Press Release

Study reveals udaan winning on customer service excellence, after market consolidation

Study conducted by Redseer in collaboration with udaan

1.    eB2B in India has gone through its up and downs but the opportunity at hand remains large

A refocus on core customer value proposition delivery coupled with building density of operations, demand is unlocking the market

Over the past five years, the adoption of eB2B has experienced volatility, influenced by the fluctuating private capital flows and the drive across companies on profitable business models. The 2019-2021 period, known as the ‘Goldilocks Years,‘ heralded an era of rapid, exponential growth, propelled by a surge in private capital investment and COVID-induced disruptions of supply chains.

Post-2021, the focus shifted to sustainable growth as private investments receded, prompting eB2B platforms to prioritize profitability. This change led to major eB2B firms either scaling back in unprofitable pin codes or ceasing operations altogether, resulting in a drop in buyer penetration from about 25% in CY2021 to 12-15% in CY2023. As such, the past two years have catalysed a secular shift towards resilient and profitable growth. eB2B firms are now adopting scalable yet sustainable playbooks centred on consistent CVP (customer value proposition) delivery and operating density to build profitable growth. Looking forward, with the implementation of this strategy & playbook, buyer penetration can potentially triple from 12-15% currently to 35-45% by CY2030.

In line with this approach, udaan has piloted ‘the micro-market strategy’ with a sharp focus on customer service – in certain parts of Bangalore with a threefold objective: to deepen their understanding of customer needs at a granular level, to increase adoption among buyers, and increase their wallet share. Thus, decreasing supply chain costs through improved buyer density and higher purchase volumes.


Exhibit 1: Evolution of buyer penetration on eB2B platforms

Source: Redseer Analysis, Note: 1. The total number of buyers in India range between 14-18 million


Further, following the implementation of this strategy, buyers have expanded their purchases beyond ‘foot in the door‘ staples, such as rice, oil, and sugar, along with selected FMCG Key Value Items (KVIs), to purchase trunk/torso items in grocery and other categories, typically yielding higher gross margins. This phenomenon is known as ‘basket shaping’. Consequently, leading to an increased share of wallet due to higher engagement, i.e., increasing their order frequency, and increasing reliance on the platform, leading to higher AOVs.

Operationally, the dense concentration of buyers in the pin codes, coupled with their heightened adoption rates, leads to more efficient and cost-effective delivery operations, bringing down fully loaded supply chain cost across shipping and fulfilment to less than 3%. This cost efficiency stems from increased buyer adoption (smaller distance between drops), and higher wallet share (which boosts the load per touch point) – resulting in greater tonnage and more predictable demand with higher order frequency.

2.    Redseer interviewed ~100 buyers across 5+ micro-markets in Bangalore, to explore the on- ground impact of udaan’s new playbook

udaan engaged Redseer to assess and validate the on-ground impact of deploying the micro-market strategy in select micro-markets. To evaluate the impact of udaan’s strategy, Redseer conducted on-

ground interviews with ~100 Kirana stores, Pharmacies, and HoReCa outlets across various classes in 5+ micro-markets in Bangalore, as depicted in Exhibit 2.

These micro-markets covered certain mature markets where the micro-market strategy has been fully deployed by udaan as well as certain emerging micro-markets where the strategy is under deployment.


Exhibit 2: Split of buyer categories, buyer type, and micro-markets Redseer visited


Source: Buyer in-depth interviews, Redseer Analysis; Note(s): 1. Mature micro markets are those where the micro market strategy has been fully deployed by udaan, while emerging markets are those wherein the strategy is still under deployment. 2. Other locations include emerging micro- markets in South and Central Bangalore


We assessed the impact of the micro-market strategy across the following parameters:


Redseer assessed the on-ground impact of udaan’s micro-market strategy using five key indicators, as depicted in Exhibit 3. Collectively, these five metrics offer a comprehensive understanding of how these micro-markets have evolved over the last six months, following the implementation of udaan’s micro- market strategy.


Exhibit 3: Impact assessment of micro-market strategy

Source: Redseer analysis


3.    What does a micro-market look like?

A micro-market acts as a microcosm of the larger Indian retail market, contained within a small geographical area, typically defined by a single pin-code or a group of pin-codes. In such a microcosm, the usual residential population is about 40 – 50k and the average size of the micro-market is around 3 km², with an estimated buyer density of 120-140 per km2. Retail outlets constitute three-fourths of these micro-markets, while the rest are HoReCa establishments. The economic activity generated by the retail and HoReCa outlets in a typical micro-market amounts to between ₹10-15 crores.

Given its targeted micro geographic scope, udaan can offer highly personalized and operationally efficient services to buyers, thereby improving market penetration and enhancing buyer relationships with the platform.


