Nykaa Aiming To Improve Delivery Timelines, Eyes Express Deliveries In Metros

Beauty and fashion ecommerce major Nykaa is working to improve its delivery timelines and is looking to introduce express delivery service in metro cities.

“We have a big plan this year to improve delivery across the entire network. The operations teams have promised that, without incurring too many incremental costs, they will be able to improve the delivery timelines,” founder and CEO Falguni Nayar said during the company’s ‘Annual Investor Day’.

Nayar said that Nykaa’s scale and its hub and spoke model will allow it to offer express delivery services in metro cities and the management is excited about this prospectus.

However, the founder said that the focus is on doing this in a “balanced manner” and “there’s a lot to lose by not facilitating discovery and education at the cost of just trying to fulfill a quick order”.

Nykaa E-Retail CEO Anchit Nayar also spoke on the importance of improving the speed of delivery for consumers. He said that the order to delivery timelines have reduced by almost a fifth over the past 2-3 years, adding that a majority of products across 19,000 pin codes of India are now being delivered within 48 hours.

It is pertinent to note that Nykaa has expanded to 44 warehouses from 18 warehouses over the past three years and has a presence in 12 states against 3-4 states earlier. The majority of shipments are now intrastate, meaning the packages are dispatched from within the same state.

Anchit said that Nykaa will continue investments to strengthen its hub and spoke model. However, he added that the expenditure on the same isn’t expected to be big and the hub and spoke model will become more robust in the coming quarters and years.

Responding to a question on how quick commerce platforms are helping Nykaa in terms of orders, the founder and CEO said, “Quick commerce is a demand-fulfilling platform. It doesn’t generate demand. Instead, it caters to consumers who know exactly what they want to buy. Consequently, it is more suitable for FMCG categories and personal care, and less so for beauty products.”

It is pertinent to note that the competition in the beauty ecommerce space is heating up, with Reliance Tira also rapidly scaling up its presence in the segment. As per analysts, with quick commerce platforms also expanding their beauty products portfolio, competition for pure play beauty ecommerce players is likely to increase.

Nykaa posted an 80% increase in its net profit to INR 69 Cr in the financial year 2023-24 (FY24) from INR 38.39 Cr in the previous year. Operating revenue grew 24% to INR 6,385.6 Cr from INR 5,143.8 Cr in FY23.

The gross merchandise value (GMV) for its beauty business grew 25% year-on-year (YoY) to INR 8,340.9 Cr during the year under review. Besides, GMV growth for its fashion business stood at 27% YoY.

In a presentation today, Nykaa said it is eyeing a GMV growth at mid-late 20s in percentage terms during FY24-FY28.

Shares of Nykaa ended today’s trading 2.43% higher at INR 170.95 on the BSE.

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