Udaan has raised $280 million from a clutch of new and existing investors, as the business-to-business ecommerce platform moves to build a war chest to take on retail behemoths including Reliance Industries, Amazon and Walmart, all of whom are vying to serve millions of corner stores in the country. This is as per a report in the Economic Times.
After the latest capital infusion, Udaan’s will be valued at $2.8 billion, unchanged from the previous round.
The latest Udaan funding, a follow-on round from the $585 million the company raised in October 2019, saw participation from existing investors Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital and Tencent, along with new investors Octahedron Capital and Moonstone Capital.
The Bengaluru-based unicorn will utilise the funds to capitalise on growth in the B2B e-commerce market, as small and medium businesses increasingly adopt digital modes following the Covid-19 pandemic, it said.
It will also invest in expanding selection of products, growing SME financing capabilities and strengthening its supply chain infrastructure. “Covid-19 has accelerated the already fast digital-led evolution of the highly fragmented and unorganized Indian retail industry. At the same time, the pandemic also highlighted the unique structure of Indian economy, with millions of kiranas (corner stores) and neighbourhood stores becoming the lifeline of our country at the time of crisis,” said Amod Malviya, cofounder of Udaan.
The fresh capital will allow Udaan to take e-commerce across India, Malviya said, adding it will continue to focus on servicing the largest segment of consumers in the country.
Udaan, which connects small and medium-sized retailers with manufacturers and vendors, said it has a network of three million users and 25,000 sellers across 900 cities. It deals with goods in the lifestyle, electronics, home and kitchen, staples, fruit and vegetables, FMCG, pharma, toys and general merchandise categories.
“Participation of existing and new investors in this financing highlights the increasing recognition of capital markets of this unique nature of the Indian market, and the opportunity it offers,” Malviya added.
The investment comes at a time when the space for servicing small retailers — which still make up a bulk of retail in India — through digital channels has found significant traction. The entry of Reliance through Jio Platforms, Amazon, and the consolidation of Walmart’s India wholesale business with Flipkart is driving competition in the sector.
In the food and fresh produce segment, businesses such as Ninjacart, which is backed by Flipkart and Walmart, are finding increasing traction. Other consumer-facing market places, such as BigBasket and Grofers, are also working to expand their B2B businesses to service corner stores.
There are an estimated 15 million small and mid-sized retailers that power close to 85% of the country’s retail sales. The proliferation of smartphones and cheap data has made technology companies tap into and service their needs, eliminating middlemen.
Companies such as Udaan are not only targeting small retailers to sell goods to, but also to buy services such as working capital loans, which this business segment has historically not had access to.