Udaan cuts losses by 33%, but revenue takes hit as it shrinks operations

Udaan, an Indian B2B commerce firm, reported a 43% revenue drop to US$676 million in the financial year ended (FYE) March 2023 from US$1.19 billion in FYE 2022, according to its financial statement.

However, the company narrowed its losses by 33% to US$249 million in FYE 2023. It had taken cost-cutting measures, including multiple rounds of layoffs during the financial year.

The company had laid off over 1,000 employees- a move reflected in the employee cost. In FYE 2023, staff costs declined by over 20% to about US$119.8 million.

Photo credit: Udaan

Udaan makes money by enabling merchants to market and sell their products across India at a low cost and with payment security. While doing so, it lets buyers – which include small businesses such as shopkeepers, restaurants, and street vendors – source from a large selection of products at best prices.

Besides the layoffs, Udaan recently saw the departure of its senior employees: CTO Gaurav Bhalotia and Chief Business Officer Vivek Gupta. While Gupta was appointed as CEO of UBL, Bhalotia is yet to announce his next move.

The company has scaled down its operations in some regions across the country, as reflected in the over 40% fall of its purchase of traded goods to US$630 million.

A source with knowledge of the matter tells Tech in Asia that Udaan is looking to spend less in non-core markets and focus more on its stronghold market. The company isn’t seeking to invest heavily in a market where it has to chase new customers who may not be loyal.

However, the source didn’t specify in which markets Udaan has reduced its operations.

This shrinking of operations is also reflected in Udaan’s logistics expenses and outsourced labor costs, which were down by over 50% during the year.

“Udaan currently doesn’t want to burn cash like other competitors,” the source says. The focus of the B2B commerce firm is to create a sense of stickiness in the system and encourage existing customers to keep coming back, adds the source.

An Udaan spokesperson confirms this and says that the system has resulted in the company receiving “25% more orders as buyers are now purchasing a wider variety of products, leading to buyers purchasing 20% more than they did last year.”

Photo credit: Udaan