Nykaa's warehouse investments driving quick commerce of beauty products in major cities

Across the network, Nykaa now fulfils delivery of more than two-third of its order volume by the next day, backed by 210 stores as of Q2FY25.

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The quick commerce rush has caught on with Nykaa as well, and its investments over the past few years to enable faster deliveries have resulted in 70% of beauty product orders delivered within the same day or next day in the top 110 cities it caters to, the company said on November 12.

Across the network, Nykaa now fulfils delivery of more than two-third of its order volume by the next day, backed by 210 stores as of Q2FY25, which it claims is the largest specialized network of beauty products. To put it in context, in FY21, Nykaa’s average order-to-delivery timeline was close to four days.

This rapid scale up in back-end stores has been driven by investment in warehouse regionalization over the past few years.

Nykaa’s capex breakup for H1FY25 shows that 13% of the amount was spent on warehouses, having already taken the number of its warehouses by over 2.4x in past three years. This strategy of regionalization is resulting in Nykaa getting its warehouses closer to the consumer, the company said, thus significantly improving the order-to-delivery timeline. In the first half of the year, the company spent Rs 53.9 crore in total on capex, mostly on retail expansion and on the tech front.

The company added that it has reduced its fulfilment cost by 205 bps in Q2FY25, with its warehouses servicing over 98% of pincodes. The decision to move from third-party to owned warehouses has resulted in this reduction of freight and packaging cost per order, Nykaa said in its investor presentation.

Compared to last year’s second quarter, the retail space operated by Nykaa has risen by 25% to over 2 lakh sq ft.

Nykaa’s Q2FY25 net profit rose 72 percent on-year to Rs 10 crore, helped by robust revenue growth across its beauty and fashion segments. However, this profit fell significantly below Street expectations, with analysts polled by IBES anticipating a net profit of Rs 28.7 crore for the quarter.

Nykaa founder and CEO Falguni Nayar has said in the past that quick commerce is more for groceries and everyday items, but the company is certainly “aiming for rapid and express deliveries“.

“There is a whole size and scale at which we operate in the beauty industry, and if consumers are looking at faster delivery, obviously with the volumes that we have, we’ll keep solving for it,” Falguni Nayar said.

Nykaa has also said that they are confident of the festive momentum continuing into the wedding season as well.