The splendor ecommerce startup has recently accelerated unexpectedly inside the offline marketplace
Nykaa CEO Anchit Nayar said the organization has reached the breakeven point with INR 1229 Cr revenue in FY 19
Will Nykaa control to combat off the omnichannel competition from Flipkart, Amazon and Reliance?
Every week, we carry in-depth tales of Indian Soonicorns which are approximately to enter the a whole lot-celebrated Unicorn Club. The series showcases their scaling up & boom journeys, learnings, challenges and the way they are going about the destiny as they enter the unicorn membership.
To celebrate India’s growing startups, CFT is profiling a new soonicorn each Friday in the CFT UpNext: Unicorns Of Tomorrow collection. For the following few months, we can be speaking to founders and cofounders at these ability unicorns and shining light on their journeys and increase memories. This week, we are presenting the beauty ecommerce startup Nykaa.
Which beauty logo do style clothier Masaba Gupta, Bollywood actress Katrina Kaif, and twiglet Gigi Hadid (of Victoria’s Secret reputation) turn to in India? Forget the massive cosmetic manufacturers which are probably shuffling thru the mind’s eye — it’s truely Nykaa.
Nykaa desires little introduction in the Indian context. Nearly everyone who has shopped online is familiar with the emblem. And it’s come to be synonymous with splendor buying inside the us of a.
Claiming a 75% retention price these days and with over one thousand emblem collaborations, the seven-year old startup isn't only the most excellent vacation spot for beauty and well-being products in India, however it’s additionally managed to enter the ultra-aggressive, long-tail retail area.
When Nykaa released in 2012, the online splendor space had more than one players including Urbantouch and Purplle. Urbantouch was shuttered in March 2013 after being acquired by FashionAndYou. And whilst Purplle continues to be round Nykaa has a far higher brand consider within the beauty vertical.
Speaking to CFT in 2017, founder Falguni Nayar said, “The aim changed into always to begin in a sunrise enterprise, nascent and geared up for a marketplace leader. The beauty enterprise in India has usually been fragmented, be it on-line or offline.”
While it has made its call on line, Nykaa is looking to interrupt through into the coveted ecommerce unicorn membership with its method for the offline market. But how did the corporation get there and how is it charting a course for the next level?
For CEO (retail) Anchit Nayar, the robust consumer trust and emblem consider are Nykaa’s largest strengths. Anchit, son of Nykaa founder Falguni Nayar, has been leading the company’s omnichannel efforts.
He informed CFT that the Nykaa’s stock-led commercial enterprise model lets in it to make sure authenticity of products and aggressive pricing. The different thing he said is the organization’s capability to create a hook up with its clients thru relatable social media content.
“This isn't like Kareena Kapoor selling kajal or Aishwarya Rai selling a shampoo, these are 23-25 years vintage girls who look and speak like the patron in preference to speakme from a pedestal.”
Nykaa stands out from different ecommerce gamers because of its inventory model. Products are bought from brands and distributors, and then bought directly to the customers. Unlike a market model, wherein 1/3 celebration dealers list merchandise, Nykaa has a more potent hold on what it sells, which arrests counterfeit merchandise from making it to the platform.
Like Nayar stated, content is also considered one of Nykaa’s strengths, and by this he became hinting at the virtual content material on social media and YouTube. Nykaa runs these channels through an in-residence group of around 20 women called the Nykaa Army. Essentially, those are beauty fans and assist add the relatable, female-subsequent-door vibe which Nykaa’s customers have lapped up — Nykaa has a social media following of over five Mn users.
These factors couple along with the employer’s 150-strong customer support team and a shipping community across 70K pincodes in India, have constructed Nykaa’s logo reputation, Nayar said. And the next step is to copy this believe within the offline marketplace.
Nykaa: Living In An Omnichannel World
This month, Nykaa announced the hole of its 55th offline keep in Raipur, Chattisgarh. Since the release of Nykaa’s first offline store in Delhi, the business enterprise has expanded its presence to over 20 Indian towns inclusive of Bengaluru, Jalandhar, Ludhiana, and Bhubaneswar amongst others.
“We have taken the call to be an omnichannel retailer due to the fact beauty is a category where physical trial is important. We realised that if we want to sell top rate merchandise or maybe affordable merchandise in categories like blush and foundations, shade matching may be very essential. So we realised that as a way to supply our customers a truely holistic beauty enjoy, we needed to construct a bodily retail distribution,” said Nayar.
Nykaa has stores in three formats — Luxe, On Trend and Kiosks. While Nykaa On Trend products are confined to trending and fashionable manufacturers, Nykaa Luxe stores feature extra premium and luxury brands together with Estee Lauder, Dior, Huda Beauty, and M.A.C Cosmetics amongst others. Besides ladies splendor, Nykaa also has more than a few grooming products for men on the Nykaa Man website and app and an internet community for splendor enthusiasts Nykaa Network.
