Delivering instant gratification is clearly the need of the hour.
Nykaa’s quick commerce testing comes at a time when beauty has emerged as one of the top grossing categories on rapid delivery platforms such as Blinkit, Zepto, Swiggy Instamart and BigBasket’s BB Now.
The Mumbai-based beauty retailer is expected to add more pin codes in Mumbai for 10-minute delivery.
It plans to undertake a major update on its platform to launch the service in more locations, people aware of the matter told ET.
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It is likely to have a separate brand name as well, they said.“Certain low-priced items such as kajal pens, foundations or daily-use skincare items are finding traction on quick commerce…and platforms such as Nykaa stand to lose,” a senior quick commerce executive told ET. “Same goes for other categories such as fashion, home decor…where more vertical platforms will do quick deliveries.”
The CEO of a top quick commerce player said beauty in select stock keeping units (SKUs) are seeing one of the fastest growth rates among the new-to-quick commerce segments.
Industry executives, however, said that while horizontal quick commerce platforms such as Blinkit and Zepto are likely to retain a stronghold in grocery deliveries, there is a play in quick commerce for vertical platforms with a wide range of SKUs and deep supply-side relationships.
An email sent to Nykaa didn’t elicit any response until press time Tuesday.
Licious also did not comment.
The Bengaluru-headquartered online meat shop “has been conducting one-to-two-hour deliveries in major markets and often delivering ahead of the promised time,” a person aware of the matter said. “In Gurgaon, there is a new experiment to reduce the time even further based on the density of orders,” the person added.
These developments come at a time when large horizontal e-tailers are firming up their quick commerce play. While Flipkart has launched its 10-minute delivery service Minutes in Bengaluru, Delhi-NCR and Mumbai, Amazon is working on its Q-commerce offering, ET has reported earlier.
Last week, Swiggy started the 10-minute food delivery service Bolt, and it is understood that its rival Zomato is planning to bring back a 10-minute food delivery option for certain items, too, in partnership with top cafes and quick service restaurants.
ET had reported earlier that even logistics players such as Delhivery, Shadowfax, Ecom Express and Xpressbees are entering the quick commerce space.
Also Read | Tiger Global conducts due diligence of Zepto dark stores as it eyes quick commerce
Beauty and the quick beast
Nykaa initially plans to take about 5% of its total SKUs to the quick commerce offering as it sees certain kinds of products being ordered for quick delivery, people cited above said.
Multiple industry executives told ET that several brands – depending on the category – are increasingly moving to same-day delivery in top metros, underscoring the changing nature of delivery expectations from consumers.
“This is what’s leading to the dynamic changes. You don’t want to wait for a basic kajal for two days. These products are selling fast and consumers want them instantly,” a senior quick commerce executive said.
Nykaa has been offering same-day delivery for orders placed before 12 pm and next-day deliveries are done for orders after 12 pm in four metros.
“For Nykaa, they already see about 10-15% of orders in the top four metro cities being delivered the same day while 85-90% of the orders get delivered by the next day,” a person aware of the numbers said.
A recent note from JP Morgan said Nykaa’s premium portfolio is growing the fastest. “Nykaa sees no major impact from increasing proliferation of quick commerce on account of its skew towards more beauty products (80-85% mix) and tier-II+ cities (66% contribution). Nevertheless, Nykaa aims to enhance same day/next day order delivery rate to 65% of orders in top 12 cities and 60% of the orders from top 110 cities through higher efficiency of its supply chain network and expects no major investment in the initiative,” the report said.
In August, Varun Alagh, cofounder and CEO of direct-to-consumer beauty and personal care brand Mamaearth, had said during the company’s analyst call that quick commerce was the fastest growing sub-segment within its online commerce channel. He had pointed out that quick commerce sales – most of which were coming from top 10 cities – contribute over 10% of the company’s online revenue.
Beyond instant gratification
Quick commerce along with highly competitive new brands is speeding up the premiumisation trend in the country, CLSA said in a recent note.
“We agree that quick commerce will accelerate premiumisation, but note the competitive intensity in premium categories is even higher than in standard categories, especially as new entrants are likely to target higher gross margin categories. This is especially evident in categories such as premium personal care, beauty, premium foods and premium home care, where competitive intensity from new entrants is the highest,” the brokerage said in the note dated September 24.
During the ET Startup Awards 2024 ceremony held on October 5, a panel discussion chaired by Infosys chairman Nandan Nilekani threw light on the rise of instant gratification in Indian consumption.
During the course of the discussion, Zepto cofounder and CEO Aadit Palicha said the rise of quick commerce was on account of factors beyond just instant gratification.
“When you look at why quick commerce is working in India, it’s largely because we’ve been able to cater to ‘small ticket multiple times a week’ use case that is unique to Indian commerce,” Palicha said. “If you go to the West, for example, it’s precisely the opposite – it (grocery shopping) is large baskets one or two times a month. The average frequency of transactions in India on grocery household essentials is 2.2 times a week… In the US it’s 2.4 times a month.”
