It is a tough call for a person to quit a high-shot Job at the age of 50 and then start a business from scratch. Well, had it been easy, there would not have been extraordinary stories like Falguni Nayar’s who bid adieu to her well-established 19 yearlong stellar careers at Kotak, only to give birth to her entrepreneurship dream, Nykaa.
An IIM Ahmedabad alumnus, Falguni Nayar had some spare time on her hands, after her children (twins Anchit and Adwaita) left for their studies to the US. While the idea and the dream to be an entrepreneur lived inside her, Nykaa happened at this moment.
She observed the e-commerce market and the potential of its growth in India. The choice of the beauty segment came both from her love for make-up and the potential online market waiting for someone to come up with such a platform.
Nykaa Business Model
Bridging the gap and changing the way women shop, Nykaa has curated more than 850 brands and 35,000 products in its catalogue. The company also has its presence in many cities with 17 stores across India. There are two store formats – Nykaa Luxe and Nykaa On Trend. Luxe has Indian and international beauty brands along with Nykaa Beauty, the in-house beauty products collection, and On Trend is a collection of popular market products.
The young yet super successful online beauty company has a target audience in the age group of 22 – 35 and has also launched private labeled products in the bath and body care category recently. Nykaa competes with online marketplaces like Myntra, Purplle, Flipkart, and Amazon.
Working on an inventory-based model, Nykaa has warehouses in Mumbai, New Delhi, and Bangalore, and offers all the leading brands including Kaya Skin Clinic, Lakmé, L’Oréal Paris and more.
How Nykaa Became a Brand? – The Private Label Path
One of the compelling reasons for Nykaa to succeed and be profitable is the fact that they have a strong base in terms of their private label. Only private labels could help Nykaa compete against other vertical players like Myntra and horizontals like Amazon. “There is no advantage as an early beginner (in the beauty industry). About a 15 to 20 percent margin is what you get in online beauty retail, and that is not enough online – it ends up in cash burn,” says Arvind Singhal, Chairman of Technopak Advisors.
Private labels help Nykaa offer discounted prices, as brands do not often do that as they need to follow the minimum operational price. Falguni says that the private label is a global trend now – all retailers do it now for improving consolidated margins and profitability.
Nykaa Growth Strategy – Growing fast and at a Sustainable Path
Nykaa has grown strength to strength over the years; they have always focused on customer needs and worked closely with its brands to achieve the desired results. A recent Google and Bain & Co. report estimates the Indian beauty and hygiene industry will be worth US$17 billion by 2020, with 20 percent of that coming from online sales.
Expanding its offerings, Nykaa last year launched Nykaa Network, an interactive beauty forum where subscribers could chat with each other. It also launched the Nykaa Design Studio for apparel in designer and premium brands like Ritu Kumar and Masaba in 2018. Around the same time, Nykaa also launched NykaaMan, an e-commerce platform for men’s personal care products in hair care, skin care, wellness, and sports nutrition, among others. It recently acquired members-only platform 20Dresses.com for an undisclosed amount in a move to further growth.