Although beauty lies in the eyes of the beholder, the global beauty industry has never happened to lose its charm. Alongside its steady growth the industry has also garnered a stream of loyal customers over generations. Which girl doesn’t love using cosmetics? From practicing makeup tutorials, experimenting with different shades on idle days, beautifying ourselves prior to a wedding or a function or just putting on a quick light layer before work, cosmetics play an integral role in all our lives.
But we’re long past the days when people were required to physically visit cosmetic stores. Why should brick and mortar stores be the only option when we now have online stores for cosmetics which allow customers to order items at any time and anyplace.
Despite the Indian economy having plunged to list new lows in the recent months owing to the lockdown induced by the COVID19 pandemic, there are still a number of platforms which have continued to stay steady amidst this lockdown.
One of these e-commerce platforms for beauty and wellness items is Nykaa, a platform which has become the foremost option for all cosmetic lovers in the Indian nation. Anyone out there who has the slightest interest in making use of beauty and wellness items would have heard of Nykaa at some point in their lives. This is an e-commerce company which specialises in beauty and cosmetic items. Established in 2012, this platform has played an intrinsic role in overcoming the myth that e-commerce and beauty retail fails to perform in India.
Through this blog, we will provide you a gist about the platform of Nykaa, about its founders, its business model, its funding, its success story, its origin, as well as its growth.
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Nykaa is an India based brand that specialises in multi-beauty and personal care products. The brand had been originally established as a sole e-commerce medium until it later began setting up various retail outlets in many metropolitan cities across the nation.
The brand specialises in facilitating an extensive collection of cosmetics, skincare, haircare, fragrances, bath and body, luxury as well as wellness products for both women and men. The platform facilitates suitably prepared and priced branded products, claiming to receive more than 1.5 million per month across India.
“We have taken the call to be an omnichannel retailer because beauty is a category where physical trial is critical. We realised that if we want to sell premium products or even affordable products in categories like blush and foundations, colour matching is very important. So we realised that in order to give our customers a really holistic beauty experience, we had to build a physical retail distribution,”
- Falguni Nayar, Founder and CEO of Nykaa
Presently Nykaa has its stores in three formats namely Luxe, On Trend, and Kiosks. With the Nykaa On Trend items being confined to trending and fashionable brands, Nykaa’s Luxe stores feature more premium and luxury brands such as Estee Lauder, Dior, Huda Beauty, and M.A.C Cosmetics as well as a range of others.
Aside from women beauty, the platform also holds a range of grooming items for men listed on the Nykaa Man website and app and also on Nykaa Network, which is an online community for beauty enthusiasts. As of now the company is a firm believer in sticking to the vertical marketplace.
“The customer may be common and we could obtain synergies between our sites, but we want to be a demand-led retailer, not a ‘push’ retailer.
We are a multi-brand retailer, with more than 150 brands listed with us. We believe private labels in fashion will have a far higher percentage share than beauty, and could contribute up to 40% as the business grows. We don’t want to be a discount-led fashion website; we would rather be a curated, style-led one.”
- Falguni Nayar, Founder and CEO of Nykaa
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“Falguni saw that there was a huge opportunity in the online space and considering all the different areas she could invest in or start a company, she focused on beauty”
– Nihir Parikh, Chief Business Officer at Nykaa.
A graduate in MBA from IIM Ahmedabad, Falguni Nayar started to work at Kotak Mahindra in investment banking, shortly following her graduation. In 2005, she became the Managing Director at the same division of the bank.
She worked for Kotak Mahindra for about 18 years, amidst which she took the decision to venture beyond the banking sector and experiment in other areas.
She perceived the unexplored promise held by the online beauty sector. Since back in those times, there was a dearth of accessible online brands and items which could be trusted and purchased confidently by the consumers, this is where she saw the scope for Nykaa.
Being passionate about makeup and beauty items she wished to alter the opinion of Indian women on personal grooming. With the desire of developing something exclusive to her, she established Nykaa in 2012.
