Detailed Case study on Nykaa Business Model:

 

If you are a girl or have a girlfriend who loves makeup then you would have heard of Nykaa.

Have you wondered how Business Model of Nykaa formed?

How do you get such high discounts on Nykaa?

Do you know about the mind behind creating your favorite E-Commerce Store?

We have got all covered for you.

Nykaa’s business is an E-commerce website and a multi-brand retailer.

It offers beauty and wellness products for men and women.

After reading this detailed Nykaa Case study, you’ll be clear about the business model of Nykaa, marketing strategy, swot analysis.

 

nykaa-products

 

It deals in high- end products from brands like MAC, Lakme, etc.

 

The value of these products is high.

 

It implies that the value of the commission is also high. 

 

I have heard from many people that cosmetic products have a high margin.

 

Nykaa with their website has taken it to a different level. .

 

Nykaa ships in the entire country to almost every zip code.

 

They use the services of leading courier companies like E-com Express, Delivery, etc.

 

Today, Nykaa sells more than 35,000 products from 650 brands.

 

nykaa-business-model-case-study

 

The products of Nykaa include both international and Indian, luxury and mass.

 

They are constantly adding new labels to its stock.

 

nykaa-products-sold-so-far

 

Nykaa Business Model | How Nykaa Earns? | Case Study: (with Subtitles) 

 

 

 

What’s in for you?

 

A) The woman behind NYKAA- Falguni Nayar

B) Story of NYKAA

C) Team

D) Nykaa Business Model

E) Nykaa Marketing Strategy 

F) Nykaa Competitors

F) Problems Faced in Early Stages

G) Advantages/ USP of Ecommerce Platform: Nykaa

H) Expansion of Nykaa’s Business

I) Financial Statistics

F) Fascinating Facts about Nykaa

 

 

 

The woman behind Business Model of Nykaa- Falguni Nayar

 

Falguni Nayar is known as a beauty entrepreneur.

She led a revolution in the market of beauty and wellness products.

 

falguni nayar-founder-of-nykaa

 

She was born and raised in Mumbai.

 

Falguni Nayar is a graduate of the Indian Institute of Ahmedabad.

 

She took a job as a management consultant after completing her degree of MBA in Finance.

 

Her husband whom she met at business school, took a job in finance.

He is now a CEO of KKR India.

 

 

Story Of Nykaa’s Business

 

Nykaa a private company was founded by Falguni Nayar in 2012.

 

how-nykaa-was-founded

 

After Falguni left Kotak Mahindra, she started seeking opportunities to become an entrepreneur.

 

Falguni Nayar got the idea of starting Nykaa when she once walked into a Sephora store.

She was amazed by the variety of brands available at the store.

 

She bought products worth hundreds of dollars. 

 

The sales associates showed her the best way to use them.

 

They recommended her best beauty products without any bias.

 

She felt that there is a dearth of multi-brand chains in India in beauty and wellness.

 

At the age of 50, Nayar gave up her stellar career at Kotak Mahindra and turned into an entrepreneur.

That’s how Nykaa Business Model was formed. 🙂 

Her story at Film Companion: 

 

 

Team

 

Founder- Falguni Nayar

 

Nihir Parikh – Chief Business Officer for the E-commerce Business

 

Sanjay Suri – Chief Technology Officer.

 

Sachin Parikh – Chief Financial Officer.

 

Madhavi Irani – Chief Content Officer.

 

Hitesh Malhotra – Chief Marketing Officer.

 

Manoj Jaiswal – Chief Supply Chain Officer.

 

nykaa-team-members

 

Nykaa Business Model(Analysis): 

 

Nykaa is one of the rare companies which follow an Inventory based E-commerce model.

 

Inventory Model:

 

The company stores the stock of goods purchased directly from manufacturers.

 

They store the products in their warehouses.

 

Nykaa’s business has warehouses in New Delhi, Mumbai and Bangalore.

 

The products are sold directly from there.

 

In this, the profit margin is high. 

 

The responsibility of any damage lies with the company.

 

They achieved their breakeven after 5 years of operations.

 

Initially, the cost to acquire a customer was Rs. 1000 which has now reduced to Rs.200-300.

 

Nykaa has its offline presence in 35 stores.

 

Nykaa has two store formats – Nykaa Luxe and Nykaa On-Trend.

 

 

The Luxe format features luxury beauty brands.

 

The On-Trend format features curated products by category based on their popularity. 

 

Nykaa’s target audience is in the 22-35 age groups.

 

As I discussed earlier,

 

The company achieved a break-even point in 2017.

After which what it received was profit.

 

Last year, the revenues accounted for 214 crores which now has increased to 570 crores.

 

The company decided not to launch their IPO until profits reach 200 crores.

 

The company is still a private company.

 

The costs include the salaries paid to employees, maintenance costs and the marketing costs.

 

Nykaa Marketing Strategy:

 

They use online advertising to promote their products.

 

Nykaa collaborated with Femina to host the ‘Nykaa.com Femina Beauty Awards’ in 2015 and 2016.

 

 

The award function was organized to highlight the best products in different categories in the Indian market.

 

They provide easy shopping experience, the virtual makeover tool, beauty advice, tutorials and celebrity looks.

 

NYKAA uses digital marketing as a means to market their website. 

 

The average cart size of NYKAA is worth Rs.1250- Rs.1550.

 

Their monthly traffic on the website is about 17 million.

