Udaan lays off about 180 employees in a move to drive cost-efficiency

Udaan - India’s largest business-to-business (B2B) e-commerce company - has laid off about 180 employees, or 4-5 per cent of its workforce of 4,000, in a move to drive cost efficiency, revealed sources.

They said the layoffs have happened across various department functions.

The layoffs have happened at a time when the Bengaluru-based firm is trying to turn into a publicly listed entity in 18-24 months.

For this, it is focusing on positive unit economics and tracking quarter-on-quarter performance of the firm.

Udaan declined to divulge the exact number of employees it is laying off but said it believes in efficiency as a driver of profitable growth and has already made significant progress towards building a sustainable business.

“As the market evolves, we continue to tweak our already proven business model to make it stronger, more efficient, customer-centric, and agile,” said a spokesperson for Udaan, adding, “In this direction, we have taken various steps to enhance efficiency, refine our cost structure, and grow faster in our journey to achieve strong unit economics.

"However, the efficiency enhancement exercise has also resulted in certain redundancies in the system, with some roles no longer required.”

Udaan said it is working towards providing all required support to the impacted employees, which includes medical insurance for self and family (based on the existing coverage plan), compensation package as indicated in the company policy, and providing placement assistance.

“We remain committed to our goal of driving kirana commerce and empowering small and medium businesses by leveraging the power of e-commerce,” said the spokesperson.

Over the past year, Udaan said it has improved its unit economics by over 1,000 basis points with equally strong improvements in both gross margins as well as operating costs.

The firm said that the gross margin percentage has gone up 2.5x year-on-year (YoY).

It said the company’s revenue is now at about Rs 10,000 crore for 2021-22 - a 1.6x increase, compared with that of 2020-21.

Also, the firm said the implementation of the right business design and unit economics has helped the company reduce cash burn by about 45 per cent YoY.

Udaan achieved a valuation of $3.1 billion during its last round of funding of $280 million in January 2021 from existing and new investors.

In April this year, Microsoft - one of the world’s biggest technology (tech) companies - joined the convertible note funding round of Udaan.

It was launched in October 2021 and has since reached $275 million via convertible note and debt.

According to industry sources, the valuation of this round of the fund-raise will be derived at a future date - either at the time of the initial public offering (IPO) or during the pre-IPO rounds of funding.

The start-up is competing with e-commerce giants, such as Amazon, Flipkart, and Reliance’s JioMart, which are also betting big to tap into B2B e-commerce, especially in tier 2/3 cities and rural India.

“As part of the long-term plans of the organisation, we continue to hire talent for the new roles that have been created to grow the business faster,” said the spokesperson.

Layoffs are taking place at other unicorn firms as well.

Edtech firm Unacademy recently laid off about 600 employees, or about 10 per cent of its workforce, including full-time employees, contractual workers, and educators.

Vedantu laid off 424 employees - that’s about 7 per cent of its workforce.

The layoffs took place days after the company fired 200 of its contractual and full-time employees.