Nos. show that Nykaa’s SuperStore is going nowhere!

Apr 26, 2024

SuperStore is Nykaa’s attempt to take the place of the distributors & stockists and sell directly to retailers.

And, on analyst calls, the mgmt only shares 4 cursory updates on the SuperStore. That’s it 😅

This data of the last 9qtrs portrays a solid biz in the making.

However, did you notice that the mgmt doesn’t share the exact sales numbers?

But, it does mention that the GMV and net sales (NSV) figures apart from beauty & personal care (BPC) & Fashion business are almost all about SuperStore
Thus, if attribute the remaining sales to SuperStore, it won’t be an issue

And this helps us derive a few things.

GMV/Orders gives us an avg order value (AOV) of Rs 7k -> down ~55% in the last 8qtrs!
Net Sales is 45% lower than the GMV figure (an avg net sales per retailer of Rs 9k in a quarter)
And if we divide Rs 9k by the AOV of Rs 7k, we get the successfully completed orders per retailer in a quarter.
That’s almost 1. Abysmally low!

And, it gets worse.

Avg no. of orders placed by a retailer has remained in 2-2.3 range for the last 9 quarters.

So, if an avg retailer places just 2 orders a quarter, why is the figure for successfully completed orders just about 1?
Means, about half the orders are either cancelled or returned by the retailer

This is a sign of a very bad service.

Let’s look at it another way.

If you are eliminating the middlemen & giving way better margins to the retailers, why are they only ordering products worth just Rs 9k a quarter?

Any beauty products store would have a manifold that much of needs every quarter even in small cities

Thus, a bad business 😓

And this only gets worse.

Daily orders per city is less than 5!

In big cities SuperStore would be doing many times more orders than that
Thus, avg of 5 orders, means most of the 770 cities have recorded maybe 0-1 orders a day on avg
Practically, in many cities Nykka is not doing any business at all!

It’s all about portraying a pretty growth narrative?

Alas, most retail investors can’t examine the numbers this way.

But, why do the biz media & brokerage analysts don’t highlight this stuff either? 📛📛

Best,
Jayant Mundhra