After e-commerce conquered China through the might of Alibaba and its peers, India has long been seen as the next country ripe for a switch to purchasing online.
Underlining the point that the world's second most populous nation could follow a trend set by the most populous was the entry this year of Walmart via its $16 billion purchase of a 77% stake in homegrown e-commerce play Flipkart. That puts the US supermarket chain in direct competition with Amazon India, sparking a costly price war.
Still, smaller competitors are carving out their own niches. And fast-growing Udaan, founded by former Flipkart executives, is this week celebrating reaching unicorn status after agreeing a $225 million series C funding round co-led by Lightspeed Venture Partners and DST Global.
Undaan's business model involves connecting 150,000 traders, wholesalers and retailers retailers to manufacturers across India, via its mobile app. Executives Sujeet Kumar, Amod Malviya and Vaibhav Gupta all previously held senior roles with Flipkart, before resigning in 2016 to found Udaan.
Confirming the investment to FinanceAsia, Bejul Somaia, partner at Lightspeed Venture Partners, said it first invested in Udaan's $10 million series A funding in late 2016.
California-based Lightspeed is a global early-stage venture capital firm which has invested in over 300 start-ups over the last two decades, including GrubHb and Snap.
In February Udaan raised $50 million in series B funding, also with Lightspeed Venture Partners and DST Global, following the $10 million series A round in late 2016.
And according to the India Brand Equity Forum (IBEF), established by the Ministry of Commerce in India, e-commerce in India is on the verge of an explosion in numbers.
The e-commerce market is expected to reach $64 billion by 2020 and $200 billion by 2026 from $38.5 billion as of 2017, according to data from the IBEF.
As India’s middle class grows, internet penetration rate has been rapidly rising as well.
In the first quarter of 2018, overall internet penetration in India was 38 per cent. The number of internet users in India is expected to increase from 494 million as of March 2018 to 829 million by 2021, according to the IBEF report.
In October 2017, Morgan Stanley analysts in a report entitled “India’s Digital Leap – the Multi Trillion Dollar Opportunity” said India had 60 million online shoppers in 2016, just 14% of the country's internet user base.
Analysts expect this to rise to more than 50% by 2026.
The meteoric rise of Udaan in India means its joins the swelling ranks of India’s unicorns, following the likes of food delivery service Swiggy and restaurant search app Zomato, which both broke through the $1 billion barrier this year.