Days after it secured $340 million in capital, B2B e-commerce unicorn Udaan has fired around 150 employees, or about 10 percent of its entire workforce, people aware of the developments told Moneycontrol. The company has sacked staffers because of a fundamental shift in the way it operates, they added.
While two sources confirmed the number of impacted employees to be around 150, one other person said the number was even higher than that. Moneycontrol had sent queries to the company on December 17 and received replies on December 18.
Udaan would earlier run operations with a pan-India focus but has now decided to decentralise operations. “Each warehouse has multiple products from categories like FMCG, Food, Lifestyle, etc. Earlier, the FMCG team for instance operated at an all India level, but now the operations will be cluster wise which means there will be different teams for different clusters and each team will look into all the products, irrespective of categories, for a particular cluster,” one of the persons cited above told Moneycontrol.
The company’s decision to restructure its business has impacted employees across all roles, from peons to senior executives. Marketing, Finance, Category, Operations are some divisions that have been impacted the most, Moneycontrol has learnt.
The company confirmed the developments to Moneycontrol but did not provide specific numbers.
“Over the last few years, we have made significant investments to build a solid and sustainable business. We believe in efficiency as a driver of profitable growth and are continuously making efforts to enhance efficiency, grow business sustainably and further improve customer experience," a company spokesperson said.
"We have already made significant progress in our journey towards building a profitable business and continue to make relevant interventions to our already proven business model, while remaining customer centric and agile. However, these interventions have also resulted in some redundancies in the system."
Scaling back
While employees have been let go, Udaan is also improving its financial health by exiting regions like Vishakapatnam which have failed to yield desired results for Udaan, another person cited above told Moneycontrol.
Udaan, which sells groceries and other products to kirana stores who further re-sell to customers, is similar to what DealShare used to do earlier in B2B. Tiger Global-backed DealShare however shuttered its B2B unit earlier this year and fired all employees from the division because the margins were too thin and the unit economics did not make sense, as reported earlier.
Startups like Udaan typically operate with a net margin of about 8-11 percent.
This is the second instance, in the last 13 months, where Udaan has sacked staffers soon after it raises a new round of capital. In November last year too, Udaan fired 10 percent of its workforce days after raising $120 million in convertible notes.
In all, this the third round of layoffs at Udaan. The Bengaluru-based company fired at least 500 employees across two rounds (June and November) in 2022.
The cost cutting exercise comes at a time when Vaibhav Gupta, co-founder and CEO, Udaan, said his company will be profitable and will be ready for an initial public offering (IPO) in 12-18 months. The plan to IPO comes at a time when the company’s revenue from operations shrunk by 43 percent from Rs 9,897.3 crore in FY22 to Rs 5,609.3 crore in FY23. The dip in revenues was largely because Udaan burnt lesser money and managed to narrow its losses to Rs 2,213 crore in FY23 from Rs 3,075.8 crore in FY22.
Founded by former Flipkart executives, Sujeet Kumar, Amod Malviya and Gupta in 2016, Udaan has raised over $1.8 billion from investors like Tencent, DST Global and several others, as per Tracxn, a private markets data provider.
While Kumar and Malviya stepped down from active roles in 2022, they continue to hold equity in the company as CEO Gupta runs the show. Gupta, Kumar and Malviya collectively hold about 20 percent in Udaan, while Microsoft, Noumra and others hold the remaining, Tracxn showed.
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