Nykaa sees beauty leveraging quick commerce more; plans to cut delivery times
Nykaa sees a higher mix from quick commerce channels for fast-moving categories, especially within its newer beauty brands like Dot &Key.
Falguni Nayar-led Nykaa sees a diversified channel mix for its beauty-owned brands as it drives down on omnichannel presence and alternative platforms for select categories in a bid to enhance customer experience.
Nykaa’s ecommerce platform contributed 51% to the total GMV for its beauty-owned brands in Q2 FY25; the number was 56% in the corresponding quarter in FY24. Moreover, the channel mix saw a higher share of GMV, about 21%, from other online marketplaces, including quick commerce platforms. This number was 12% a year ago.
“As Nykaa brands are growing, especially acquired brands, there is some amount of focus on other channels besides Nykaa. And this also includes to a certain extent exports, albeit small now, but going forward, it will also be the focus,” noted Falguni Nayar, Chairperson, MD and CEO of Nykaa, in a post-earnings call.
These brands would stay in-house up to a certain size and beyond that, they may pursue other channels based on feasibility and profitability, clarified Nayar.
Nykaa’s newly acquired new-age beauty and personal care brands like Dot & Key and Earth Rhythm are available on third-party marketplaces and popular quick commerce channels.
“I think beauty is a long-tail category. So there are large parts of our business that are not addressable by quick commerce, at least not in a very affordable and sustainable way. We are not looking to do 30-minute delivery for that part of the assortment,” noted Anchit Nayar, CEO of Beauty Ecommerce at Nykaa.
Quick commerce works for fast-moving everyday SKUs and products that consumers consider essential rather than a more deliberate beauty purchase. And to dominate market share in those SKUs and subcategories, it is important to be competitive in certain metros for these types of products, clarifies Anchit.
Nykaa currently doesn’t expect to make investments in setting up dark stores to enable quick deliveries as it doesn't see the overall operation becoming margin dilutive. However, it is looking to tap into third parties deeply.
“We think we can do this in a profitable way. As you know, our average order values tend to be quite high. And so, on an order basis, we feel that this business can be actually profitable as well,” he noted.
Nykaa has been focusing on cutting down its delivery timelines across pin codes. The company managed to deliver 70% of its beauty orders within same-day or next-day delivery timelines across the top 110 cities.
LBB drives growth in fashion
While the company’s beauty and personal care segment recorded strong traction, its fashion vertical showed lacklustre growth, just 10% YoY growth in GMV, due to slower demand on account of festive seasons shifting to the second half of the year.
Revenue from the segment grew 22% YoY to Rs 166.09 crore from Rs 136.50 crore in the previous year. However, revenue growth in the segment was driven by the robust performance of the digital content delivery platform Little Black Book (LBB), which brings in marketing and services-related income.
Overall, the company posted a 66% YoY growth in net profit to Rs 12.97 crore in the second quarter of FY25, along with a 24% YoY growth in operating revenue at Rs 1,874.7 crore.
Edited by Kanishk Singh