 

nykaa-website-traffic-organic-reach-and-paid-search

 

50% of customers are routine customers.

 

The rest have to be attracted through online advertising and social media marketing.

 

“Our average ticket size is high, and we have four items in a cart on an average.”, Falguni says.

 

Recently Janhvi Kapoor became the first brand ambassador of Nykaa business under Nykaa cosmetics.

 

It was done to attract a young audience towards their products.

 

Janhvi appears in print, digital and electronic advertisements.

 

She also plays an active role in social media campaigns through her Instagram handle.

 

 

 

 

Nykaa Competitors:

 

purplle-nykaa-competitor

Purplle.com

Purplle is an online store which sells cosmetics, fragrances, skin and hair care products. It is based in Mumbai.

 

 

truggo-nykaa-competitor

 Truggo

Truggo is an online platform that helps users to book an appointment in salons and spa.

 

 

It allows the users to bid an amount that they are comfortable to pay for the services.

 

 

Problems faced in the early stages by Nykaa: 

 

In the early stages, they faced problems in collaborating with big brands.

 

Reason-

The brands were not convinced with the idea of putting their exclusive products at the same place where low-cost products are also available.

 

They felt that it can ruin their brand value.                                                                                                                                                                                                            

 

Advantage/ USP of E-commerce Platform: Nykaa 

 

They purchase directly from the brands.

 

This helps in getting high commission over the products.

 

They do not provide discounts themselves.

 

The brands give discounts which do not reduce their commission.

 

nykaa-fast-service-fast-delivery

Fast deliveries are an advantage as women rather than going to offline stores prefer online.

 

The reason is it is cheaper and saves the time of going to the market.

 

Expansion Of Nykaa’s Business

 

Nykaa expanded its business by launching its product line, Nykaa cosmetics in 2015.

 

This implies that the entire profit will solely be earned by the company.

 

 In March 2016, Nykaa introduced private labeled products in the bath and body care category.

 

 To capitalize on the growing interest among male consumers towards grooming and personal hygiene, Nykaa launched NykaaMan.com

 

nykaa-man-new-label

 

It is India’s first multi-brand e-commerce store dedicated to men’s grooming.

 

It was launched in July last year.

 

NykaaMan.com offers products in categories like shaving, haircare, grooming kits and sports nutrition with exclusive brands.

 

For example- The Shave Doctor, Clinique for Men and Beardo are only available in India with NykaaMan.

 

For women, Nykaa business Model brought brands like MAC, Estee Lauder to their platform.

 

This made them the first company to do so.

 

At present, it sells over 850 brands across makeup, skincare, and hair care and wellness categories.

 

nykaa-acquired-20-dresses

Nykaa’s business recently acquired the company, 20 Dresses.

 

Logo of 20Dresses
20Dresses
Mar 22, 2019
Logo of 20Dresses acquired by Nykaa
20Dresses acquired by Nykaa

 

Nykaa aims to increase their offline footprint to 180-200 Nykaa stores in the next 4-5 years.

 

Financial Statistics

 

Nykaa’s business requires a huge amount of money to fund their projects.

 

Nykaa has raised a total of $107.9 M in the funding of over 8 rounds. 

 

 

The latest funding was raised on April 1, 2019, in a Series E round. 

 

Nykaa’s business had raised $9.5 million from TVS Capital in 2015.

 

It was followed by raising Rs 82 crore from Sunil Munjal and the Mariwala family last year.

 

NYKAA was founded by 10 investors.

 

TPG Growth and Light House Funds are the recent investors.

 

 

Investor Name 
 
 
 
Lead Investor 
 
 
 
Funding Round 
 
 
 
Partners 
 
 
Logo of TPG Growth
TPG Growth
Yes
 
Series E – Nykaa
 
Lighthouse Funds
Yes
 
Secondary Market – Nykaa
Sean Sovak
 
TVS Capital Funds
 
Secondary Market – Nykaa
 
Harsh Mariwala
 
Series D – Nykaa
 
Sunil Kant Munjal
 
Series D – Nykaa
 
Dalip Pathak
 
Series D – Nykaa
 
Dalip Pathak
 
Series D – Nykaa
 
Sunil Munjal
 
Series D – Nykaa
 
Michael Carlos
 
Series D – Nykaa
 
Sunil Munjal
Yes
 
Series C – Nykaa
 
 
 

 

Fascinating Facts About Nykaa:

 

The first order ever placed on Nykaa was on October 24, 2012, on the auspicious occasion of Dussehra.

 

First two products –

loreal paris-nykaa-first-product

1. L’Oreal Paris Color Riche Intense Lipstick (Burning Rose)

 

 

maybelline-nykaa-business-model

 

2. Maybelline New York Express Finish Nail Color (Pearly Pink). Maybelline – The Colossal Kajal is the top selling product on Nykaa.

 

Nykaa has 17,961 pieces sold to date

 

 

50,710 Kajals and 1,25,000  Lipsticks sold since launch.

 

21,252 Pin codes serviced by Nykaa’s business

 

1,78,659 Customers shopped with Nykaa’s business to date.

 

nykaa-products-sold-so-far

 

Nykaa supports the Nanhi Kali Foundation as part of Corporate Social Responsibility.

 

 Nykaa has won the award of most innovative E-Commerce Company.

 

Nykaa Website Audit: Lapaas $150 SEO Audit Tool 

 

lapaas-free-seo-audit

Updated on 24/06/2019

 

 

 

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