Exhibit 4: LHS – Characteristics of a typical micro-market in Bangalore, RHS – Micro-market buyer composition in typical Bangalore micro-market

Source: Client inputs, Redseer Analysis


Redseer carried out on-ground interviews encompassing all classes of Kiranas and Pharmacies, while focusing on Independent Eateries in the HoReCa sector. These visits helped us build with a comprehensive grassroots view of the impact of udaan’s micro-market strategy across diverse buyer groups.



Exhibit 5: Snapshots of buyers in micro-markets Redseer visited

Source: Buyer In-depth Interviews, Redseer Analysis


4.    On-ground impact of udaan’s micro-market strategy in areas where the strategy has been fully deployed

4a. Across buyer types in micro-markets where the strategy has been fully deployed, we noted a >2x increase in penetration and ~1.4x increase in udaan’s eB2B wallet share

Across micro-markets where the strategy has been fully deployed, we observed that udaan’s penetration among buyers has more than doubled, from ~35% in July 2023 (before the strategy was implanted) to ~75% in January 2024. Similarly, reflecting its growth in buyer penetration, udaan’s micro-market focus has unlocked significant growth in wallet share with a 1.4x increase amongst eB2B platforms over the past six months, translating into a ~13% share in overall trade for udaan and a 16-18% share in overall trade for eB2B players. (i.e. udaan’s eB2B market share in these micro- markets were witnessed to be at 70%+1). The primary drivers of this growth were significant enhancements in customer value proposition parameters, such as service excellence across touch points (e.g. guaranteed issue resolution in less than 24 hours) & order flow, credit accessibility, and right pricing & loyalty constructs. Additionally, udaan also witnessed advancements in other customer value proposition parameters, such as product assortment and availability, due to firm- wide improvements.


Preliminary results in emerging micro-markets, where udaan’s strategy is still in deployment have been promising too.


Exhibit 6: LHS – udaan’s buyer penetration in mature micro-markets, RHS – eB2B wallet share: udaan vs other channels


Source: Buyer In-depth-Interviews (N=100), Redseer Analysis; Note: 1. Micro-Markets included here are Southeast MM1, Southeast MM2, South Central MM, and South MM, where the micro-market strategy has been fully deployed by udaan


Among HoReCa buyers in these micro-markets, especially amongst Independent Eateries, udaan has seen its eB2B wallet share grow by ~35%. HoReCa’s high purchase volumes – almost double that of retail – renders it more sensitive to shifts in customer value proposition parameters such as OTIF service, pricing, quality consistency, product availability and assortment. Independent Eateries, operating with limited bandwidth generally struggle most with getting their required range of assortment consistently fulfilled on time with limited vendors. Consistency in quality is also crucial for these establishments to maintain their unique taste profiles, complemented by the need for steady product availability to minimize operational disruptions.

While, amongst Kiranas and Pharmacies, udaan has seen its eB2B wallet share grow by 30-35%, primarily driven by Kirana C&D stores, which benefited from the introduction of the micro-market playbook, leading to an eB2B wallet share growth of >40% amongst these buyers, further acknowledging the additional support and service levels that these buyers require.


Exhibit 7: udaan growth in frequency, AOV, and wallet share by channel in mature micro-markets


Source: Buyer In-depth-Interviews (HoReca N = 15, Kirana Class A&B N = 16, Pharmacy N = 15, Kirana Class C&D N = 54), Redseer Analysis; Note: 1. Micro-Markets included here include Southeast MM1, Southeast MM2, South Central MM, and South MM, where the micro-market strategy has been fully deployed by udaan


4b. This growth has been enabled by significant improvement across customer service and key customer value proposition vectors; udaan’s performance in these core propositions is also significantly better than other channels

Our research indicated that in the markets where udaan has implemented the micro-market strategy, it has seen significant improvements in customer value proposition parameters. While delivery speed, credit accessibility, and pricing have been directly impacted by the implementation of this strategy; assortment and product availability, while seeing firm-wide improvements, have also greatly benefited from the critical role played by Market Managers in gathering vital ground-level feedback from buyers to create the right ‘localization’.

Further, the micro-market strategy has enhanced serviceability by improving udaan’s last-mile operations, which are now supported by the micro-markets’ geographical catchment areas and high buyer density, as explained earlier. In terms of pricing, based on immediate market feedback, they frequently suggest pricing adjustments to enhance sell through in their markets by ensuring udaan’s pricing remains competitive against both offline and online competition.


