⚠️ ATTENTION
I am not SEBI Registered. This post is not a recommendation or an investment advice. Please consult your financial advisor.
Unicommerce is an e-commerce enablement SaaS platform that enables end-to-end e-commerce operations management for brands, sellers, and logistics service provider firms.
Incorporated in 2012, it started with Warehouse Management Solutions and gradually added other products in the Transaction Processing Layer. Now it is moving in Order Fulfilment Layer as well.
In a nutshell, what happens between pressing the buy button and the product being delivered is powered by Unicommerce.
Timeline:
What problem does it solve?
The Company's SaaS products come into the picture after the purchase has been made helping in transaction processing and fulfillment operations for businesses i.e. inventory management across multiple locations, rationalizing fulfillment costs, orders processing for multiple online and offline channels, returns management, invoicing, and reconciling, shipment tracking for customers, taxation and other regulatory compliances.
Our product suite is sector and size-agnostic and designed to meet the business needs of various types and sizes of retail and e-commerce enterprises, both online and offline. Our products aid in streamlining e-commerce operations for our clients and enable us to become a critical part of the supply chain stack of our clients.
Increasing complexity:
As the number of channels, and consumer touchpoints increase, the operations become difficult. Here Unicommerce keeps on improving so that it can be a one-stop shop for the brands in the E-Commerce Arena. (Not only E-commerce space but in the OmniChannel approach)
Brands and retailers are increasingly engaging customers through multiple channels, both offline and online, and these could be various marketplaces, both horizontal and vertical, their own website, and many other touch points.
Unicommerce is this centralized system that enables brands and sellers to focus on growing their business without having to spend a lot of time managing their day-to-day operations. Unicommerce, with its extensive 250-plus plug-and-play integrations, provides brands the flexibility to choose the service provider that's best for their business, secure in the knowledge that the service provider is already integrated in the workflows and with the ecosystem. Any new innovation that happens in e-commerce, such as Quick Commerce or ONDC that have happened in recent times, adds to the complexity for a brand and further strengthens the need for our solutions and these new models become a new channel source for us as we integrate with all these models. We stand for simplifying e-commerce and shielding the brand from the entire complexity through our comprehensive product suite.
Growth Drivers
(1) E-Commerce Industry Growth
Unicommerce is a pick-and-shovel play on e-commerce growth. India’s e-commerce is still under-penetrated and hence there are levers in place for growth in e-commerce.
E-commerce is likely to grow at a multiple of GDP growth.
(2) New Client Additions
Enterprise clients account for 90% of the revenue while the Small and Medium Businesses contribute 10%.
As per management, many companies don’t use specialized software to manage their operations rather use Excel for their requirements. As companies grow in size they will need SaaS products like Unicommerce offers to manage the volume and complexity.
(3) New Products
The company is now adding products in the Order Fulfilment layer.
Our vision is to become a one-stop shop for e-commerce enablement and hence we recently launched two new products and we will continue to offer more solutions so that the ecosystem can fulfill all their needs of e-commerce enablement from a single place.
(4) New Markets
Focusing on International Expansion
We are already present in six countries outside of India and our focus would be to go deeper in these geographies across Southeast Asia and Middle East and deliver growth.
Business Economics
There are no people-service components. The revenue comes from the platform usage.
Charge a minimum subscription fee in which a number of transactions are bundled. An additional fee is paid by customers for additional transactions over and above the bundled ones.
The pricing does not decrease as the number of transactions increases. As per management, their customers appreciate the increased complexity as the number of transactions increases.
For any e-commerce brand or seller, as the scale increases, they actually value the complexity we are solving for them a lot more compared to a customer which is at lower scale. So very rarely have we seen a customer demanding a discount as their scale increases because we are helping them handle a large portion of this complexity very seamlessly, and they value this solution a lot more at higher scale, and that's why most of our contracts continue to be linear
Integrations with wider partners enable them to handle complex operational permutations & combinations - which a brand will unlikely be able to do in-house.
In a nutshell, the strategy is to keep investing in the platform that helps in retaining the customers as well as getting larger wallet share from the existing clients apart from new clients
IMO the purpose this company solves has a switching moat - the customers/brands will not be comfortable in switching as long as the platform keeps evolving with the changing e-com landscape.
We enable businesses to efficiently manage their entire journey of post-purchase e-commerce operations through a comprehensive product suite that includes the warehouse and inventory management system, the multi-channel order management system, the omni-channel retail management system, the seller management panel for marketplaces and the recently introduced UniShip and UniReco.
We have a consistent client base, ARR and revenue growth with 850+ Million Annual Transactions Run-Rate, along with 3600+ Clients, 8300+ Warehouses Managed and 2900+ Stores Managed processing orders through the Unicommerce platform as of the quarter ended on 31st June 2024.
Operating leverage
Our business has consistently demonstrated operating leverage because the four products that I described to you in the transaction processing layer are fairly mature now. So we do not need to invest a lot in those products. And hence whatever incremental revenue growth we get, a large part of that flows to our bottom line demonstrating operating leverage.
To Sum Up:
At the first glance this is an interesting business model. The return ratios of this business are great. The industry it serves itself has taiwinds as and when the consumption cycle turns.
On the contrary, valuations are not very comforting, its a new IPO and hence management trackrecord is not available plus there are many unknowns in the technology space.
Disc: Have a tracking position
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Disclaimer: I am not SEBI registered. The information provided here is for educational purposes only. This is not a buy or sell advice. I will not be responsible for any of your profit/loss based on the above information. Consult your financial advisor before making any decisions.
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