Nykaa: Igniting the Spark of Beauty Revolution in India
Nykaa is an Indian e-commerce platform that specializes in beauty and wellness products. The company was founded in 2012 by Falguni Nayar, a former Managing Director at Kotak Mahindra Capital Company. Over the years, Nykaa has grown to become one of the largest online beauty and wellness platforms in India. This article will explore Nykaa’s history and journey, business model, milestones, e-commerce platform evaluation, consumer research results, investors, IPO, and future growth plans.
History and Journey
Nykaa as an online beauty platform started at a time when the market for beauty and personal care products was largely unorganized. There were only a few reliable sources for consumers to purchase from. There were only a handful of D2C brands, like Plum, that were picking up and were known only to beauty enthusiasts. The majority of the sales happened through in-store retail. Nykaa’s goal was to provide a curated collection of products from well-known brands as well as its own in-house brand.
Today, Nykaa has grown to become one of the largest online beauty and wellness platforms in India, with over 17 million monthly active users. The company operates a network of physical stores as well as an online marketplace that offers over 1,500 brands and 1,30,000 products. Nykaa has also expanded into the fashion and home decor space with its own in-house brands and partnerships with well-known designers.
What makes Nykaa the Mecca of Beauty?
Nykaa provides a carefully chosen collection of products in various categories, such as makeup, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness. These products come from both domestic and international brands, including luxury and premium ones. It offers a mix of established national brands, international brands, luxury brands, and emerging labels and designers. Nykaa has established separate business verticals and channels for beauty and personal care brands and fashion brands, recognizing the different customer journeys involved in purchasing these products. Nykaa also provides personalized customer experiences and offers a diverse range of content and communities to educate customers about their products
Nykaa has implemented effective e-commerce strategies to establish a comprehensive digital ecosystem that caters to its customers, partner brands, celebrities, and influencers.
· Consumers: Nykaa provides a seamless shopping experience through its user-friendly platform, offering a vast array of products, and utilizing informative resources like blogs, articles, and tutorials to aid in purchase decisions. The platform also features various payment and delivery options, ensuring maximum convenience and satisfaction for customers.
· Partner brands: Nykaa’s digital marketplace allows them to showcase their products to a wider audience, increase their online presence, and leverage the platform’s extensive customer base. Additionally, Nykaa offers brand collaborations and partnerships that provide mutually beneficial opportunities to drive sales and increase brand awareness.
· Celebrities and influencers: Nykaa offers a platform for them to showcase their expertise and collaborate with the brand through campaigns and initiatives. This not only helps the brand promote products to a larger audience but also provides the celebrity or influencer with an opportunity to monetize their reach and influence.
By utilizing such effective e-commerce strategies, Nykaa has created a thriving digital ecosystem, resulting in significant benefits for all its stakeholders.
Nykaa: A deep dive
Let’s look at the business model in detail to understand the key drivers of the company and how it uses them to position itself as a leader.
Key drivers of the business include:
· E-commerce platform: Nykaa’s e-commerce platform is its primary resource, enabling customers to browse and purchase a wide range of beauty and wellness products online.
· Technology infrastructure: Nykaa has invested heavily in building a robust technology infrastructure to support its e-commerce platform, including website development, logistics, and payment processing.
· Private label products: Nykaa’s private label products are a significant resource, as they enable the company to offer exclusive products to its customers while also providing higher profit margins.
· Brand partnerships: Nykaa’s brand partnerships and collaborations are a valuable resource, as they allow the company to feature a wide range of products on its platform while also generating revenue through commissions and fees.
· Physical stores: Nykaa’s physical stores are another key resource, providing customers with a tangible shopping experience while also generating revenue through the sale of products and in-store services.
· Customer data: Nykaa’s vast customer data is a valuable resource, providing insights into customer preferences and behavior, thus enabling the company to tailor its products and marketing strategies to better serve its customers.
Overall, Nykaa’s key resources enable the company to provide a comprehensive beauty and wellness shopping experience for its customers while also generating revenue through various channels.
Other formats of the business gaining momentum
The brand, which began as an online platform, has repositioned itself as an omnichannel model. Apart from its strong online presence, Nykaa has pioneered other popular formats:
· Nykaa Luxe: Nykaa Luxe also offers exclusive in-store services, such as personalized consultations with beauty experts and makeovers. Customers can book appointments at Nykaa Luxe stores across India to receive personalized beauty advice and try out products before making a purchase. The pricing of luxury products on Nykaa Luxe is on par with international markets and is reflective of the premium nature of the products. However, the platform offers occasional discounts and promotions to make luxury beauty products more accessible to a wider audience.
