The success story of Nykaa- A Beauty Retail Company

 Nykaa is an Indian beauty and lifestyle retail company that sells cosmetic products through online as well as offline mode. Anyone who is interested in beauty products would surely have known about it, and those who are not much interested in beauty products, they would definitely have at least heard about it. Nykaa not only sells beauty products but is also involved in content creation like beauty product reviews, videos on how to use certain products and online magazines on beauty. The content that it creates helps in influencing customers to buy those beauty products and thus helps in increasing its revenue.

About Nykaa and its origin

Nykaa started out as an e-commerce platform but later it opened retail outlets in many metro cities. On Nykaa’s website or physical store one can buy cosmetics, haircare, skincare, perfumes, bath and body and wellness products. Nykaa is a multi-brand retailer as it sells products of multiple brands on its website. Nykaa also has its own range of products like Nykaa cosmetics, Nykaa naturals. Nykaa provides a one place shopping experience to customers as they can buy products of domestic as well as international brands on it.

Nykaa was founded by Falguni Nayar in 2012. She sensed the potential of the beauty and cosmetics market in India because though in India there was demand for beauty and cosmetics products, products of international brands used to remain unavailable most of the time and customers were not getting quality products. So Falguni Nayar worked on these pain points and formed an online platform Nykaa, as a solution to it. Later Nykaa opted for an omnichannel strategy to sell products i.e. customers can buy products online (through website or app) or from offline stores.   

About Founder

Nykaa was founded by Falguni Nayar. She had done MBA from IIM Ahmedabad. She had worked at Kotak Mahindra in investment banking. In 2005 she became Managing Director of the same bank. After her 18 years of stint at Kotak Mahindra, she made a decision to leave the banking sector and venture into some other sector.

After realizing the potential that beauty and cosmetics market offer in India, she founded Nykaa in 2012.

Business Model

Unlike the marketplace model in which products are listed by third party sellers for customers to make a purchase, Nykaa is based on an inventory model i.e. companies buy products from brands in bulk and then sell them to customers on its platform. This helps Nykaa to secure its customers from fraudulent sellers. Also Nykaa buys products in bulk so it gives Nykaa bargaining power to buy products at lower cost than normal rate.

Core Competency of Nykaa

Exclusive collaboration with big brands, creation of its own range of products and having a physical presence makes Nykaa stand out from its competitors. Also, Nykaa Network helps the company to connect with customers. Nykaa Company has also collaborated with Femina to conduct Femina Miss India.

Besides, Nykaa company stores are present in three formats: On Trend, Luxe and Kiosks. Kiosk is for luxury brands like Dior, Huda Beauty, and MAC. On Trend and Luxe deals with fashionable and trending brand products.

Nykaa is using an omnichannel strategy to promote products. It is using its app, website, and blogs to pitch about its product on digital platforms. Nykaa also uses physical stores to sell the products to a larger base of customers and has more than 75 brick-and-mortar stores. The company has more than 500 brands in its catalog. Earlier it was only operating in the women's segment but from 2019 it started to operate in the men's segment as well. During Covid-19, Nykaa was quick enough to take action and it came out with hand sanitizers, PPE kit, thermometers and many other hygiene products.

Funding and Financials

Investors list of Nykaa include Steadview Capital, Lighthouse Funds, TPG Growth, Fidelity Management and Research Company, Hero Group’s Sunil Kant Munjal and many more. Apart from them, celebrities like Katrina Kaif and Alia Bhatt have invested in Nykaa through a secondary route.

Valuation of Nykaa has increased by more than 60 times. Revenue of the company for FY 2021 is Rs. 2,440.89 Crore. Nykaa booked profits for the first time in FY 2021. Now talking about acquisitions, Nykaa has acquired three companies so far. These are Dot & Key Wellness, Pipa.Bella and 20Dresses.

More than 15 million users have registered themselves with Nykaa. Over 130,000 products can be accessed from its website.

Nykaa’s IPO

Falguni Nayar had announced Nykaa’s initial public offering as she wanted to expand the offline business by opening 180 stores all over India. Nykaa seeked valuation of around $7.4 billion and launched its IPO on 28 October, 2021.

 Nykaa had a dream debut in its IPO and the market cap of the company crossed 1 lakh crore. The issue price of Nykaa was Rs. 1,125 on BSE and it rallied by 96.15 percent to close at Rs. 2206.70 on debut day. The valuation of Nykaa surged to $13 billion. The rally in the stock price has made Falguni Nayar, founder and CEO of Nykaa, India’s richest self-made woman billionaire and her net worth rose to $6.5 billion, as per Bloomberg Billionaires Index.