Amul, Parle & Others Cut Direct Supply To B2B ECommerce Startup Udaan

Amul, Parle & Others Cut Direct Supply To B2B ECommerce Startup Udaan

SUMMARY

The largest FMCG brands in the country alleged that Udaan is hampering exclusive distribution partnerships that they have build over the years

Amul and Parle said that Udaan is trying to monopolise distribution to retailers

Udaan took Parle to the Competition Commission of India (CCI) last week for refusing to supply Parle-G stock keeping units

After B2B ecommerce startup Udaan filed an antitrust suit against Parle last week for refusing to supply Parle-G stock keeping units, Amul, Parle and other FMCG brands have stopped direct supply to the Bengaluru-based startup. 

According to a report, FMCG giants such as the Gujarat Co-operative Milk Marketing Federation Ltd (or Amul) which helped India emerge as one of the largest milk producers in the World and Mohanlal Dayal Chauhan-founded Parle have alleged that Udaan was monopolising distribution to retailers.

A query sent to Udaan went unanswered till the time of publishing this report. 

RS Sodhi, managing director of Amul told ET that Amul has over 10,000 exclusive distributors or small enterprises and if Udaan is doing distribution itself, then it is competing with Amul’s exclusive distributors and hurting them. 

A sales head of  another FMCG giant said that FMCG brands which took years to build distribution partnerships are now being hampered by Udaan’s model of supplying products to retailers at a cheaper rate. The sales head said that the FMCG brand has now curbed supplies of some packs to Udaan.

Founded by former Flipkart executives Sujeet Kumar, Vaibhav Gupta, and Malviya, Udaan helps to connect SMBs, manufacturers, wholesalers, traders, and retailers to sell goods and services to each other. The 2016-founded startup also offers credit facility to select small sellers.

The Bengaluru-based startup last raised $280 Mn in additional financing from new investors Octahedron Capital and Moonstone Capital, along with existing investors Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital, and Tencent. Udaan also became one of the fastest startups to achieve the unicorn status in 2018 after it bagged $225 Mn funding round from DST Global and Lightspeed Venture Partners’ global fund.

Last week, Udaan took one of the biggest biscuit manufacturers Parle to India’s anti-trust regulator the Competitive Commission of India (CCI). The startup alleged that it is facing a competitive setback due to Parle refusing to directly supply its highly demanded products “without any objective justification”.

Udaan further stated that it has tried to hold discussion with Parle in the last 2 years to work out a direct supply deal in a fair and justified manner, but Parle has apparently continued to discriminate. Udaan pointed out in its complaint that Parle is the dominant brand in the glucose biscuits market in India, which commands a market share of around 83% when compared with other brands.

“Parle’s continued refusal to supply Parle-G stock-keeping units to Udaan makes it a clear case of refusal to deal and is an abuse of dominance under Section 4(2) of the Competition Act,” Udaan said in its complaint. Udaan highlighted that existing retailers might have to procure Parle biscuits from other wholesalers in the distribution network where Udaan might not enjoy any preference as it won’t be able to offer competitive prices.

As per a report by Goldman Sachs which was quoted by the India Brand Equity Foundation, India’s ecommerce market is expected to reach $99 Bn by 2024, which is growing at 27% CAGR during 2019-24. The report highlighted that grocery and fashion will act as the key drivers to help the ecommerce industry to grow. During the lockdown imposed in the country in the backdrop of the pandemic, tier II and tier III towns too relied on ecommerce platforms to get their essential items delivered. 

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
Unlock 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

Amul, Parle & Others Cut Direct Supply To B2B ECommerce Startup Udaan-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

Amul, Parle & Others Cut Direct Supply To B2B ECommerce Startup Udaan-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

Amul, Parle & Others Cut Direct Supply To B2B ECommerce Startup Udaan-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

Amul, Parle & Others Cut Direct Supply To B2B ECommerce Startup Udaan-Inc42 Media
Amul, Parle & Others Cut Direct Supply To B2B ECommerce Startup Udaan-Inc42 Media
You’re in Good company