Nykaa - Story of the Top Beauty Retail Platform of India | Successful Entrepreneur Stories & Startup Journey - Entrepreneurship PDF Download

About

Nykaa is a beauty retail company that sells cosmetic commodities both online and offline. The company also offers comprehensive content that includes product reviews, beauty how-to videos, expert-written articles, and even an e-beauty magazine. The Nykaa helpline is designed to help its customers choose products and services that are tailored to their needs. The products that beauty and wellness brand boasts of are sourced directly from the manufacturing brands and are therefore authentic, and are also available for delivery!
Nykaa currently ships its products all around the Indian subcontinent and to Nepal as well and will start its international deliveries to many other countries soon!

How Did It Start?

• It was the inconsistencies witnessed in the market of beauty products, which gave Falguni Nayar, the founder of the company the initial impetus. The beauty and cosmetic products market of India was not at par with the scope of the products, as it was in other nations like France and Japan though the market demand was high. Furthermore, the products were also discovered unavailable in many places around the country, all of which led to the formation of Nykaa.
• Nykaa was founded by Falguni Nayar in the year 2012. It initially started as an online corporation and eventually switched to being an omnichannel strategy.
• Based out of Mumbai, Nykaa is well-known for its wide range of beauty and cosmetics products, fashion, and intimate wear that the company makes available through its online website, app, and via its online stores. Making simple women extraordinary in every aspect is one of the main focuses of the brand.

Founder and Team

• Falguni Nayar is the founder of Nykaa, which presently stands as one of India's biggest lifestyle and fashion portal. Nayar was a student of IIM Ahmedabad from where she completed her MBA in Finance. She joined Kotak Mahindra Capital Company, a leading investment bank of India soon after turning into a graduate. Nayar Managing Director of the same division of the bank in 2005. She served the bank for 18 long years after which resigned in order to dedicatedly follow her entrepreneurial dream: Nykaa.com.
• Nayar is also recognized as a Founding Member of the Asia Society in India. She has her name listed on numerous boards, including the Aviva Insurance Board, Dabur India, along with serving as an Independent Member on the Tata Motors Board. Being a successful entrepreneur as well as a responsible homemaker, Falguni is a source of inspiration to everyone in Nykaa and beyond. Falguni's passion for her business, attention to detail, and involvement in every aspect of the firm can be defined as some of the qualities that had made her a great leader. She has also set a big example for the entire world and validated the saying, "age is just a number" when it comes to entrepreneurship.
• Falguni has been the recipient of tons of accolades throughout her career including the FICCI Ladies Organization (FLO) award for the top woman achiever in the field of banking and the Business Today award, which hailed her as one of the top 25 women in business.
• “Retail is all about detail” is one of the most popular mantras that Falguni Nayar lives by and is often heard propagating the same.

Mission and Vision

Nykaa's mission rests on 3 prominent ideals - curation, information and personalization. The company believes in bringing the best offering to its customers to help them make the right choice for their holistic beauty needs.
The mission statement of Nykaa reads as -

"Inspiring Indians, both men and women to make fashion & lifestyle choices that best suit them."

Tagline, Slogan And Logo

• The brand name 'Nykaa' is derived from the word 'nayaka', which means 'one in the spotlight' in Sanskrit.
• The company's tagline is 'Your Beauty, Our Passion'. There was a partnership between Nykaa and Peanut Butter as a result of which generated another slogan, 'Beauty Anytime, Anywhere'.
• The brand colour was very carefully chosen because the brand targets the ladies and the colour red and pink would perfectly reflect a modern girl's flaws and vibrancy.

Marketing Strategy

• Nykaa has stood as one of the most competent players in the beauty and fashion space due to its robust marketing strategy, which is carved with digital marketing at its core. 
• The brand not only focuses on marketing in the Tier 1 cities but also pitches all the potential customers from the Tier 2, 3, and 4 cities.

