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What makes Nykaa Unique? What is the Reason Behind the Success of India’s first Unicorn Beauty E-Commerce Startup? Nykaa’s story is a Case Study in Innovation, leveraging its 360 degrees in marketing strategy.
In the beauty and cosmetic industry of over 1.3 lakh+ products and 1500+ brands, clutter is hard to break. Getting noticed and creating a profitable beauty brand is often years of time, money, and investment.
The Indian beauty industry is a significantly expanding market. This expansion went hand in hand with an increase in the per capita spending on beauty and personal care products. Despite its potential in the ever-growing e-commerce industry, the beauty market accounted for only a marginal share of online sales.
This was the scenario, till Nykaa.com emerged and revolutionized the beauty e-commerce business. It created a storm in the Indian beauty markets making all makeup, beauty, and skincare brands available under one online shop – Nykaa.com.
It became the only Indian beauty startup to attain Unicorn status in less than 8 years with the latest round of funding from Steadview Capital. The Indian online marketplace Nykaa experienced exponential growth since 2017. Starting with a revenue of only a little more than two billion Indian rupees, the yearly revenue amounted to 18.6 billion rupees in the fiscal year 2020. CAGR of 105%, wow!!
So, you may be wondering, what’s so special about an aggregator website that sells beauty products? A lot went behind the super success of Nykaa, read on below.
How did Nykaa start?
Once Falguni Nayar walked into a Sephora store abroad and was amazed to see the variety of beauty products available under one roof. To top it all off, there were trusted beauty advisors and consultants all around to guide on customer needs. There were free trials, makeovers, and a lot of talk on the beauty all around the store. It was a woman’s paradise, in short!
Indian women didn’t have access to this kind of beauty product variety, advice, and unbiased guidance. Makeup buying meant going to the local drug store or the cosmetics shop where the staff was barely trained. Even if they were, they would be pitching products from one particular brand, that they represented. The higher-end brands would often be nested in malls and hi-street retail markets, offering little choice to the consumer. Falguni saw an opportunity.
She quit her senior leadership role at Kotak Mahindra and founded Nykaa at the age of 50 in 2012. The rest of course is history.
The company hit the break-even point in 2017 and has been growing YoY in profits since then. There has been no looking back.
Marketing Strategy- Making Nykaa Unique
Sheer Variety and Top International Brands
Nykaa houses the largest collection of beauty brands in India with over 1300+ brands. The sheer complexity of maintaining lakhs of products with new releases and discontinued versions is a story for another day.
Nykaa didn’t only house the top Indian brands, but since 2018 they have been bringing the best of international brands to India.
In fact, some of the best Instagram beauty trend products have been launched on Nykaa and are exclusively available on their website and app. Popular international brands like Huda Beauty, Glam Glow, MAC, K-Brands, and even Farsali’s Unicorn Tears are on Nykaa first.
Nykaa also houses its own makeup and skin products line on the website which is priced well and is a big hit.
A Promise of Authenticity and Quality
Over the years, Nykaa has become synonymous with buying makeup online. Their popular sales including the Big Nykaa Sale offer great deals on beauty products that are not available offline under one roof.
They have carved a unique niche for themselves and the biggest one is a promise of Authenticity. Nykaa stamps each product with an authenticity stamp and has helped put the fear of buying duplicate or counterfeit products to rest.
It is a big reality of the beauty industry where cheap fakes of popular brands find their way into stores. Expired and fake products can cause much more harm in this industry, often causing high damage. Nykaa has been able to build a strong reputation with fantastic quality control. Even the product expiry is mentioned on the website and app.
Nykaa’s Innovative Business Model
To manage so many products and deliver them across India, requires impeccable logistics. Nykaa has the inventory model strategy and believes in being the customer first.
They themselves stock all brands and products in their warehouses across India and ship them directly to consumers. This e-commerce model helps them control last-mile delivery and conduct quality checks, storing products in a safe environment.
Try and Buy Product Strategy
Nykaa’s minis became an instant hit with the Indian audience. What these minis provided were small-sized trial packs of larger-sized beauty products.
What this gave was an opportunity for the value-conscious Indian consumer to try out smaller quantities of an expensive beauty product. It not only lets the Indian female with average income access brands well out of reach at a comfortable price point but also ensured that she invested in the product after trying it out.
A Strong Digital, Content, and Influencer Marketing Strategy of Nykaa
They leveraged digital to reach out to their target consumer in the age group of 18-35 years. Nykaa’s blog content and detailed reviews section allow women to discover more about a product than what’s on the label.
A large part of the beauty industry involves product education, correct usage, and custom application for accentuating beauty. They leveraged top beauty influencers to create digital content explaining how to use beauty products and also partnered with many top brands for this. It’s run under Nykaa TV now. Janhvi Kapoor is Nykaa’s own brand ambassador as of now and promotes it across print, electronic and digital media.
What’s Next on the Beauti-ful Road to Success?
While there’s a lot that can be credited to the success of Nykaa, the best part is that they have been quick to adapt to trends. The beauty industry rests heavily today on Instagram influencers, millennials, and the latest trends. Staying updated has become part of their DNA.
They are one of the few brands that expanded successfully into offline retail and have a network of over 70+ stores in India. They plan to open 180 more stores in the next 5 years. Add to this the launch of Nykaa Luxe (premium brands) and Nykaa Fashion (apparel and accessories), they are well on their way to becoming the Amazon of the beauty industry.
Nykaa was valued at more than 100 billion Indian rupees as of March 2020, up from about 50 billion rupees in 2019 The Indian BPC market has been forecast to have a value of 23 billion U.S. dollars by 2022.
Nykaa went public in Nov’21 and the stock started trading at a premium of over 82% at Rs.2,054 per share on the NSE as compared to its IPO issue price of Rs. 1,125 apiece. Its market capitalization crossed ₹1 lakh crore in early deals. The stock closed over 10% higher at Rs.2,208 per share on its first day on the BSE. Unfortunately the stock has failed to show any return for initial investors.
Nykaa said it plans to use the proceeds from the IPO for expansion, by setting up new retail stores and establishing new warehouses. The e-commerce beauty giant also plans to retire some of its debt, which should bring down interest costs, and further shore up its profitability.
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