Udaan B2B Trading platform, soaring above the other e-commerce giants in India, has reached new heights in the market by becoming the fastest growing unicorn company with a valuation of $2.8 billion since their birth. Udaan stands strong in the still new, B2B market, which is said to be on the onset of overtaking the B2C e-commerce market in the coming future, for the majority of services offered online. 

Today we will learn about Udaan’s:

  1. Business Model
  2. Revenue Model
  3. How Udaan Works
  4. Udaan upcoming challenges

1. What’s in a name, Udaan?

On being asked why the name “Udaan” was suggested and chosen, founder — Vaibhav Gupta, who had originally suggested the name, explained the reason behind the naming. He said, unlike the other countries, India’s digital adoption is through the roof, but the purchasing power is still slower. And since the core India, hub of low scale and domestic marketing, is not being addressed, they wanted to work for all the “small guys (retailers) in India”. And hence, to make their product closer to their heart for them to connect. The name to them as a company is about hope and about someone who doesn’t have much could grow up and take flight. This is the vision behind Udaan company model.

2. Idea Behind Udaan Working Model: 

After breaking camp at Flipkart, founders — Vaibhav Gupta, Sujeet Kumar, and Amod Malviya, decided to start on a new journey themselves. In June 2016, Udaan launched its operations and about a year later in September 2018, it achieved new heights by becoming the company to gain the unicorn status the fastest in history.

On being asked about the inspiration behind this e-commerce service, Amod Malviya said that they had laid down three major criteria for them to be solving a real-world problem, namely —

A.  “Whatever we do, has got to be large and impact a large scale audience;

B. Secondly, it should be a problem where technology can play a very disruptive role; and

C. Thirdly, it has got to have a uniquely Indian flavor.”

On researching, the B2B e-commerce platform problem hit all three notes very sweetly to them, and here they are!

3. Udaan Working Model | Udaan Business Operation: 

The company originally is a large — scale distributive machinery mostly used to mobile and electronic services to wholesalers and low — scale retailers from the manufacturers. However, this distribution platform works on other services too. In addition to every IT and computational device, Udaan online shopping offers electronics ranging from earphones in wholesale to home appliances. Indian and foreign brands of garments are also purchasable online via Udaan online shopping. The list appends local stores to be able to hail services of local produce delivery, which makes it easier for them to constantly churn their businesses throughout the day.

4. How Udaan App Works | Udaan Business Plan:

Much like any other online B2C consumer, this platform works the same for the business holders. The steps to order from the Udaan app are pretty simple, which is why it makes at least one part of running a business easy now.

1. Firstly, the business administrator should visit the company app or website to be able to order goods online via Udaan online shopping.

Udaan working and earning model
Credits: Udaan

2. Much like any other in-app purchasing platform, you need to create a profile. The profile requires generic details for the company such as verifiable phone number, name of the distributor, business/shop name and the pin code for the site of the company.

3. After the verification of your details, you can select the items that you need to purchase from the catalog. There could be subcategories depending on the type of item you wish to purchase as a wholesaler.

4. Upon choosing the product and adding it to your cart, you will be required to show proof of your business. Business proof can be of many types, namely,

  • GST Certificate
  • Shop License
  • Trade certification
  • FSSAI registration
  • Udhyog Aadhar

5. After submitting the business proof, you are required to choose an adequate quantity of the product you would like to buy via Udaan online shopping.

6. On completion of all formalities, the policies for product and company payment should be reviewed carefully. On reviewing the payment can be made in several ways according to the buyer’s discretion.

A simple process like this for a B2B marketing platform is one of the main reasons Udaan B2B Trading platform is a leading e-commerce giant at the moment.

5. Revenue collection | How Udaan Earns

  • Udaan earning via logistics — 

Even though these account for a commendable amount of the total revenue for the company, their source of revenue is not only from the logistic services that come with the purchasing of the products.

  • Udaan Commission  Model— 

They also, even though not completely, gain from the commission they gain from the product that has been bought.

  • Interest-

The main chunk of it comes from the interest they offer to the small — scale buyers. They fund working capital for its buyers, which can be a hassle for any new business, and intend to make revenue off of it by interest rates around 15 to 18 percent, as of today.

6. Why Udaan business model rising too fast?

Many offer lending, logistics and delivery services much like Udaan and yet they haven’t been able to make a footprint as large as this magical startup. The reasoning can be boiled down to the fact that no other company is ever ready to invest in small — scale businesses that are new to the market. However, with the business strategy that Udaan company model brings into the big picture which includes:

  • Transaction history of buyers
  • The ability to grasp the working capital requirement for businesses
  • Recovering ability
  • They are able to loan onto the businesses and collect their revenue.

This is also an additional factor as to why Udaan has gained popularity enough to hold the title of the fastest-growing unicorn.

Get additional info in this YouTube video:

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7. Challenges faced by Udaan Working Model:

Much like every growing startup, even though Udaan has been soaring heights that are never seen before, they face several challenges, most common but on a larger scale.

There are its competitors and they provide at least some amount of friction in the market, on any scale possible. Few to name are Dropbox, ADP, Ninjacart and the list goes on.

Since it is a B2B platform, it is necessary to attain and maintain the quality of the delivered products to the retailers to maintain credibility and to pull back the customers for bound interactions.

Since it is a niche online market, there is always a threat of cyber attacks and hacking. Even if unsuccessful, these attempts make dents in the platform that require fixing. This can hamper the delivery model and communication model of the company for the retailers.

In addition to every virtual threat faced by the company, there is always the physical threat of flow disruption that can cause problems to the Udaan business model. The need to be quick in delivery or rightfully entertain the last-minute cancellation of products is what gives an e-commerce company its edge, which is very much required in this time and era, and much to Udaan’s hard work, they are emerging victorious.

Next Article: UrbanClap B2C Startup

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