Udaan bets on community e-comm to tap $850-bn grocery opportunity

Udaan, India’s largest businessto-business (B2B) e-commerce platform, is betting big on community grocery e-commerce to tap into the country’s grocery sector. This sector is expected to become a $850-billion market by 2025. The Bengaluru-based firm has launched its Price Company app, which marks its entry into community grocery e-commerce.

Here, Udaan would leverage existing relationships with small retailers, community influencers and their customers to enable ecommerce for the masses.

Price Company, the community grocery arm of Udaan, started operations in Bengaluru after test marketing in southern Karnataka. It witnessed 100 per cent week-on-week growth on orders. The firm plans to cover the entire South India by the end of this month. Around 1,500 towns and cities as well as about 5 million retailers will be onboarded by December next year.

Udaan’s new innovation targeted at getting the next 500 million Indian customers into the ecommerce fold with groceries and fresh products.

“Today, more than 80 per cent volume of e-commerce transactions happen in the consumer discretionary space and they come primarily from the top 30 cities,” said Ankit Agarwal, business head, Price Company.

He added, “Price Company furthers Udaan’s mission of building ‘Bharat ka e-commerce’ by targeting the next 500 million customers of Bharat (tier 2, tier 3 cities and rural India). They are still not leveraging the benefits of e-commerce. It is also to empower millions of retailers in small towns and cities.”

India, which is one of the fastest-growing grocery markets globally, is growing at a compound annual growth rate (CAGR) of 8 per cent. It is expected to become a $850 billion market by 2025, according to consulting firm Redseer.

Udaan is competing with ecommerce giants such as Amazon, Flipkart, Reliance’s Jiomart and Tata as well, which are also eyeing to tap the grocery market through various models.

Although India’s market has largely remained unorganised, it is now shifting towards organised channels as e-grocery is significantly growing with increased penetration into smaller cities.

Further, the Covid-19 pandemic has also been a catalyst for the accelerated growth of organised grocery channels with egrocery being one of the biggest gainers, according to the Redseer report.

Udaan’s entry into community grocery e-commerce is a natural progression of its business model to leverage and empower food, fresh and grocery retailers at the bottom of the pyramid in tier 2, 3, and 4 cities. These retailers are the direct link with customers in towns. Millions of micro retailers are already doing this in an informal fashion.

Udaan aims to get them into the formal ecosystem.

Udaan said retailers will benefit from its scale, network, transparency, better margins and trade credit facilities. The firm has a strong network of 3 million retailers and over 200 warehouses. Its supply chain network handles over 8,000 tonnes of products daily. The firm provides delivery in 1,000 towns and cities.

“Price Company’s business model is community group buying where we leverage the existing relationships with small retailers, community influencers and their customers to enable ecommerce for the masses,” said Agarwal. He added, “This will enable community influencers to generate additional income and offer high-quality products to customers at better prices. It will be done by removing inefficiencies and leveraging Udaan’s robust supply chain network, strong sourcing capabilities and 3 million strong retailer network built over the last 5 years.”

Udaan will leverage its capabilities – sourcing from over 2,500 regional and national brands as well as its 5 lakh products. This includes fresh fruits and vegetables from farmers and farmer producer organisations (FPOS) as well as staples from local millers, for the benefit of retailer partners and customers.

Udaan said Bharat needs such initiatives as it benefits farmers, growers and millers. There is an increase in efficiency and reduction in waste. Such initiatives will empower budding entrepreneurs and small retailers.

The company said the pandemic has accelerated digital adoption among people and businesses – small and big. Bharat is an ideal market – as it is ready for the next leg of the digital journey. There is a huge population with smartphones in small cities waiting to enjoy the benefits of ecommerce, it said.