09-08-2021 02:06 PM | Source: Motilal Oswal Financial Services Ltd
Opportunity in the B2B e-commerce space By Sujeet Kumar, Co-Founder of Udaan - Motilal Oswal
News By Tags | #607 #4315

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Below are View On Opportunity in the B2B e-commerce space By Sujeet Kumar, Co-Founder of Udaan - Motilal Oswal

Opportunity in the B2B e-commerce space

India’s B2B market is estimated at USD900b and is likely to grow to USD1.4t by CY30. Of this, even if 5-10% organizations move to digital, it will offer Udaan an USD100b opportunity. A recent survey by Bain & Co indicates that nearly 45% of traditional retailers are willing to shift to digital, offering a better price discovery, reliance on on-time delivery, and ease of access to credit. B2B online is far more competitive v/s B2C, which has low order value and higher supply chain cost. Despite competition from large online players, the market opportunity and fragmented market provide a large place for all to grow.

 

Growing scale, optimizing cost

Udaan is present in more than 900 cities, reaching over 12,000 pin codes. It receives ~70% of its orders from Tier II cities and beyond. It has achieved a healthy scale of 3m registered SME users, 140m producers, more than 1m traders and distributors, and 20m buyers, with over 90% repeat purchases and USD1b in credit disbursals. It has built capabilities, with 10m sq. ft. of warehouse space, driving 18x growth in the last three years. It achieved an annualized order run-rate of 52m in Mar’21 across Grocery and Fresh (80%), Electronics, Lifestyle, general merchandise, and Pharma. This has allowed it to reduce logistics cost to ~3% of the average order value v/s significantly higher cost in the B2C segment.

 

Driving growth geographically and in new categories

Udaan is building a digital ecosystem by expanding in additional pin codes and into specific categories like Construction, Chemicals, etc. It is creating a strong credit business to drive growth, and also expanding its private labels to bridge the category gaps not covered by FMCG brands.

 

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