Udaan is laying off 350 employees, or 10 per cent of its workforce of 3,000, as India’s largest business-to-business e-commerce firm targets profitability, according to people familiar with the development.
The e-commerce firm, which plans an initial public offering (IPO) in 12-18 months, is laying off people across department functions in a move to drive cost efficiency. The Bengaluru-based firm sacked 180 employees in June this year.
“As we move forward in our journey towards making Udaan a profitable company, the efficiency enhancement drive and the evolution in business model has created some redundancies in the system, with some roles no longer required,” said an Udaan spokesperson. “As a responsible organisation, we are working towards providing all required support to the impacted employees.”
Udaan recently raised $120 million in convertible notes and debt from shareholders and bondholders, amid a funding winter for start-ups. The firm has raised a total funding of $1.6 billion from investors that include Microsoft, Lightspeed Venture Partners, and Nomura.
It was valued at $3.1 billion in its last funding round of $280 million in January 2021 from existing and new investors. The start-up competes with giants like Amazon, and JioMart in B2B e-commerce, especially in smaller places the company refers to as ‘Bharat’.
“We will continue to invest to build Udaan as a professionally run organisation with scale,” said the Udaan spokesperson. “This includes capabilities and resilience that can leverage the huge opportunity that Kirana commerce offers while empowering the small businesses of Bharat.”
Udaan said the journey of the right business design and unit economics has translated into a 60 per cent reduction in cash burn. The firm had said that the gross margin percentage has gone up almost three-fold year-on-year (YoY). It said the company’s revenue is now at about Rs 10,000 crore for FY22, a 1.6X increase compared to FY21.
“We believe in efficiency as a driver of profitable growth and will continue to refine our cost structures and models,” said the Udaan spokesperson. “In this direction, we have taken numerous steps, with enhanced digital capabilities, to achieve efficiency and scale, become more agile, and remain competitive in the marketplace.”
After raising $585 million from marquee investors in October 2019, and gaining recognition as India’s fastest-growing unicorn, Udaan’s business model found itself severely disrupted by the coronavirus pandemic. At one stage during the lockdown, the firm reportedly lost almost 60 per cent of its business. It had to lay off its contract staff, leading to the loss of around 3,000-3,500 jobs. Udaan revived and grew rapidly as the pandemic accelerated India’s shift to e-commerce.
Udaan now has a network of over 3 million registered users, and about 30,000 sellers across 1,100 cities in the country. The platform has over three million retailers, chemists, kirana shops, and farmers doing over five million transactions per month.