B2B startups find a new path as Udaan struggles

Key takeaways

• Udaan helped make app-based wholesale popular in India, but it has faced heavy losses and funding pressure.
• Several B2B startups now focus on repeat buyers, better margins and tighter control over credit.
• Small shop owners need reliable stock and fair prices more than flashy discounts.
• The next test is whether these firms can earn money while growing.

B2B startups sell goods or services from one business to another. In India, many now help neighbourhood shops buy stock through an app. Udaan showed how big this idea could become, but its troubles have pushed rivals to build more careful plans.

The core lesson is simple: selling more is not enough. A wholesale app must also make money on each order, because discounts and unpaid bills can quickly drain cash.

Why are B2B startups getting attention now?

India has millions of small kirana stores, pharmacies and other local sellers. These shops often buy goods from wholesalers, then sell them to families nearby. B2B startups try to make that supply chain easier by showing prices, taking orders and arranging delivery on a phone.

That can save a shopkeeper time. Instead of visiting several markets, they can compare items and order from one place. But the business is hard because profit on each packet of biscuits, soap or rice is usually small.

Udaan became one of the best-known names in this space after starting in 2016. It raised billions of dollars from investors and expanded across categories. Yet rapid growth came with large costs, including delivery, discounts and credit.

Credit means letting a buyer pay later. It can help a shop buy more stock, but the platform loses money when payments arrive late or never arrive.

What did Udaan’s problems teach rivals?

Udaan’s struggle has made the market less focused on headline sales. Investors now ask a tougher question: does each order leave enough money after all costs? That leftover is called a margin. It is the amount a firm keeps after paying for the product and service.

Some B2B startups have responded by serving a narrower group of buyers. They may focus on one city, one type of shop or a few product lines. This can make delivery routes shorter and buying patterns easier to predict.

Others limit credit to customers with a good payment record. That may slow sales at first, but it reduces the risk of bad debt. Bad debt is money a business may never collect.

Business choice	Why it matters
Repeat orders	Regular buyers lower the cost of finding customers.
Tighter credit	It reduces losses from late or missed payments.
Focused delivery areas	Shorter routes can cut fuel and staff costs.
Higher-margin goods	More money per order can support the service.

There is no single winning model. Some firms connect buyers and sellers without owning much stock. Others buy goods themselves and control delivery. Owning stock can improve service, but it also ties up cash.

How does the money problem add up?

Imagine a platform earns Rs 100 from a small order. If it spends Rs 35 on delivery, Rs 25 on discounts and Rs 45 on other costs, it loses Rs 5. That loss looks small, but it becomes serious across millions of orders.

Example: Rs 100 earned from one orderIncomeRs 100CostsRs 105ResultRs 5 lossIllustration only; real costs differ by company and order.

That is why B2B startups are paying close attention to unit economics. Unit economics means whether one sale makes or loses money. A firm can grow for years, yet still fail if every order creates a loss.

Funding has also become harder to get. In 2021, many young firms could raise money while promising fast growth. Since then, investors have placed more weight on profits, cash use and the quality of customers.

Which strategies could work better?

A platform may sell private-label products, which are goods made for its own brand. These products can offer better margins than well-known brands. Still, shops will only reorder if the quality is good and supply stays steady.

Some B2B startups also add payments, loans or business software. Those services can bring extra income, but they need care. Lending money brings risk, especially when small shops face weak sales.

For readers watching India’s startup scene, this is part of a wider reset. Zepto’s IPO valuation debate also shows that investors want clearer proof of lasting value. Meanwhile, Zomato’s restaurant count decline shows how quickly platform growth can change.

The market opportunity remains large. However, the winning firm may look less dramatic than Udaan once did. It may grow city by city, keep credit checks strict and treat every rupee of delivery cost seriously.

What should shopkeepers and investors watch?

Shopkeepers should compare final prices, delivery reliability and payment terms. A low price does not help if stock arrives late. They should also avoid taking more credit than they can repay.

Investors will watch repeat orders, cash losses and how quickly firms collect payments. They will also ask whether a business can work without huge discounts. B2B startups that answer those questions well could gain ground.

India’s wholesale trade is changing, but it is not becoming easy. The firms that last will need trust from small shops and discipline with money at the same time. For official company records, readers can check filings on the Ministry of Corporate Affairs website.

FAQs

What are B2B startups?

B2B startups sell products or services to other businesses. In this case, they often help local shops order goods from suppliers.

Why did Udaan face pressure?

Udaan grew quickly, but wholesale delivery, discounts and credit can cost a lot. Investors now want firms to show a clearer route to profit.

How can B2B startups make money?

They can earn through margins on goods, delivery fees, payments or useful shop software. Each service must cost less than the money it brings in.