About Unicommerce eSolutions Limited

Unicommerce eSolutions is an e-commerce enablement Software-as-a-Service (“SaaS”) platform in the transaction processing or nerve centre layer. They enable end-to-end management of e-commerce operations for brands, sellers and logistics service provider firms. They enable their enterprise clients and small and medium business (“SMB”) clients to efficiently manage their entire journey of post-purchase e-commerce operations through a comprehensive suite of SaaS products that include (i) the warehouse and inventory management system (“WMS”); (ii) the multi-channel order management system (“OMS”); (iii) the omni-channel retail management system (“Omni-RMS”); (iv) seller management panel for marketplaces, housed in their platform, Uniware; (v) recently introduced post-order services related to logistics tracking and courier allocation (“UniShip”); and (vi) payment reconciliation (“UniReco”). Additionally, they offer several sub-modules that their customers may use as a part of their routine operations. Their products act as the nerve centre for e-commerce fulfilment operations of their clients, ensuring that the orders received from their clients’ end customers are processed correctly, efficiently and within timelines as per client needs. Their products aid in streamlining e-commerce operations for their clients and enables us to become a critical part of the supply chain stack of their clients.

The growth of the eCommerce enablement SaaS industry is intrinsically linked with eCommerce sales. As India’s e-commerce industry grows, e-commerce businesses and retailers face significant challenges to scale their operations efficiently. Some of the major challenges faced by e-commerce businesses and retailers include management of inventory across multiple locations, minimising fulfilment costs, order processing from multiple online and offline channels, management of returns, generation of correct invoices, and taxation and other regulatory compliances. Particularly, brands and retailers are reaching out to the customers through multiple offline channels and online channels (including various marketplaces) to compete in the market. As the number of these marketplaces and omni-channel practices continues to increase, the demand for e-commerce enablement SaaS products is directly affected. As businesses scale to process higher numbers of orders for their ecommerce operations, the scale of such challenges also increases exponentially, including keeping inventory updated across all sale channels (marketplace and webstores software), processing orders through the correct warehouse, management of distributed inventory across multiple warehouses and adhering to service-level agreements (“SLAs”) and procedures for respective sales channels. Given the range of issues, regularly changing business needs and market practices, and the need for sanctity of data across the various stages, customers prefer comprehensive end-to-end transaction processing layer SaaS products.

Their products are sector and size-agnostic and are designed to meet the business needs of various types and sizes of retail and e-commerce enterprises, both online and offline. Their products are configurable as per client needs, and their clients can use one or more products at a time depending on their needs and configure them to suit their specific workflows. They also have several additional sub-modules, which form part of their SaaS products, that clients can utilize for their business operations including procurement management, invoice management and logistics management. Clients prefer to use a SaaS solution like theis which can continue to develop the technology as per changing market needs and add emerging integrations relevant to their business while they can focus on their business.

Proliferation of eCommerce
The retail sales over the online channel, where orders are generated from websites or mobile applications, across categories – electronics, fashion, beauty and personal care (“BPC”), home and living, grocery, amongst others is referred to as “eCommerce”. 

As per ITA (International Trade Administration), the global eCommerce12 market reached between US$ 3.5 – 4.5 trillion in 2023, accounting for 12% of all retail sales. China and the USA dominated the market, jointly accounting for approximately 53% of global eCommerce sales. eCommerce penetrations13 in China and the USA are 33% and 16%, respectively. In comparison, the eCommerce penetration in India (~7%), SEA (13%), and the Middle East (14%) was relatively lower. However, these regions have showed significant increase in eCommerce penetration over the last three years, more than doubling the initial figures. 

The global eCommerce market is expected to grow at an annual rate of 10-12% between 2023 and 2027, reaching between US$ 5 trillion and US$ 6 trillion and accounting for approximately 15% of all retail sales. The larger eCommerce markets of China and the USA are projected to grow at an annual rate between 8% and 9%. Meanwhile, India, SEA, and the Middle East are expected to experience much higher growth rates of 23-26%, 16-18%, and 18-20% respectively, providing ample growth opportunities for eCommerce platforms, brands, and enablers in these regions.

Along with eCommerce, Direct-to-Consumer (“D2C”)14 sales are on the rise globally as more businesses move online and adopt omni-channel strategies. In major economies like the USA and China, D2C has made significant strides in recent years. In India, D2C has performed remarkably well, with D2C penetration of eCommerce at approximately 10- 11% in 2023, in-line with the trends in larger economies. On the supply side, the growth of D2C brands is expected to be one of the core growth drivers of eCommerce in India. 

