The encyclopedia · Strategy & Leadership · Strategic decision · 2022–2025
Udaan cut India into 50 local supply chains to make B2B delivery profitable
After bleeding on one national network, Udaan rebuilt around 50 demand clusters with local warehouses — next-day delivery at lower cost.
Udaan
the move
Udaan, founded in 2016 by three ex-Flipkart executives, connected small retailers with manufacturers across India. Running 12 categories with centralized warehouses and a centralized supply chain, it lost focus: in FY23 revenue fell 43% and losses reached ₹2,076 crore.
The pivot was from big to small: hyper-local clusters. India was divided into 50 clusters, each with its own supply chain, warehouse and fulfilment centres that stock and serve only their designated demand zone.
The approach cuts cost — no money wasted serving customers outside major demand centres — and enables next-day delivery, plus a locally relevant assortment, since the rice and pulses sold in Bengaluru differ from those in Hyderabad. Udaan aims for shopkeepers to find at least 80% of their products on the platform.
Investors backed the model: a $340 million Series E in December 2023, led by M&G, was one of India's biggest late-stage deals of the year.
why it works
- National scale spreads you thin over low-density, low-margin demand.
- Local clusters make next-day delivery physically possible.
- A curated local assortment raises buyer retention and order frequency.
- The model matches the true geography of Indian staples.
what transfers
Scale is not one big network: find where demand concentrates and make each pocket self-sufficient — local assortment and short hops beat nationwide reach that bleeds margin.
what came after
Udaan continued consolidating categories and cities, pushed private labels with margins up to 15% versus 3–5% for national brands, and by 2025 was shipping a rising share of orders within 24 hours as it prepared for an IPO.
references
- Getting Udaan IPO-ready: The inside story of a pivot
- Enterprise e-commerce rides quick commerce wave, but credit challenges remain
spotted an error? The archive wants to know.