Udaan fires over 100 employees, days after $340Mn fundraise
In a surprise move, Udaan, the business-to-business (B2B) e-commerce unicorn, decided to make significant cuts in human capital by laying off 100 to 120 employees which constitutes nearly 10% of its total staff. The move comes following the firm’s recent funding success in which it secured a whopping $340 million in a funding round led by the UK firm M&G Prudential.
The funding was intended to strengthen the firm’s supply chain and empower vendor partnerships. According to a report from Moneycontrol, the cause of the layoff is said to be due to a fundamental shift in the firm’s operational strategy.
Majority of these job cuts hit the Udaan’s go-to-market (GTM) team, the folks responsible for managing the firm’s relationships with sellers. The report also indicated that these surprise layoffs are tied to Udaan’s plan to tidy up its operations that began in September. The measures to ‘tidy up ‘ include the integration of its ‘Essentials’ and ‘Discretionary’ verticals which are spread over categories such as fast-moving consumer goods, electronic goods, lifestyle and many more.
According to the same report, a spokesperson for the firm confirmed the layoffs and stated that interventions to construct a lucrative business model led to some redundancies within the organisation and as a result caused the firm to take a step towards laying off employees from its GTM team. It is a strategy to compensate for the other adversities faced by the firm.
Even with a recent influx of funds, Udaan is reportedly experiencing a valuation dip, with its valuation falling well below $2 billion. This plunge marks a significant downturn from its last equity round in 2021 where it proudly stood at a valuation of $3.2 billion. To compensate for its reeling losses, the company has strategically scaled back its operations, tackling liquidy challenges and issues head-on and zeroing in on achieving profitability. The difficulties at hand were compounded when Udaan’s founders, former Flipkart executives Amod Malviya and Sujeet Kumar, shifted away from the firm’s daily operations.
Udaan’s operations mainly facilitate connections between small traders, wholesalers, and retailers on its platform, offering services for buying and selling goods and arranging product deliveries and trade financing.
This is not the first major change that Udaan is experiencing this year. Earlier in September, Udaan went through a revamp which comprised merging key verticals and also witnessing the exit of its Chief Technology Officer (CTO). At present, the company is reportedly operating at a gross merchandise value run rate of 1-1.5 billion annually. Although a big figure, it is a substantial decline from its peak run rate of about $4 billion past the pandemic.
The financials of Udaan’s parent company, Trustroot Internet, showed a 43% descent in gross revenue at Rs 5,629 crore for the fiscal year ending March 2023. Despite the decrease, the company managed to cap its losses, with Rs 2,075 crore in FY23 compared to Rs 3,123 crore in FY22.
This is not the firm’s first layoff stint. Previously, in November last year, Udaan sacked at least 300 employees after raising $120 million – a similar scenario to the current one.
The company has assured that it will be offering services such as medical insurance, and severance packages and also assist with placements to those who are affected.
The firm also has other plans apart from providing relief aid. The fastest firm to reach unicorn status is reported to go public a year from now or so. Established in 2016 and backed by Lightspeed Ventures, it plans to take its network of over 3 million and counting users and nearly 30,000 sellers spread across 900+ cities in India to new heights.