The eCommerce market in India reached approximately US$ 62 billion in 2023, accounting for approximately 7% of all retail sales. The Indian eCommerce industry is expected to experience significant growth in the coming years, with an estimated compound annual growth rate (“CAGR”) of approximately 23% to reach approximately US$ 140 billion by 2027. The growth of eCommerce in India is driven by several demand side factors, including the growing internet user base, increasing participation of lower-tier cities, diversification of product categories, and changing consumer behaviour.

Rapid Emergence of Software as a Service (“SaaS”) and Opportunities in Retail SaaS
SaaS, or Software-as-a-Service, refers to cloud-based software products that are owned, operated, and maintained by one or more service providers, typically remotely. End-users typically subscribe to these software products on a subscriptionbased or usage-based pricing model for a pre-defined period of time.

Indian SaaS companies have been doing well over the past few years. With the growth of the Indian SaaS market, there has been significant investor interest in the space. The investments are spread across various sectors within SaaS, which is expected to continue with ongoing disruptions and evolving technology needs across various industries. With time, the revenue potential and size of SaaS companies in India is also growing.

eCommerce Enablement SaaS market
eCommerce enablement SaaS is defined as SaaS products deployed across various points in eCommerce value chain to enable several types of business operations. As retail brands and SMB sellers grow their business online, expand their product lines and start selling across multiple channels, they face significant challenges including accepting and confirming orders, marketing at scale, managing their supply chain and ensuring efficient order fulfilment. For instance, on the supply side, as the brands/sellers scale, they must manage their inbound supply chain efficiently by managing multiple vendors and warehouses to ensure optimal order fulfilment. Similarly, on the demand side, the brands/sellers must maintain a unified view of all inventory and orders from sales channels, map such orders to inventory, optimise dispatch, and interface with outbound logistics (including returns management) to ensure customers receive products within promised timelines. 

eCommerce enablement SaaS products offer a set of solutions that streamline the various components of the eCommerce value chain and enables brands and sellers to sell their products across various online and offline sales channels such as own website, marketplaces, stores, etc. with greater ease and efficiency. 

The eCommerce value chain encompasses various touchpoints that are facilitated by a range of eCommerce SaaS products. These products can be grouped into three main categories: Customer Engagement Layer, Transaction Processing Layer, and Order Fulfilment Layer.

Unicommerce Capabilities and Competitive View
The growth of the eCommerce enablement SaaS industry is intrinsically linked with eCommerce sales. While India’s eCommerce industry is growing, eCommerce businesses and retailers face significant challenges to scale their operations efficiently. Some of the major challenges faced by eCommerce businesses and retailers include management of inventory across multiple locations, minimising fulfilment costs, order processing from multiple online and offline channels, management of returns, generation of correct invoices, taxation and other regulatory compliances. Particularly, brands and retailers are reaching out to the customers through multiple offline channels and online channels (includes various marketplaces) to compete in the market. As the number of these marketplace and omni-channel practices continues to increase, the demand for eCommerce enablement products is directly affected. As businesses scale to process higher numbers of orders for their ecommerce operations, the scale of such challenges also increases exponentially, including keeping inventory updated across all sale channels (marketplace and web stores), processing orders through the correct warehouse, management of distributed inventory across multiple warehouses and adhering to Service-Level Agreements (“SLA”) and procedures for respective sales channels. Given the range of issues, regularly changing business needs and market practices, and the need for sanctity of data across the various stages, customers prefer comprehensive end-to-end transaction processing layer SaaS products. 

Unicommerce is an Integrated eCommerce Enablement SaaS Platform that enables end-to-end management of ecommerce operations for D2C brands, brand aggregators, traditionally offline brands, retailers, marketplaces, logistics players, SMBs through a comprehensive suite of SaaS products as a part of the transaction processing or nerve centre layer. Its products are sector and size-agnostic and are designed to meet the business needs of various types and sizes of retail and e-commerce enterprises, both online and offline. Due to the nature of its solutions, Unicommerce acts as an operating system for businesses to complete day-to-day post-purchase operations efficiently through technology and automation.

