Udaan lays off 180 ‘to drive cost efficiency’

Udaan, India’s largest business-to-business (B2B) e-commerce company, has laid off about 180 employees or 4-5 per cent of its workforce of 4,000, in a move to drive cost efficiency, according to sources. They said the layoffs had happened across various departments.

The layoff has happened at a time when the Bengalurubased firm is eyeing to turn into a publicly listed entity in 18-24 months. For this it is focusing on positive unit economics and tracking ‘quarteron-quarter’ performance of the firm.

Udaan declined to reveal the total number of employees that it is laying off but said that it believes in efficiency as a driver of profitable growth and has already made significant progress towards building a sustainable business.

“As the market evolves, we continue to tweak our already proven business model to make it stronger, more efficient, customer-centric and agile,” said an Udaan spokesperson. “In this direction, we have taken various steps to enhance efficiency, refine our cost structure and grow faster in our journey to achieve strong unit economics. However, the efficiency enhancement exercise has also resulted in certain redundancies in the system, with some roles no longer required.”

Udaan said it is working towards providing all required support to the impacted employees which include medical insurance for self and family (based on the existing coverage plan), compensation package as per company policy and providing placements assistance. “We remain committed to our goal of driving Kirana commerce and empowering small and medium businesses of Bharat by leveraging the power of e-commerce,” said the Udaan spokesperson.

Over the last year, Udaan said it has improved its unit economics by a total of over 1000bps (basis points) with equally strong improvements in both gross margins as well as operating costs.

The firm said that the gross margin percentage has gone up 2.5X year-on-year (y-o-y). It said the company’s revenue is now at about Rs 10,000 crore for FY22, a 1.6X increase compared with that of FY21. Also, the firm said the implementation of the right business design and unit economics, has helped the company bring down the cash burn by about 45 per cent y-o-y.

Udaan achieved a valuation of $3.1 billion during its last round of funding of $280 million in January 2021 from existing and new investors. In April, this year Microsoft, one of the world’s biggest technology companies, joined the convertible note funding round of Udaan, which was launched in October 2021 and has now reached $275 million via convertible note and debt. According to industry sources, the valuation of this round of the fundraise will be derived at a future date either at the time of the IPO or during the preipo rounds of funding.