Exhibit 8: udaan’s and offline channel performance in core customer value proposition parameters in micro-markets

Source: Buyer In-depth-Interviews (N=100), Redseer Analysis


4c. While eB2B has seen significant improvements in pain point intensity reduction, buyers still face significant challenges while procuring from traditional distribution channels

While udaan’s micro-market strategy has been a catalyst for buyer adoption and wallet share growth, it has also been facilitated, in large part, by pervasive pain points faced by buyers while sourcing from offline channels. The top five pain points cited by buyers during offline procurement in our interviews are depicted in Exhibit 9. Collectively, these factors make the offline procurement process cumbersome and untimely for traditional buyers. eB2B platforms, specifically udaan, have effectively provided solutions for these challenges.


Exhibit 9: LHS – Top pain points faced by buyers across traditional distribution channels in micro-markets, RHS – Verbatims of pain points from buyers

Source: Buyer In-depth-Interviews (N=100), Redseer Analysis


5.    Driven by enhancements in customer value proposition parameters udaan enjoys a high NPS with ~50% of buyers looking to increase procurement from the platform

Driven by its strong performance in core customer value proposition parameters, udaan has achieved an NPS score of 42 in the micro-markets Redseer studied, outperforming all other platforms. In contrast, offline channels, especially Mandis, significantly trail with an NPS score of 7, as buyers grapple with the inconvenience of long, often 30-40 km, journeys to procure staples. Additionally, the inconsistent quality of staples procured from mandis also detrimentally impacts the buyers’ overall experience.

udaan’s strong NPS score is positively correlated with future wallet share outlook, as 49% of buyers plan to increase their wallet share on the platform, while only 3% intend to decrease it. In contrast, buyers procuring from offline channels, namely through distributors and mandis, have an even smaller proportion seeking to increase their wallet share, at 10% and 16%, respectively, while 14% and 38%

intend to decrease their wallet share, respectively.


Exhibit 10: LHS NPS score by channel; RHS Expected wallet share evolution in next 6 months by channel

Source: Buyer In-depth-Interviews (N=100), Redseer Analysis


6.    Case study – Buyers who use udaan are increasingly procuring more and that too more frequently

Mirroring the trends noted above, our on-ground interviews with buyers across various channels reveal a growing inclination towards udaan following the roll-out of its micro-market strategy, as evidenced by increased purchase frequency and higher average order value (AOV), as detailed in Exhibit 12. The buyers featured in the exhibit have experienced a wallet share growth anywhere between 1.2 to 1.4 times over the last six months.


Exhibit 11: Case studies of buyers post-micro market strategy implementation

Source: Buyer In-depth-Interviews, Redseer Analysis


7.    What does this mean for the overall eB2B market in India?

The initial success of the micro-market strategy and customer service excellence playbook in select focus markets in Bangalore, comes across as great news for the sector. Though it is operationally intensive, the strategy shows promise and there’s a potentially replicable playbook emerging. In the markets where this has been deployed fully by udaan, it resulted in, a >2x jump in penetration, a 1.4x increase in wallet share for udaan among eB2B platforms, and thus a 70%+2 market share in eB2B (~13% overall trade market share). The initial success of the micro-market strategy has the potential to be replicated across the ~600 micro-markets in the Bangalore cluster, with ~400 stores addressable in each micro-market. This replication could result in a 6x increase to ~$1B annual scale in eB2B opportunity in Bangalore by CY2030 compared to CY2023.

The strategy could potentially further be replicated in other clusters across the nation, but implementation against the playbook remain key.

  1. Market share calculations exclude kiranas/grocery stores selling fresh and dairy products


Definitions of key terminologies used in the report:


Serial #TermDefinition
1Micro-MarketA Micro-Market is usually a small, geographically confined area,

typically encompassing a single pin code or a group of pin codes






Class A/B/C/D Kirana

Class A: Store >200 sq. feet, avg. daily revenue INR 25,000+. Class B: Store 100-200 sq. feet, avg. daily revenue INR 15,000-25,000. Class C: Store 100-200 sq. feet, avg. daily revenue INR 6,000-15,000. Class

D: Store 50-100 sq. feet, avg. daily revenue INR 6,000

3HoReCaHotel, Restaurant, and Café outlets





Independent Eateries

Independent Eateries (HoReCa class C&D) refers to unorganized outlets that do not have more than one branch. These

establishments are often smaller in scale and cater to a more

localized customer base compared to their more organized counterparts in Classes A and B





Basic or essential food items that are used regularly and are in constant demand. Typically includes items like rice, wheat, pulses,

salt, sugar, etc





Fast-Moving Consumer Goods. Products that are sold quickly and at

relatively low cost. Examples include non-durable household goods such as packaged foods, beverages, toiletries





Redseer was engaged by udaan to assess and validate the on-ground impact of deploying the micro-market strategy in select micro-markets. Redseer independently conducted ~100 in-depth buyer interviews across these micro-markets to evaluate the impact stated in this report. The findings contained in this report may also contain predictions based on current data and historical trends. Any such predictions are subject to inherent risks and uncertainties. Redseer accepts no responsibility for actual results or future events.