On 24 April, Bengaluru-based Udaan laid off 3,000 ground staff—around 10% of its workforce. It was the biggest retrenchment in the history of the business-to-business (B2B) online marketplace.
Udaan’s employees were blindsided, several ground staff told The Ken. “Just 45 days before, we had a meeting to discuss expansion and we were asked not to worry,” says an employee in Mysuru, Karnataka, who was part of the cuts. Instead, on the day of the firings, he was suddenly unable to use his ID to enter the company’s building. He and many other employees were told to wait outside for an email. Soon after, some 80-90 employees received emails informing them that they were fired.
The termination letters did not reveal much, with some saying the employee’s project was terminated while others simply said the cuts were because of a “business call”. The common factor was that all the fired employees are contract workers, who make up a majority of the company’s workforce.
Given the timing of the layoffs, at first glance it is easy to attribute the layoffs to public enemy #1—the novel coronavirus and the havoc it has wreaked. Indeed, with most of the categories Udaan operates in paralysed by the lockdown, the company’s business has contracted 70% since the lockdown came into effect.
Incidentally, all the fired employees were also from affected categories like clothing and mobiles rather than essentials, which have government sanction to continue. This has left Udaan with just two operational categories—food and FMCG FMCG Fast-moving consumer goods are products that sell quickly at a relatively low cost , and pharmaceuticals—out of the six it normally deals in, four former and current employees told The Ken.
Udaan isn’t alone. Its fellow Bengaluru-based B2B startups Meesho and BlackBuck also laid off employees. But while Udaan sacked 3,000, its rivals each handed out pink slips to around 200 staffers. All of this points to Covid-19 being the source of Udaan’s woes.
The cracks in the company, though, have been visible well before—a problem of its own creation.
Founded in 2016, Udaan had a storied rise. Unlike competitors like IndiaMART, which are classifieds players and function largely as a meeting point for buyers and sellers, Udaan is an end-to-end solution. Facilitating discovery, payment, and delivery—all via its app.
The company hit the ground running, fuelling aggressive growth through aggressive losses. This was a strategy its founders Amod Malviya, Sujeet Kumar and Vaibhav Gupta picked up from their former employer, e-commerce giant Flipkart. Initially, it had no membership fees, no delivery charges, and no listing charges.