freemium has been around for 20+ years, Udaan has innovated on it in several aspects:

-         Provide platform for FREE not for 1 or 2 months… more like 1 or 2 years

-         Provide a range of ancillary services, even if it costs money (eg: Credit facilities)

-         Focus on dramatic scale-up through sales and marketing investments

-         Focus on transactions… than on providing information

As a marketer it is of particular interest to me as to how Udaan has done a range of BTL and digital marketing that most people may not be aware of. It is a testament to how things ought to be done, if dramatic scale-up is required (sans TV, Print etc).

Maybe I will take some time to comment on marketing innovations done by Udaan on another day. What do you think? Is Udaan going to win big?

(Disclosure: Some personal interests in B2B Commerce via some organizations that I meet on-and-off in this space. But maybe my thoughts are still evolving… would love to hear more)