Nykaa’s Success Story | Startup to IP
Nykaa has recently become a household name across the country following the launch of its initial public offering (IPO). It has received an overwhelming response, propelling its founder Falguni Nayar into India's elite group of self-made billionaire women, with her net worth rising to $6.5 billion following Nykaa's record listing, according to Bloomberg Billionaires Index.
Despite the fact that beauty is subjective, the global beauty business has never lost its allure. Along with its steady expansion, the business has amassed a lengthy list of devoted clients. Who doesn't enjoy applying makeup?
But we've come a long way from the days when consumers had to go to a cosmetic store in person. Why should brick-and-mortar businesses be the sole choice when there are now online cosmetics stores that allow clients to order things at any time and from anywhere?
Do you know what the Lipstick Effect is? We encountered it last year during the pandemic. It indicates that during recessions, economic downturns, or when consumers have very little cash on hand, they continue to spend their money on low-budget luxury, and sometimes even increase their spending. People took consolation in their personal care during Covid, for example, resulting in a boom in the skincare and beauty sector.
The beauty and personal care sector firms benefited directly from the pandemic-induced demand boom, so did Nykaa, one of India's largest beauty manufacturers? The firm operates India's largest omnichannel beauty destination.
About Nykaa
Nykaa is an Indian cosmetics company that specializes in multi-beauty and personal care items. It started off as a solo e-commerce platform before expanding into a variety of retail locations around the country.
For both women and men, the company specializes in providing a broad variety of cosmetics, skincare, haircare, perfumes, bath & body, luxury, and wellness items. The portal, which claims to attract more than 1.5 million visitors every month from across India, permits adequately prepared and priced branded items.
“We have taken the call to be an omnichannel retailer because beauty is a category where physical trial is critical. We realised that if we want to sell premium products or even affordable products in categories like blush and foundations, colour matching is very important. So we realised that in order to give our customers a really holistic beauty experience, we had to build a physical retail distribution,”
- Falguni Nayar, Founder and CEO of Nykaa
Nykaa now offers three types of stores: Luxe, On Trend, and Kiosks. Nykaa's Luxe shops contain more premium and luxury brands like as Dior, Huda Beauty, and M.A.C Cosmetics, among others. Whereas Nykaa On Trend goods are limited to trendy and stylish names.
Aside from women's beauty, the Nykaa Man website and app, as well as Nykaa Network, an online community for beauty aficionados, provide a variety of grooming products for males. For the time being, the corporation is a staunch believer in staying in the vertical market.
Who is Falguni Nayar?
Falguni Nayar, an MBA graduate from IIM Ahmedabad, began working in investment banking at Kotak Mahindra immediately after graduation. She was promoted to Managing Director of the same bank division in 2005.
Ms. Nayar worked for Kotak Mahindra for nearly 18 years, during which time she decided to branch out from banking and try her hand at other fields.
Falguni Nayar saw the untapped potential of the internet beauty industry. Since there was a lack of accessible online brands and things that people could trust and purchase with confidence at the time, she recognized an opportunity for Nykaa.
She wanted to change Indian women's perceptions about personal grooming since she was enthusiastic about cosmetics and beauty products. She founded Nykaa in 2012 with the goal of creating something unique to her.
Nykaa’s inception story
Falguni Nayar was looking for a promising business opportunity in India when she discovered an inconsistency in the beauty items market in India, which wasn't up to par with the product's scope in other countries such as France or Japan, despite high demand, owing to a lack of product availability in many places. As a result, she and her husband, Sanjay Nayar, founded Nykaa. Starting off as an online business, the platform evolved into an omnichannel platform over time.
Nykaa's Business Model
Nykaa's inventory methodology is essentially what distinguishes it from its competitors. The items are obtained through brands and distributors and then sold directly to customers under this arrangement. This is in contrast to a marketplace approach, in which third-party vendors offer the items. Nykaa will be able to keep a tighter grip on its products as a result of this, reducing the chances of forged things making their way onto the platform.
Aside from that, exclusive partnerships with large brands in beauty and fashion, the establishment of private labels across categories, and having a physical presence have all helped it stand out in a crowded e-commerce market where shoppers are typically skeptical of vendors and seeking the best bargain.
“In the midst of this unprecedented global crisis, we are working to ensure all our stakeholders are well served and that Nykaa emerges as a leading retail player in the industry,”
- Falguni Nayar to Mint
Nykaa's Marketing Strategy
The most important aspect is to promote companies and products across different platforms, including social media, websites, and blog pages. It uses digital marketing to reach customers in all parts of the country. Over the previous several years, the firm has teamed with Femina to host Femina Miss India in order to directly target the relevant audience.
Its capacity to provide relevant, interesting, and relatable material for its audience is another key to its success. The goal is to connect with beauty lovers via their YouTube and Instagram accounts. The company's ability to establish itself as a respectable voice in beauty and, increasingly, fashion discussions on social media.
Growth over the years
Nykaa's platform has come a long way since its inception in 2012. It currently plays an important part in the advancement of the beauty industry.
It began with internet activities before branching out into physical locations. The firm now has 76 physical locations. Previously, it was solely active in the female market. The firm now offers over 300 brands in its women's, men's, and children's apparel sections.
The transition from online to hybrid mode has had a huge influence on how the brand is seen by its target audience. It has also allowed the brand to reach out to a hitherto untapped market. It highlights the company's attempts to engage a diverse spectrum of consumers.
The company moved quickly enough to establish itself as a provider of critical personal care items to a big consumer base. They went from a hybrid to a pure-play online mode over night. The 70+ physical locations provided hyperlocal delivery across the country. They also developed a category concentrating on hand sanitizers, PPE Kits, thermometers, and other vital hygiene items to accommodate the growing demand.
During the pandemic, the company was able to reclaim its 93 percent business volume in mid-June.
The firm also mentioned that they are expanding into the home essentials and travel care segments in order to increase their product scope. Under the Nykaa brand, the firm entered the intimate apparel area under its fashion label.
Nykaa's Funding
Nykaa's parent firm, FSN E-Commerce Ventures Ltd, said on October 27th, 2021 that it had raised roughly Rs 2,396 crore from anchor investors prior to its IPO.
Fidelity Management & Research Company has previously invested an unknown sum in the platform in late November 2020.
In early April of 2020, the platform received a new $13 million fundraising round from previous investor Steadview Capital, cementing its status as a unicorn. Steadview Capital, TPG Growth, and Lighthouse Funds are among the platform's top investors.
Bollywood actresses Katrina Kaif and Alia Bhatt also acquired a little sum in the firm through a secondary method. The corporation claims that its value has surged by more than 60 times in the previous eight years.
Click here to learn more about the stages of startup funding
Nykaa's IPO
The platform's initial public offering (IPO) was open for subscription from October 28 to November 1. With a price range of Rs 1,085-1,125 per share. Nykaa's initial public offering (IPO) was oversubscribed by 81.78 times the 2.64 crore shares available.
Investors reacted positively to Nykaa's initial public offering (IPO) when it was made available for subscription. The platform was launched on the BSE and NSE on November 10 and entered the 1 lakh crore market capitalization club when its stocks closed at 2,206.70, nearly double the issue price, valuing the beauty firm at about $14 billion.
Conclusion
Through its brick-and-mortar locations, the firm plans to develop further in the offline mode. By 2024, it intends to open more than 180 outlets. This will aid the company's sales and revenue growth.
Nykaa might be described as the Amazon of the beauty business. This platform has played a key role in eliminating the myth that e-commerce and beauty retail don't function in India.
