B2Be-commerce marketplace, Udaan saw a 50 per cent value growth in its FMCG business in the quarter that ended March 31, 2023, as compared to the Oct-Dec period, a top official of the company told ReTale.
During Q4, Udaan saw its FMCG business saliently growing towards tier 2,3, and 4 towns, with robust growth in small and mid-sized brands. Overall, Udaan drives about 55 per cent of its FMCG business from 10 lakh plus markets. This contribution is down from 65 per cent a year back.
“Our business is moving towards tier 3 and 4 towns. We have seen a movement of 10 per cent. As we keep building rural, this contribution percentage will keep moving towards smaller towns,” stated Vinay Shrivastava, business head, FMCG at Udaan.
Sharing key levers of growth, he said that the company has taken initiatives in terms of its supply chain, customer service, and expansion.
In the last quarter, the B2B e-tailer made a pivotal shift from assisted selling to an organic self-ordering model. Shrivastava claimed that 93 per cent of Udaan’s FMCG business is on self-ordering today which has resulted in ‘more stickiness’ with the buyers and a 29 per cent increase in average basket size.
A key aspect the company has been focusing on is redesigning its supply chain network with the introduction of fulfilment center and micro fulfilment center model.
“We are ensuring visibility of anchor warehouse selection to every retailer in the cluster, allowing buyers in the deepest pockets of the country to have access to every product available at an anchor city,” commented Shrivastava.
He further pointed out that Udaan’s supply chain cost is 1/5th of the e-commerce industry due to the capabilities it has built over the last few years.
Udaan’s rethinking of its supply chain network is in line with the company’s increased focus on rural markets. The eB2B major launched a ‘Project Vistaar’ last year under which it is expanding its reach in the towns and villages across the country. Under the project, the company opens one micro fulfillment center in every district with an aim to be closer to the market and offer next-day delivery.
Started with a pilot in two districts of eastern UP, Project Vistaar has been expanded to 10 districts with over 15,000 retailers and 2,200 towns and villages. Sharing future plans for the project, the FMCG business head said that Udaan is aiming to cover 15,000 plus villages and more than 60,000 retailers in UP, Bihar, NorthEast, and Karnataka, from July onwards.
Adding to its list of initiatives, Udaan said that it has removed entry barriers by reducing the minimum cart value from Rs 3,000 to Rs 499 along with free delivery. This is helping the e-retailer increase frequency as well as the number of buyers.
Additionally, the company has launched a simplified returns policy and is also running a pilot for an expiry returns product policy in Bengaluru.