Social Media Marketing

• Nykaa has 4 social media accounts for the marketing of its in-house brand My Nykaa, Nykaa beauty for the promotion of its e-commerce platform, Nykaa fashion to promote its e-commerce apparel store, and Nykaa beauty book, which helps the audiences with numerous beauty and makeup tips.
• The company has its accounts on diverse social media platforms to extensively promote the brand on social media. The brand is also engaged in posting the content created by its influencers via its social media handles. Therefore, influencer marketing plays an important part in the promotion of Nykaa.

Youtube Marketing

• Nykaa has a full-fledged Youtube marketing strategy. The brand refrains from focusing on selling its products via its Youtube channel but concentrates more on offering consumable content, including beauty, personal care tips, makeup hacks, and much more, to its target audiences.
• Furthermore, the brand also runs Youtube ads from time to time to target its customers. Thus, the Youtube marketing of Nykaa is fueled with quality content that keeps the audience engaged and relevant ads.

Content Marketing

• Nykaa relies majorly on its content marketing. The D2C beauty and fashion marketplace offer a variety of consumable content to the audience, which helps them convert into its customers.
• Nykaa has its own blog, “Nykaa beauty book,” which the brand uses to publish blogs on beauty, makeup, and personal care. Furthermore, the brand is also engaged in creating video content like makeup tutorials, DIYs, and more. T

Event Marketing

• Event marketing is another important marketing strategy that Nykaa leverages to pitch the target customers at the right time and right place.
• Nykaa has successfully sponsored the popular Femina Miss India event, one of the largest beauty events in India on a number of occasions, and is still tied to the same event.
• Besides, Nykaa also sponsors numerous college fests and events like the Red Brick Summit, 2019 IIM Ahmedabad, and the Mumbai college fest, Mood Indigo.

Business Model

• Nykaa is a D2C consumer products eCommerce brand, which relies on an inventory-based business model. The company purchases its products directly from the manufacturers and keeps them in its designated warehouses located in New Delhi, Mumbai, and Bangalore. These products are sold either on the website of Nykaa or through its 3 offline store formats: Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks.
• The inventory-led model of business of the company helps the company witness high-profit margins and has resulted in a profitable business. Besides, the company also ensures the authenticity of products and follows competitive pricing.

Revenue Model

Nykaa has reported $324.77 million (around Rs 2,440.89 crores) in FY21, which surged around 38.10% from what it was in FY2020.  Nykaa earns its revenues through the below-mentioned ways.

Sale of products

The brand sells its own products and the products of its partnered brands, which is the primary source of the revenue of the brand.
Banner advertisements
The banner advertisements of the company also help it bring in a lot of traffic, many of which turn into sales. Discount income, income from commissions, and miscellaneous income are some other sources of revenue for the brand.

Funding and Investors

Nykaa's valuation crossed the $13 billion mark in its blockbuster debut on the Indian stock exchanges. The stocks of the famous Indian cosmetics platform initially started trading at a premium of 82% and have surged to around 96%. The total funding amount is around $341.9 million.

Challenges

• Being a latecomer in the cosmetics market, Nykaa has to battle numerous professional players. Ajio and Myntra are some of the biggest players operating in Nykaa's market. Besides, it also needs to create a USP in fashion.
• In a recent statement, Kannan Sitaram, a Venture Partner at Fireside Venture, stated that one of the biggest of Nykaa's challenges is to remain interesting to the shoppers because if it fails to provide an excellent experience, then they would be disappointed.  
• Nykaa was filed a case against by French cosmetic giant, L’Oréal, which had filed a civil lawsuit against the Indian cosmetic startup in November 2019 at the Delhi District Court, alleging that Nykaa has infringed copyright. The case on Nykaa was due to the similarity that the French cosmetic major found out in some packaging that Nykaa does, which was similar to the Maybelline brand. 
• The court battle seemed like a long-drawn, which is why both the firms decided to call it off and settle terms between them, which is currently approved by the Delhi District as well as the High Court of Delhi. Under the new settlement terms, L’Oréal has approved of the new, modified artwork that Nykaa has created.