It all began in the year 2012 when Nykaa was established. On the lookout for a promising business opportunity in the Indian nation Falguni Nayar came across an inconsistency in the beauty items market in India which wasn’t at par with the product’s scope in other nations like France or Japan, in spite of the high demand, largely owing to the lack of product availability in many places. This led to her setting up Nykaa alongside her husband Sanjay Nayar. Starting out as an online corporation in the beginning the platform gradually shifted to an omnichannel platform in the upcoming years.
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“This is different from Kareena Kapoor selling kajal or Aishwarya Rai promoting a shampoo, these are 23-25 years old girls who look and talk like the customer instead of speaking from a pedestal.”
Nykaa Inventory Model
What sets Nykaa aside from all its competitors is largely its inventory model. In this model, the products are purchased through brands and distributors after which they are directly sold to the consumers. This is in contrast to a marketplace model where the products are listed by third party sellers. This allows Nykaa to have a more secure hold on its items, helping them avoid any forged items which find their way on the platform.
“In the midst of this unprecedented global crisis, we are working to ensure all our stakeholders are well served and that Nykaa emerges as a leading retail player in the industry,”
- Falguni Nayar to Mint
As reported by Your Story, recently in the month of July of this year, the platform stated that it's in-house brand Nykaa Beauty has now penetrated into travel care as well as home necessities.
"Nykaa was able to meet demands for essential products through the critical time of the lockdown, overcoming logistical hurdles and gaining customer trust. In the last few months we have responded rapidly to the needs of our customers, launching a range of hygiene essentials including handwashes, hand sanitisers, masks, PPE suits, and thermometers.”
- Falguni Nayar, Founder and CEO of Nykaa
From the time of its establishment in 2012 to now, the platform of Nykaa has advanced a long way, playing a simultaneous role in the progress of the beauty industry.
Presently, as confirmed by CNBCTV18, Nykaa has over 5 million monthly active users, 70 stores across India and over 500 brands and 130,000 products available via its website, app as well as stores.
A certain verdict which has played a crucial role in the expansion of the company is its shift from an online model to being an omnichannel retail model. This shift has largely influenced how the brand is presently perceived by its audience alongside allowing the brand to encompass a range of audience they were not able to include previously.
“For a lot of fashion brands, which continue to look at India as a strong growth market, and establish a presence, Nykaa is not just an online retailer, but also has a strong omni-channel play with offline stores. And brands are looking to partner with us to not just help them create a presence but also retail their products, creating an end-to-end."
- Anchit Nayar, CEO, Retail, Nykaa.
As reported by the Economic Times, within its Nykaa Fashion label the brand has recently ventured into the intimate wear category through its brand Nykd.
Amidst the lockdown, the platform witnessed a fall of upto 70% in its sales in the month of April post which it began listing essential items in order to avert engulfing customers through non-deliverable inventory. As a result the platform has also begun advancing its 70 stores spread across India by facilitating hyperlocal delivery. The platform has now recovered by more than 90% in comparison to its pre-covid levels.
Nykaa has witnessed a shift by customers towards essential categories, which also includes personal skin and hair care items.
Recently the platform’s CEO has stated that the platform has clocked a rise in both its sales as well as its profitability, owing to which its plans for IPO may be pushed ahead.
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In its most recent leading raised funding, Nykaa had raised Rs 66.64 crore in the month of May 2020, from its existing investor Steadview Capital. This investment round valued the platform at $1.2 billion.
Prior to this, as reported by Financial Express, in early April of this year, Nykaa had marked its place in the unicorn club through its fresh $13 million funding from existing backer Steadview Capital.
As of now in late October of this year, the Bollywood star Alia Bhatt has recently invested an undisclosed amount in Nykaa via a secondary transaction. Her investment was made merely a couple days after the platform received some investment from Katrina Kaif.
Some of the leading investors of the platform include Steadview Capital, TPG Growth, and Lighthouse Funds.
Over the recent times Nykaa has launched a range of new products that also incorporate celebrity endorsements. Alongside this, they have also incorporated various fresh collections to include in their personal brand.
The platform has a wide range of grand plans ahead to mark the beauty and fashion industry and has been focusing on escorting quality products and services to the users at suitable rates. The platform shows a great degree of promise towards expanding and gaining an even further dominant position in the future.
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