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<ul><li>Retailers can be served better by multi-category platforms as they seek competitive rates, says <keyword id="3359665" type="General" weightage="80" keywordseo="redseer" source="Orion">Redseer</keyword> report. </li><li>Multi-category platforms like <keyword id="6357316" type="General" weightage="100" keywordseo="udaan" source="Orion">Udaan</keyword> have gained market share to reach 55-60% of the retailer-led eB2B market. </li><li>India’s eB2B market is projected to grow from $5-6 billion in 2022 to $90-$100 billion by 2030. </li></ul>India’s vast retail system comprises a variety of sizes – from the local general stores or kiranas to the organised big players. This whole system is supported by a large, haphazard and unorganised system of wholesalers largely. However, in order to grow to its true potential, the retail system will have to bank on organised electronic business-to-business (eB2B) players going forward, according to a report by advisory firm Redseer. The rationale for the argument is that India is a potential $950 billion retail market and thus will do better if served by multi-category platforms, which in turn will smoothen processes for the front end player. Multi-category platforms offer products across groceries - both staples and <keyword id="34523" type="General" weightage="50" keywordseo="fmcg" source="Orion">FMCG</keyword>, electronics and accessories, general merchandise, fashion, and others. Current picture As per the Redseer report, there are few such big eB2B platforms which have a <keyword id="106831" type="General" weightage="20" keywordseo="pan-india" source="Orion">pan-India</keyword> play currently. Most are eB2B platforms that operate in fewer categories or verticals and access regional and national levels. “Over the last few months, many of these vertical platforms have been struggling, and across categories have shown limited growth/ been flat or declined due to challenging unit economics and prevailing macro-economic conditions, while multi-category platforms like Udaan have gained market share to reach 55-60% of the retailer-led eB2B market,” said <keyword id="4436374" type="General" weightage="50" keywordseo="mrigank-gutgutia" source="Orion">Mrigank Gutgutia</keyword>, partner at Redseer. Udaan is a B2B trade platform, designed specifically for small and medium businesses. Why multicategory platforms? Retailers are dogged by many issues that come with an unorganised market, and there is a case for new-age eB2B platforms that can solve these issues. “The fragmented market puts retailers at a disadvantage procuring from traditional channels owing to price opacity, slow/no deliveries, stockouts, and inconsistent product quality, among other challenges,” says a Redseer report. Retailers who decide to take their business online from the traditional channels, seek competitive rates across categories, and might have to resort to multiple B2B suppliers. “For instance, a retailer might procure rice from a particular eB2B platform and choose a different one for detergent. Unless the same platform can offer both at competitive rates, the retailer would buy from different platforms based on their margins,” Redseer said. Enabling this competitiveness requires cross-leveraging capabilities and costs, and multi-category first-party (1P) platforms with inventory-based models have a distinct advantage, the consulting firm says. While grocery and staples provide them with volumes, discretionary items might be able to drive margins — both which are needed to be in this large market. Growth path and way forward According to Redseer, India’s eB2B market is projected to grow at a compound annual growth rate or CAGR of 40-45% – i.e. from $5-6 billion in 2022 to $90-$100 billion by 2030. “Growth in this market will be led by deepening penetration among retailers across categories and geographies, and a higher wallet share for eB2B platforms. Retailers will get habituated and reap the benefits offered by these platforms, such as cheaper procurement, faster deliveries, higher fill rates, and consistency in product quality,” said Mrigank.

India’s retail system needs more Udaan-like models for the unorganised market

Business-to-business (B2B) e-commerce platform <keyword id="6357316" type="General" weightage="100" keywordseo="udaan" source="Orion">Udaan</keyword> has raised $120 million in convertible notes and debt, as it plans an initial public offering (IPO) in the next 12-18 months amid the <keyword id="6357455" type="General" weightage="20" keywordseo="funding" source="Orion">funding</keyword> winter. Udaan's chief financial officer <keyword id="2753906" type="General" weightage="50" keywordseo="aditya-pande" source="Orion">Aditya Pande</keyword> wrote in an email seen by IANS that with this round, the total funds raised by Udaan through convertible notes and debt in the last four quarters have crossed $350 million, making it one of the largest structured instrument fundraises in the country. "Despite the funding-related challenges being experienced by the larger start-up ecosystem, this fundraise reflects the confidence of investors in our business model and their endorsement of the journey to unit economics, driven by great progress in the evolution of our business model and cost efficiency, that we initiated last year," said Pande. He added that these steps have not only helped us achieve positive unit economics last quarter, but also improved efficiency in the system, with huge cost benefits, "which is key to building a sustainable business, and being public market-ready in 12-18 months". The Bengaluru-headquartered startup improved its unit economics by "1,000bps with equally strong improvements in both gross margins and operating cost," said Pande. "The journey of right business design and unit economics has translated into over 60 per cent reduction in the burn. Continued focus on customer-first thinking and initiatives on strengthening our value proposition for them have resulted in monthly buyer repeat rates increasing by more than 500 bps in the last 2 quarters," he added. Earlier this year, Udaan raised $250 million, $200 million in a convertible note and $50 million in debt. In the calendar year 2021, Udaan raised $500 million, taking its total raise to $1.4 billion to date. To cater to the growing demand, Udaan plans to scale its warehouse capacity to 50 million square feet across the country in the next seven-eight years. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/jiomart-on-whatsapp-is-a-big-opportunity-for-paid-messaging-market-zuckerberg/articleshow/95114891.cms">JioMart on WhatsApp is a big opportunity for paid messaging market: Zuckerberg</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/kkr-to-acquire-digital-services-transformation-company-ness-digital-engineering/articleshow/95119920.cms">KKR to acquire digital services transformation company Ness Digital Engineering</a>

Udaan raises $120 mn in funding winter, plans IPO in 12-18 months

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India’s retail system needs more Udaan-like models for the unorganised market

Katya Naidu

Udaan raises $120 mn in funding winter, plans IPO in 12-18 months

IANS

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