Unicommerce is India’s largest eCommerce enablement SaaS platform in the transaction processing or nerve centre layer, in terms of revenue for Fiscal 2023, 2022 and 2021. It is the only profitable company among the top 5 players in this industry in India during Fiscal 2023. The rule of 40 is an industry accepted thumb rule which is used to assess the growth and profitability of SaaS companies. It says that the sum of the revenue growth over a year and profitability (EBITDA as a percentage of revenue) must be at least 40%. This indicates the ability of the SaaS company to grow efficiently. Unicommerce satisfies the rule of 40 and it has the highest PAT margin amongst its competitors in Fiscal 2023. 

Unicommerce’s ability to create efficiency gains for clients through its suite of products has led to financial growth for the company. Plug and play integrations with key technologies and partners is a key strength of Unicommerce and together with its ability to streamline e-commerce operations enables it to become an integral part of its client’s tech stack. Unicommerce has several key integrations with relevant marketplaces, 3PL partners and popular ERPs. These also allow Unicommerce to serve various type of clients across the retail landscape. The above capabilities allow Unicommerce to be an essential consideration for D2C Brands, Brand Aggregators, Traditionally Offline Brands, Retailers, Marketplaces, Logistic Players, and SMBs when evaluating market solutions. Its ability to act as an integrated technology stack, enable end-to-end e-commerce operations and act as a nerve centre for management of all e-commerce data including sales, inventory, returns, procurement management, invoice management and logistics management, makes it a leading player in the market. Due to such market position, Unicommerce has one of the largest bases of enterprise customers in India among its competitors and powers a diversified, marquee clientele. Unicommerce processes large numbers of orders across retailers and brands with 20-25% of all dropship volumes in ecommerce processed through Unicommerce’s solutions in Fiscal 2023. Unicommerce has also received accolades from leading Industry bodies, including Gartner, Forrester and Nasscom, for its various products.

With the comprehensive end-to-end solutions and the sticky nature of the integrations, once integrated, solutions in the transaction processing layer SaaS become an essential part of client operations, ensuring the longevity of the relationship and customer stickiness, leading to high recurring revenue over a period of time. The NRR is defined as net change in revenue from existing customers, taking into account expansions (cross-sells and upsells) and account contractions (downgrades and churn) and indicates a growing relationship with existing clients. NRR of more than 100% is an indicator of revenue growth from existing set of clients. 

While this industry is still nascent, there are several growth drivers propelling the industry forward. However, as the industry matures and as businesses invest in R&D to enhance their platforms, we can anticipate that market players will experience increased profitability due to higher operating leverage. This means that players can generate increasing revenue and grow their scale with relatively lower increase in their operating and R&D costs.

UNICOMMERCE ESOLUTIONS LIMITED STRENGTHS
1. Largest e-commerce enablement SaaS products platform, acting as the nerve centre for business operations of their clients
2. Comprehensive and modular suite of products with a wide range of plug-and-play integrations makes us an integral part of their client’s tech stack
3. Large, growing and diversified base of marquee Indian and global clients with long-term relationships and the capability to upsell or cross-sell new and additional products
4. Proprietary technology platform built for scalability and high adaptability to accommodate various uses across different industries.
5. Consistent track-record of fast, profitable growth with strong cash flows over the past three financial years
6. They have strong governance practices, experienced management, and marquee investors

UNICOMMERCE ESOLUTIONS LIMITED STRATEGIES
1. Continue to expand their India business
2. Drive expansion in current international markets and expand their global footprint over time
3. Enhancement of their existing SaaS products and building advanced features for more use cases
4. Investment in and development of their recently launched SaaS products and develop additional, complementary products to expand their portfolio of offerings
5. Continue track record of strong financial performance & expand Adjusted EBITDA Margin % with increased operating leverage

UNICOMMERCE ESOLUTIONS LIMITED RISK FACTORS & CONCERNS
1. They provide a comprehensive suite of products.
2. Their business and growth are correlated with the growth of the ecommerce industry in India.
3. Their Company does not have any listed industry peers in India or abroad and it may be difficult to benchmark and evaluate their financial performance against other operators who operate in the same industry as them.
4. Their success depends, in part, on their ability to expand use of their products by clients globally and accordingly, their business is susceptible to risks associated with international. operations.
5. A portion of their business is dependent on the dropship volumes of their clients.
6. A portion of their business is attributable to certain large clients.
7. The business is subject to seasonality.
8. Their use of “open source” software could adversely affect our ability to offer their products and services and subject them to possible litigation.
9. They rely on telecommunications and information technology systems, networks and infrastructure to operate their business.