She is more of a risk taker, because she was there from the start. You waited for it to settle. Probably the foundation was late and jumped in. Is that the kind of categorisation you would agree with?
Anchit Nayar: I would say Adwaita definitely has a strong appetite for risk. She is willing to take a big bet and obviously it has paid out, paid well for her. I would say that, yes, in a way I am slightly more analytical, slightly less risk forward. And if you look at our parents, they are very similar. My father is also slightly more risk averse. My mother is obviously a big risk taker. And somewhere, I think, obviously, genetics play a big role. So, I land somewhere in the middle. I think Adwaita is probably slightly closer to my mother in that sense.
Adwaita Nayar: But I think, in general, we have very complementary skill sets. I enjoy the zero to one journey, even within Nykaa, building our various businesses. Really, I love that early phase. I think Anchit is really good once the business is established, really taking it to the right level and scale and demanding the right rigor from the team. So, if I am zero to one, he is one to 100 and that makes us a good fit.
That is interesting. That is a good way to put it, actually. But you talked about the India opportunity and how this century belongs to India. What do you think is stopping India right now to create the next Amazon, Walmarts of the world?
Adwaita Nayar: I do not think anything is stopping India. In fact, a lot of India’s companies, particularly led by technology, are world-class in terms of the product that they have built from a technology perspective and even the services that they are providing. So, I would say that we are really building leading-edge companies, particularly when it comes to consumer tech.
Quick commerce, of course, is the new thing, and we have all gotten used to it. We now expect 10-minute delivery for pretty much everything. How are you looking at dealing with this disruption and what would it mean for your fulfillment costs, same-day delivery, etc?
Anchit Nayar: I will say that retail in India is a massive business. It is a trillion-dollar-plus opportunity and within that, BPC is probably one of the fastest-growing categories within the consumer discretionary space. It is expected to grow at roughly 12% to 15% CAGR over the next 15 years and within that, if I look at online, online beauty is expected to grow at almost mid-20s-plus over the next 10-15 years, so it is massive growth. So, the market is still very nascent and very small and where it is today is in large part thanks to players like us who have done the work of building the category, growing the category.
However, there is so much more to be done for us to get to a size and scale as a category that is at a level comparable to where we should be given our population, our demographics, and our now-growing GDP per capita. So, our point of view actually and it might be counterintuitive to you but is that competition will actually help to accelerate the growth of this category. If we were able to bring per capita consumption from $6 to $15, can competition actually help us to expand that per capita consumption and grow the market for everybody? If we were in a market that was already well-developed and was a single-digit grower and competition was to then kick in, I would say yes, then it is a challenge, but in a market where we are just getting off the ground, where the growth is going to be mid-20s and potentially could be higher if the competition also helps us build the market, I think that we are actually quite positive on it. We think it helps the category grow. Now, coming to your question, I think quick commerce is real. Again an example of how ahead of other countries India is. Quick commerce was tried in other markets. It did not really work. And in India, it is doing well. There clearly is a product market fit. And it is nice to watch young founders and young companies leading the way on that. A lot of folks do not know, but we are already very advanced in our speed of delivery. Just to give you a sense, three years ago, we had only 18 warehouses in India, which is a lot, but it was 18. Today, we are at 44. And we have almost 15 lakh square feet of warehouse capacity in the country across 44 warehouses which, as I said, has almost more than tripled in the past three years. As a result, today we are delivering all of our orders anywhere in the country, north, south, east, west, small towns, large cities within 48 hours. And 60% plus, 65% of all of our orders in the top 110 cities which is where a lot of the demand comes from, is being delivered either same day or next day.
So, we are already giving what we feel is the best in class speed of delivery, same day or next day delivery, which you can assume is like within 24 hours, 65% of all orders within the 110 cities in India are being fulfilled within 24 hours.
It is already a very strong customer value proposition. Now, please remember, we are doing that across 150,000 SKUs, across thousands of brands. So, we are managing to give consumers the choice of assortment as well as the convenience of quick delivery. Right now, quick commerce is at a point where they are not able to give that kind of depth of assortment for 10-minute delivery. So, we believe that giving that entire assortment available within short delivery times, like same day or next day, is what I would say is where the bullseye is.
Is a piece of the puzzle missing right now?
Anchit Nayar: Yes, it is where the bullseye is. And we continue to strengthen that capability. So, you will see that over the next several quarters, our same day and next day delivery ratios will continue to improve from 65%. And our plan is that, yes, at some point in the near future almost 100% of orders should be completed within the same day or next day.
I have a couple of follow-ups there. First, what will it mean for your fulfilment costs because, of course, if you are looking at expanding so much, it will involve a lot of costs as well. And secondly, with respect to utilising the platforms which are already set, why not just partner with a Blinkit or a Zepto of the world and utilise those platforms as well?
Anchit Nayar: In terms of fulfilment cost, we have not disclosed what it will be, but it should not be meaningful because the difference is a couple of things. One, we built all of Nykaa and whatever value it is worth today, all of $130 million, it includes the money we raised in the IPO.
Wow, that is a quite a bootstrapped version.
Anchit Nayar: Yes, very bootstrapped and so are an incredibly capital-efficient company. And we have tremendous respect for what we call the return on capital employed (ROCE). Some of these other players in this space are raising billions of dollars and we are not able to understand why that is required even to build this capability.
So, when we do our math, we feel that this is not going to be a large investment for us. Now, also, it may be because we are just doing this for one particular category, which is we are doing it for beauty, whereas the other players are doing it across multiple categories. So, it is not expected to have a very meaningful impact in terms of the investment required.
How do you guys look at business and your own leadership styles? How is it the three of you working together? She said it is very complimentary, but I am sure there will be those knickknacks that happen or difference in terms of work-life balance expectations, different work styles.
Adwaita Nayar: Yes, honestly, we love working together…
No fights whatsoever….
Adwaita Nayar: Oh, there are lots of fights. But there is an underlying bedrock of a whole lot of trust. Anchit and I are twins. We have been like best friends growing up as well. So, there is a lot of trust and camaraderie between the two of us. So, yes, there are lots of disagreements and I would say all three of us are pretty ferocious in how we voice our disagreements with each other. But once we sort of align and commit to whatever the path is forward, we are really a really strong unit and then we proceed.
So, I am not just saying that. We just genuinely love working together. We think you are just so much more powerful when there are three of you to take each other’s back, to take on different business risks and support each other. It makes for a very strong, formidable team. And then, of course, we are supported by incredible professionals. We have loads of professionals at the top management level who work alongside us, with us and we think of all of us collectively as a unit.
But does anyone have a veto, that that is the final decision and the buck stops there? Is Falguni the one?
Adwaita Nayar: Definitely our mother. She is the ultimate decision maker. And she typically listens to all our opinions. But ultimately what she decides is what we go with.
Anchit Nayar: Yes, but one thing I would add is, I think it was the most important thing in a relationship amongst family members who are working together is respect. And the three of us have a tremendous amount of respect for one another for different reasons. For example, Falguni, of course, built this business from scratch. And so, we really respect her instinct, the way she thinks about businesses of the future and her ability to see things that others cannot see. With Adwaita, I really respect the way she puts the consumer at the centre of everything that she does. Very consumer-backward thinking and very-very detail-oriented in terms of execution. And finally, a skill that she has that I personally and that she has much more than myself and even Falguni is an empathy for the people at Nykaa.