You must be living under a rock if you have not heard about Nykaa. It is not just India’s biggest beauty app, but a symbol of fashion, top-notch brands, and affordability. Headquartered at Mumbai, Maharashtra, Nykaa has been in the lives of every Indian girl for a very long time. With over 1,30,000 products from 1300+ curated brands, Nykaa has come a very long way. They even have 70 offline stores in various parts of the nation enhancing their public reach.
The cosmetic retail market in India is growing at about a 16% CAGR and is expected to reach $20 billion by the year 2025. The majority of growth is shown to take place in the online retail sector as it has been found to be much more convenient than the other modes.
Back in 2012, the online beauty industry in India was slowly rising. The main players at the time wee Amazon, Flipkart, and Limeroad, until Nykaa entered the industry. The rest of the companies sold a large variety of goods, while Nykaa concentrated more on beauty and fashion. This was one of the major reasons for the company’s major success.
The Chic Journey
Where a common man sees a problem, an entrepreneur sees an opportunity to find a solution. This single line caters very well to how Nykaa came to be. Falguni Nayar, the founder of Nykaa, was intelligent enough to see that there was untapped potential in the online beauty industry. Back in 2012, there were not many brands or a wide range of products available online, which the customers could buy with confidence. This is where Nykaa saw its niche.
Falguni Nayar was someone who was very much passionate about the makeup and beauty products and wanted to change the way Indian women thought about personal grooming. She started Nykaa from the sheer passion of wanting to create something of her own. This fueled her to become an entrepreneur after working for a company for over 18 years.
Business Model of Nykaa
As we know, Nykaa offers high-end makeup and Wellness brands on its website for exciting discounts and complimentary gifts. We would have to pay the actual price for the same products if bought from a retail store.
The commission Nykaa receives from luxury brands was their initial source of income. Another smart move made by Nykaa was to set up a foolproof inventory model. They buy products directly from the manufacturers and store them in their warehouses in metro cities. This paves way for super quick delivery and reduction of further expenses.
Soon after seeing a success trajectory in their business, Nykaa launched its own range of products. This was very well received by the customers and a new source of profit opened up. They no longer had to depend solely on the commission from high-end brands as a source of mainstream profit. Nykaa now has its own offline stores, blogs, and a Youtube channel where they feature famous celebrities and makeup artists.
Founder’s Retail Background
Falguni Nayar was an MBA graduate from the prestigious IIM Ahmedabad. Soon after her graduation, she joined Kotak Mahindra in their investment banking section. In 2005, she took over as the Managing Director of the same division of Kotak Mahindra.
Mrs. Nayar worked for the company for over 18 years and it is during this time that she decided to leave the banking industry and try her hand at something new. The high degree of interest in the makeup and beauty industry made her venture into the online cosmetics industry of India and the rest is history.
Growth of Nykaa
Nykaa has come a very long way from where it started. The beauty industry has evolved so much since 2012 and a huge part of this is due to Nykaa. Makeup was a concept very distant to the common women of India and was considered as something only used by celebrities. This idea is now shattered and the main reason behind this is the easy availability of high-quality products.
The app has over 10 million downloads in Play Store and has stepped out of the online realm to start its offline stores which have now reached over 70. Nykaa has millions of satisfied customers and a very wide product base of over 1,30,000.
One of the biggest decisions taken by the firm was to extend its services from just an online mode to an omnichannel model of retail. This has made a huge impact on how people perceive the brand. Moreover, this has enabled the brand to reach a group of people they were never able to reach otherwise.
Nykaa has raised around ₹167 crores from recent funding. The latest funding round took place on 8th May 2020 and this was a Series F funding. Some of the leading investors of the company include Steadview Capital, TPG Growth, and Lighthouse Funds. Nykaa has only made one major acquisition and that was of a company named 20Dresses on 22nd March 2019.
Nykaa has entered the list of unicorn companies in India on its investment from Steadview Capital. The total value of the firm has successfully reached $1.2 billion, after the $13 million investment by the same. The company is focused on increasing its offline presence and diversifying into the untapped potentials of the Indian beauty industry.
One of the biggest global competitors of Nykaa is the American brand Sephora and the firm is taking all the measures to outdo the beauty giant with its plan to open more than 180 offline stores across the nation. They have specialized luxury stores that sell high-end beauty brands such as Clinique and Mac, while there are also stores that sell both the drugstore and professional brands.
Nykaa has introduced some new products into its range that include celebrity endorsements. They have also brought in new collections to add on to their personal brand. The extensive marketing strategies deployed by the company makes sure that every beauty enthusiast gets the news and makes a purchase.
The investments made by Steadview Capital has indeed fueled the game and the main aim of the company is to bring more stores to the people. This needs more and more investment in the infrastructure as the beauty and fashion brands demand a certain set of standards that has to be met.
In total Nykaa has big plans for the beauty and fashion industry and is aiming to bring the best products and services to the users at the best rate possible.
Picture credits: Google.in