Nykaa is Concentrating on 10-Minute Delivery That is Faster But Not Ultrafast

Nitin Konde, Varun Bhardwaj

Nov 14, 2024 — 3 min read

Nykaa Introduces 10-Minute Delivery—Faster, Not Ultrafast

Nykaa, a significant player in the beauty and fashion e-commerce space, is not concentrating on 10-minute delivery, despite the nation's increasing quick-commerce craze. For other, in-demand cosmetic products, the company is instead aiming for a delivery window of 30 minutes to 2 hours.

"Ultrafast shipping isn't always consistent with Nykaa's service because its beauty consumers frequently need time to select the right products, such as the right shade of foundation." The CEO of Nykaa's beauty e-commerce division, Anchit Nayar, stated on the company's conference call following its earnings.

Not Compromising With Consumers’ Experience

While Nykaa would provide speedier delivery choices, Nayar underlined that in areas that demand more thought, the consumer experience will not be compromised. Nevertheless, Nykaa is eager to gain profit from SKUs that are more suitable for prompt delivery, such as everyday essentials and fast-moving items. These goods, like widely used cosmetics, are in great demand and constitute a significant part of the company's operations.

In order to guarantee competitive delivery speeds in these categories without materially reducing its margins, Nykaa is launching speedy delivery services in a few major cities. Relevantly, it was announced last month that the business was testing a 10-minute delivery service in certain areas of Mumbai, which would cover 10% of its SKUs. During the call, Nykaa CEO Falguni Nayar stated that the company's infrastructure investment, particularly its network of warehouses spread throughout India's state capitals, had already improved delivery times.

Logistical Dynamics of Nykaa

Nykaa claims that 70% of its orders are delivered the following day thanks to the increased network, which is a 45% improvement over previous results. According to Nykaa's investor presentation, 70% of deliveries in the top 110 cities nationwide and 80% of deliveries in the top 12 cities are covered by its same-day and next-day delivery services. Falguni Nayar added that during the first half of FY25, no extra funds were spent on growing its network of warehouses. She asserts that Nykaa's high average order value supports the company's infrastructure investment, which does not present a significant capital expenditure burden and is anticipated to increase margins.

The business thinks that rather than diluting its margins, this expansion will boost their business operations. Due to robust development in the beauty and personal care (BPC) vertical, Nykaa's consolidated net profit increased 66.3% to INR 12.97 Cr in Q2 FY25 from INR 7.8 Cr in the same period last year.

Quick Commerce Fever Rising In India

The delivery of small orders quickly is known as "quick commerce," and it is expanding far more quickly than regular e-commerce. According to a survey by financial services company Chryseum, revenues of India's rapid commerce sector have increased by more than 280% in the last two years, indicating the industry's impressive expansion.

As per the survey's findings, fast commerce's Gross Merchandise Value (GMV) in India grew by 280% from USD 0.5 billion in FY22 to an astounding USD 3.3 billion in FY24.