The primary difference inside the offline retail enjoy and the ecommerce channel is the goods which might be stocked. While Nykaa.Com can easily listing loads of thousands of products, the shops get a curated selection of forty-50 brands mainly selected for the location, city and outlet. These additionally include manufacturers that Nykaa believes customers will need to try earlier than buying.
Given this smaller selection and the fact that Nykaa is commonly an online logo, the cut up between on line and offline orders is skewed towards the former. Ecommerce debts for 85% of the commercial enterprise, but that doesn’t inform you the entire story. Nayar said while in comparison on the basis of brands which are available each on line and offline, the revenue proportion is cut up down the center at 50%. That’s an encouraging signal for Nykaa because it expands its retail footprint.
But offline retail is not pretty much experiencing merchandise — Nayar stated the stores help customers discover new manufacturers and additionally seek advice from the in-store beauty advisors. Another perception that Nykaa drew is that for merchandise that require software education the primary time or for manufacturers or SKUs which might be new to the market, clients normally make the primary purchase offline and later top off the product thru on-line orders.
“That’s the power of an omnichannel business. Customers can buy something from our shop after which they don’t should come back to buy it once more. We are giving them the benefit and preference to buy from wherever they need,” he introduced.
The Future Of Nykaa: Competing With Giants
Nayar claimed that none of Nykaa’s competitors presently suit this omnichannel enjoy in the beauty area. But there may be surely competition brewing within the horizon.
Flipkart-owned Myntra too has been investing closer to an omnichannel version and changed into stated to be planning multi-emblem beauty merchandise shops in Bengaluru.
Global ecommerce giant, Amazon had also hinted towards a ability omnichannel play, with its recent acquisition of a forty nine% stake in Kishore Biyani’s Future Coupons, the promoter entity of India’s 2d-largest retail chain Future Retail. Further, Mukesh Ambani-led Reliance Jio additionally introduced the pilot launch of its omnichannel and hybrid ecommerce venture.
In the online space, Nykaa has a new competitor within the shape of Grofers-subsidized Orange Something, that's controlling production of beauty merchandise and selling directly to purchasers. But Nykaa has one key advantage.
Nayar stated that the company has reached the breakeven factor and is capable of fund its expansion plans via the coins glide generated from the prevailing enterprise itself.
Nykaa has raised a total of $ninety three.02 Mn in funding from investors along with TVS Capital Funds, TPG Growth, and Lighthouse India amongst others. That’s a pretty small investment quantity for a business enterprise that’s on course to turn out to be a unicorn.
Grossing INR 1229 Cr in FY19, Nykaa objectives to retain investing within the omnichannel business and has plans to open up to a hundred shops in the next to 3 years. New towns being targeted below these expansions include much less popular locations which include Jammu and Bareilly among other Tier three and four towns. Is that a danger and is Nykaa increasing too quick?
“We have 16 Mn visitors on our internet site, travelling fifty five Mn times a month. So there’s now not simply a risk for us right here, due to the fact we already know which towns have extra density of our customers,” he introduced.
Beauty And The Tech
But past splendor, Nykaa is entering into a bigger vertical — fashion. Nayar known as Nykaa Fashion a natural progression of the Nykaa emblem. Today, it has over 350 Indian and global brands across highstreet, dressmaker labels and add-ons. “Fashion is a miles larger market than cosmetics. For each single girl who buys a beauty product on-line, there are ten who purchase style products,” he brought.
Fashion, however, isn't the major recognition for the organization. According to Nayar, style is in reality a part of the Nykaa’s destiny plans but the agency will do it in a sustainable way and if works outstanding, agency will maintain building it or in any other case take a call on it.
“We want to transport far from the discounted product promoting point of ecommerce platforms and alternatively deliver girls very stylish and fashionable apparel at a reasonable charge. So it’s no longer going to be approximately filter by price, or clear out by way of reductions however ‘filter by way of fashion’.”
Responding to movements such as Reliance’s plans to add virtual fact and augmented truth answers in stores, Nayar said that Nykaa is mainly a tech enterprise and the whole lot it does must be on the reducing fringe of generation. He said clients can assume a few adjustments to the website and the app within the next couple of months. At the instant, it’s operating to locate the right associate who can add price to customers through such generation.
“We are talking to some partners about AR/VR tools. But we're very focussed that it’s all about the purchaser and not approximately ourselves. Retailer simply use it because they need to mention ‘Look, we are the use of it.’ We have visible quite a few gimmicky AR/VR equipment obtainable which don’t in reality help the clients, it doesn’t virtually add cost.”