· Nykaa On Trend: One of the key features of Nykaa On Trend is its focus on customer reviews and ratings. The platform features customer reviews and ratings for each product, allowing customers to make informed purchase decisions. This feature has helped to establish trust and credibility with customers, as they can rely on the opinions and experiences of other customers before making a purchase. Additionally, Nykaa On Trend offers occasional discounts and promotions on trending products, making them more accessible and affordable to a wider audience.
It is noteworthy that Nykaa has tried to replicate the “Glossier model”, a D2C beauty company that leverages content and community to power the beauty shopping experience.
How does the data look for Nykaa?
In this, we will look at the different businesses, expansions, and acquisitions of Nykaa, their performances, marketing, popularity, and consumer perceptions.
Nykaa Beauty and Personal Care:
This is the major contributor to the overall revenue, accounting for Rs. 11K Mn. The BPC model is inventory-based, as Nykaa buys products directly from brands and authorized distributors. There are private-label products sold under Nykaa. The company doesn’t believe that a “marketplace” model would work for BPC, as the quality of skincare and makeup is sacrosanct.
The platform ranks first in the beauty and cosmetics category in India and attracts a good 14.3 million visits. Its global rank is healthy. Apart from India, the platform has gained momentum in countries such as the USA, the UAE, and the UK.
The brand remains popular among Millennials and Gen Z, who are the primary target customers of Nykaa. It is noteworthy that Nykaa, which began as a women’s beauty brand has been able to mark a massive presence in the men’s category. 41% of its visitors are male.
This growing popularity in the men’s category prompted Nykaa to start the exclusive “Nykaa man” platform. It is a thing of the past that women dominated the BPC segment. Now, the men’s beauty and personal care segment is growing rapidly.
In 2020, the size of the worldwide market for men’s personal care was assessed at $124.8 billion. Based on projections, it is expected to increase to $276.9 billion by 2030, with a compound annual growth rate (CAGR) of 8.6% between 2021 and 2030.
Nykaa is definitely on the right track to capture this shift. It is interesting to note that after India, Nykaaman is popular in Cambodia.
Nykaa Fashion:
The company began as an online BPC retailer but decided to expand its business beyond lifestyle. It started “Nykaa Fashion”, in which the brand partners with many designers and independent fashion boutiques to offer fashion wear. It was a natural extension of the beauty business. It is only four years old, but Adwaita Nayar, CEO of Nykaa Fashion, believes the segment is much larger and holds more opportunities than the BPC segment. Though sales from this segment are low because of its unorganized and competitive nature, a differentiated value proposition would be required to mark its position. As can be seen, the platform doesn’t talk about discounts all the time but shifts the dialogue to trends. The platform accounts for Rs. 1016 million in overall revenue.
Other growing segments of Nykaa to strengthen its relevance
For sustainable revenue, many e-commerce platforms are exploring B2B opportunities. Nykaa ventured into eB2B with the launch of “SuperStore”, a one-stop platform for retailers to shop for beauty and personal care products.
The Superstore is a novel concept and will help Nykaa grow its revenue streams. Many Tier 2 cities will benefit as the brand opens doors for many retailers to now order genuine and varied beauty products.
Consumers, who are generally sceptical about buying beauty products online, will be more willing to experiment as those products will be available in their nearby stores.
Nykaa is more than just a buying platform
The brand is unique in the sense that it is more than just a buying platform. It has created a moat in both the BPC and fashion segments through content-driven customer engagement. It is an excellent content generation engine that uses it to personalize pitches to its users.
Nykaa uses in-house content creators to produce blogs and videos on beauty, fashion, and personal care. They also collaborate with brand partners to create content. The Nykaa Beauty Book blog features weekly top stories, helpful articles, and product reviews. In addition, Nykaa launched Explore 2020, an in-app hub that allows consumers to watch and shop for products in real-time. The content is educational and multi-brand, featuring tutorials, reviews, and product trials, and has a strong reach among customers, contributing to the brand’s search results.
Final thoughts
Nykaa is at the forefront of the “Bespoke beauty” trend, representing personalized beauty products. It has gained widespread recognition and is popular even in Tier-2 cities, where customers rely on the platform for all their beauty needs. Nykaa not only provides products but also educates customers, reducing their dependence on beauty parlors, shop owners, and neighbors for product recommendations.
As a beauty blogger, Nykaa has become my go-to beauty hub, responsible for both my obsession with all things beauty and my dwindling bank account. While I’ve dabbled with a few newcomers for unique products, Nykaa still reigns supreme in terms of prompt delivery and top-notch services. So, what’s the tea? Have you managed to find a worthy alternative, or are you on #TeamNykaa like me? Spill your thoughts!
