India’s retail landscape is undergoing a transformative shift, driven by the surge in private consumption and the growing digital adoption across sectors. At the forefront of this transformation is the digital B2B (eB2B) model, which is playing a crucial role in streamlining the country’s fragmented and traditionally inefficient retail supply chain. In a report jointly commissioned by Udaan and Redseer, a leading management consulting firm, insights into the eB2B landscape reveal how digital B2B platforms are addressing the long-standing challenges of the retail sector while providing scalable, sustainable solutions for growth.

India’s Retail Supply Chain: A Complex Ecosystem

India’s retail market is predominantly unorganized, with over 15 million retailers serving as the backbone of the sector. General trade, dominated by small kirana stores, represents the majority of retail activity, especially for essential goods like groceries and pharmaceuticals. These kiranas often operate in remote areas and rely on a highly fragmented B2B supply chain, involving multiple layers of distributors, stockists, wholesalers, and brokers.

The traditional supply chain model has been fraught with inefficiencies such as inconsistent product quality, lack of on-field support, and cumbersome credit terms. The report highlights key pain points for retailers, including unpredictable lead times, high procurement costs, frequent stockouts, and limited data insights. These issues have long hindered the competitiveness of kirana stores, particularly when compared to organized retail channels.

Digital B2B: A Disruptor in Retail Supply Chain

In recent years, eB2B platforms like Udaan have emerged as a disruptive force in the Indian retail ecosystem, offering digital solutions to streamline operations, reduce inefficiencies, and improve supply chain transparency. According to the report, eB2B platforms are addressing critical supply chain challenges through several innovative strategies:

1. Warehousing and Inventory Management:
Digital B2B platforms offer centralized warehousing operations that enhance inventory management and product fill rates. By leveraging data and predictive analytics, these platforms enable better demand forecasting, ensuring that retailers have access to the right products at the right time.

2. Fulfillment and Delivery:
One of the key value propositions of eB2B platforms is their ability to offer fast and reliable delivery services. By bypassing traditional intermediaries, these platforms can deliver goods directly to retailers, ensuring timely restocking and reducing the risk of stockouts. The report highlights that platforms like Udaan offer same-day or next-day delivery in key micro-markets, improving retailers’ operational efficiency.

3. Credit and Financing Solutions:
Many kirana retailers struggle with accessing credit from traditional channels, which often have inconsistent terms and high costs. Digital B2B platforms are stepping in by partnering with fintech firms and non-banking financial companies (NBFCs) to provide transparent and accessible credit options. For instance, Udaan’s fintech arm, Udaan Capital, offers credit lines ranging from INR 1 to 5 lakhs to retailers, simplifying the procurement process and supporting business growth.

4, Vertical Integration and Direct Sourcing:
eB2B platforms are increasingly focusing on vertical integration, sourcing products directly from manufacturers, farmers, and mills. This eliminates the need for multiple intermediaries, leading to cost savings for retailers and better product quality. Udaan’s success in launching private labels in the staples category, such as rice and flour, has further strengthened its value proposition by offering high-quality products at competitive prices.

udaan’s Micro-Market Strategy

The report by Redseer and Udaan underscores the success of Udaan’s micro-market strategy, which has been instrumental in driving buyer penetration and wallet share across key regions like Bengaluru and Hyderabad. This strategy, focused on hyper-localized operations, has allowed Udaan to engage with over 90% of shops in targeted areas, boosting its market presence and buyer loyalty.

The report reveals that Udaan’s micro-market approach led to a 2x increase in buyer penetration and a 1.2-1.4x increase in wallet share within six to twelve months of implementation. By focusing on localized inventory, offering tailored product assortments, and deploying dedicated market managers, Udaan has established itself as a preferred partner for kirana stores. Additionally, its performance in key value proposition parameters, such as delivery speed and customer service, has resulted in an impressive Net Promoter Score (NPS) of 79, far outperforming traditional channels like mandis, which lag behind with an NPS of 11.

The Road Ahead for eB2B in India

While the future of eB2B looks promising, the report notes that firms must navigate several challenges, including capital efficiency and the emergence of new market players. Nonetheless, with India’s retail sector expected to grow at a CAGR of 8-10%, driven by rising incomes and increasing urbanization, the role of digital B2B platforms will only become more crucial in shaping the future of retail.

By addressing critical supply chain inefficiencies, offering innovative credit solutions, and leveraging localized strategies, eB2B platforms like Udaan are not just streamlining India’s retail supply chain but are also empowering small retailers to compete in an increasingly digital marketplace with tough competition from organized retail and e-commerce giants. As more retailers embrace digital solutions, the potential for scalable growth in the eB2B space remains immense, with far-reaching implications for India’s economy. 

Embracing Digital Transformation for Competitive Advantage: The Redseer Way

Embracing digital transformation is not just about staying competitive—it’s about aligning with the growing expectations of consumers who demand seamless, enhanced experiences. At Redseer, we have consistently highlighted the importance of this shift across various sectors, from the rise of digitization in the automotive aftermarket, explored in our report Why Automotive Aftermarket Consumers Are Embracing Digitisation, to the evolution of smart home technology in Unlocking Convenience: The Indian Smart Home Revolution.

The ongoing digital revolution in India’s B2B kirana market is a prime example of how technology can unlock tremendous opportunities for growth, operational efficiency, and financial inclusion. Despite the sector’s rapid expansion, several longstanding challenges remain—each presenting a golden opportunity for innovation and value creation. These hurdles, when addressed strategically, can not only fuel growth but also redefine the competitive landscape.

Thinking of scaling your business? At Redseer, we value bold ideas, ideas that redefine industries. Our strategic insights don’t just focus on growing individual businesses—we aim to elevate entire sectors.  We embrace innovation and deliver actionable strategies to help you lead the way.  So, if you are ready to innovate, we are here to map your innovation journey with detailed market research, important insights, and a roadmap to overcome challenges and the best way forward. To delve deeper into this transformation and uncover actionable strategies for your organization, explore our comprehensive report, providing valuable insights on harnessing the power of digital platforms and capitalizing on emerging opportunities within the B2B kirana market.

This article was authored by Redseer, a leading management consulting firm, in collaboration with Udaan, India’s largest B2B eCommerce platform.