Beauty e-retailer Nykaa is pushing for faster order deliveries while sidestepping heavy capital outlays that could strain its bottom line, ,Anchit Nayar, CEO of the company's beauty e-commerce vertical, told analysts Tuesday after the company’s Q2 earnings results.
Despite its entry into faster deliveries, Nykaa’s investments in setting up ‘rapid warehouses’ are expected to stay lean. Nayar noted that high average order values in beauty e-commerce allow the company to expand its logistics efficiently and profitably.
“At this point, it [faster deliveries] is not going to be margin dilutive or capital intensive. We have the ability to do it. We know how to run our supply chain, manage warehouses, and we have the assortment as well,” Nayar said.
However, he added that certain beauty products—especially those requiring selection from a wide range—are less suited for quick delivery.
“Beauty is a long-tail category. If you want to buy foundation, there could be 30 different shades that suit Indian skin tones. There are large parts of our business that are not addressable by quick commerce, at least not in an affordable and sustainable way,” Nayar said.
With the launch of Nykaa Now, the company is focusing its quick delivery on high-demand, everyday items rather than specialized beauty products. The service promises delivery within 30 minutes to three hours in select metros.
“These are the everyday essentials for consumers and not exactly a deliberate beauty purchase. For us to continue to dominate market share in these SKUs (stock keeping units), we believe it is important to be competitive in certain metros from a delivery speed perspective,” Nayar added.
The Mumbai-based company rolled out Nykaa Now last month, joining the quick commerce trend with a promise of four-hour deliveries on beauty basics. In its latest quarter, Nykaa reported that 70% of its orders in the top 110 cities arrived on the same or next day, with 80% hitting that mark in the top 12 cities.
“We are able to provide quick and timely delivery of a wide assortment of over 1,50,000 SKUs across 3,000 brands,” Nayar said during the earnings call.
Nykaa’s revenue from operations rose 24% year-on-year to ₹1,875 crore in the September ended quarter, supported by strong growth in its beauty segment and a moderate recovery in fashion. Net profit rose 72% to ₹10 crore during the quarter.
Beauty marketplace gross merchandise value (GMV) jumped 29% year-on-year to ₹2,783 crore, driven by the success of in-house brands like Dot & Key and Kay Beauty, as well as growth in offline store sales.
In fashion, revenue growth outpaced GMV, bolstered by marketing income from Little Black Book (LBB) and higher service-related revenue, according to the company’s stock exchange filing.
“There is a lot of talk that the fashion industry didn’t do well in the first half because this year all the festivals were dominant in the second half. It was seasonally weak. But, there was some pick up in October. The industry is hoping for better growth outcomes in the second half of the year linked to the wedding season,” Falguni Nayar, founder and chief executive of Nykaa, said in the analysts’ call.
Nykaa’s shares on Tuesday fell 2.09% to settle at ₹179 apiece.