Acquisitions

Nykaa has successfully acquired 5 companies to date. The company last acquired New Delhi-based Nudge Wellness on April 22, 2022. It acquired Kica on the same date along with picking up 18.5% stakes in the beauty brand Earth Rhythm for $5.45 mn. It previously acquired the Kolkata-based skincare brand, Dot & Key on October 22, 2021.

Growth

• Nykaa currently boasts of having over 17 million monthly active users and processes 1.5+ mn orders. Here's taking a look at some more growth highlights of the brand, as of October 2021:
  • Nykaa claims to have over 15 million registered users.
  • It has 70+ stores across India.
  • The company boasts of offering over 4000 brands.
  • Nykaa is packed with over 3.1 million SKUs that can be accessed from its website, through its app, or at its stores.
• Nykaa has seen its tough days during the lockdown as a result of the outbreak of the coronavirus pandemic when the company witnessed a fall of up to 70% of its sales in April 2020. However, the company was swift in its reactions and listed all the essential items effectively to keep them in stock and removed all the other non-deliverable inventory. Immediately afterward, the company started advancing its physical stores by leveraging the facility of its hyperlocal delivery.
• Nykaa recovered fast from the ill effects of the COVD-19 pandemic and had already recovered by more than 90% from what it was during the pandemic outbreak towards the end of 2020.
• The unicorn cosmetics and beauty products brand has witnessed a major shift of the consumers towards the essential categories, including personal skin and hair care items, and this is what helped it beef up faster than its rivals after the coronavirus onslaught. Furthermore, the company's shift from an online model to an omnichannel retail model also contributed a major hand to the same. All of these not only changed the customers' perception of the brand but also helped Nykaa gain audiences, whom it did not or perhaps could not target earlier.
• The company also launched Nykd, an intimate wear brand, as soon as it began to shake off the pandemic effects in October 2020.
• Falguni Nayar, the CEO of Nykaa has announced that the platform has clocked a surge both in its sales and profitability. This is why it has successfully launched its IPO on October 28, 2021, where the band will be fixed at INR 1,085-1,125 per share. The company had sought a valuation of $7.4 billion for its upcoming IPO round. Nykaa was already turned into a public company limited by shares on July 16, 2021, and had filed it's Draft Red Herring Prospectus (DRHP) back in August 2021.
• Nykaa had a dream debut in its IPO where the market cap of the company crossed Rs 1 lakh crore. The company has recorded its shares 81.78 times oversubscribed, at the end of the IPO round on November 1, 2021. The valuation of Nykaa surged almost to $13 billion in its Indian market debut.
• Nykaa's parent FSN E-Commerce, witnessed a record rising in its share values on the stock market on November 10, 2021, which resulted in 96% returns on the investments of the company's investors. FSN E-Commerce's shares, the issue price of which were INR 1,125, closed at INR 2,206.70 per share, 96.15% higher on the BSE. On the other hand, they closed at 96.26% higher than the listing price at INR 2,018 apiece. The net worth of Falguni Nayar, Nykaa CEO, rose to $6.5 Bn after the record listing of the brand, as per Bloomberg Billionaires Index.
• Nykaa parent FSN E-Commerce Ventures Ltd. reported a sharp, 96% fall in its profits, which resulted in the decline of its share prices on November 15, 2021. The fall in the company's profits is traced to the surge in its marketing costs in the quarter before its initial public offering. The net income of the company in the quarter that ended in September, was recorded at Rs 1.2 crore, which was Rs 27 crore in the previous year. It was noted that the 92% increase in the expenses helped the company witness around 47% gain in its revenues. The shares of the company decreased by 5.2% on 16th November, which saw a decline of close to 7.3% at an earlier trade.

Future Plans

The company is aiming to expand its offline business. It wants to expand its offline evidence by opening 180 stores all over India by 2024.