Nykaa: Looking right within the splendor enterprise

Cleopatra is stated to have slept in a mask of gold; young Japanese ladies sure their feet to maintain them fashionably small; and 18th-century European girls tightly laced their corsets for that perfect hourglass look. Today too, girls (and increasingly men) visit extraordinary lengths and incur high prices inside the pursuit of splendor. Ask Falguni Nayar, founder and CEO of Nykaa—a ₹214-crore splendor and health retailer—and he or she affirms: “Beauty has continually been large commercial enterprise, and it’ll stay so.”

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The investment banker-became-businesswoman based Nykaa in April 2012 to fill what she says turned into a “big hole”—the lack of online cosmetics retailers—within the Indian market. The “lengthy tail” nature of the beauty business—a substantial type of products that need to be stocked to cater to various preferences—has always been a pain factor for brick-and-mortar retail. E-commerce lets a retailer stock an extensive range of products and gets wider get admission to purchasers. Plus, the digital advertising and marketing revolution has rapidly caught on in India. “That’s how the Nykaa brand got constructed online,” says Nayar, mentioning Sephora, the multi-logo cosmetics store owned by way of French luxury goods massive LVMH, as a proposal.

Mg_98997_nykaa_280x210.JpgOver a patchy telephone line from London, wherein she is holidaying, Nayar recollects a communication with a top management govt of Adidas in India in the course of the early days of Nykaa. “He advised me he had 1,000 stores across India, and each shop noticed 50 footfalls, so he had 50,000 site visitors an afternoon. Nykaa becomes a small internet site at that point, and nonetheless, we had one hundred,000 site visitors an afternoon. The power of virtual is Titanic,” she stresses. Today, Nykaa gives 60,000 merchandise—Indian and global, luxury and mass marketplace—from an extra than 650 manufacturers and attracts 50 million site visitors a month, simultaneously as pleasant 10,000-15,000 orders a day. In 2015, it ventured into offline retail, with 5 Nykaa Luxe stores in Mumbai, Delhi, and Bengaluru.

The character Behind It

Nayar, 54, changed into a finance global pressure earlier than she determined to strike out on her personal. She worked at Kotak Mahindra Capital for 18 years—strolling their mergers and acquisitions enterprise, and setting up their worldwide operations in London and New York earlier than retiring as dealing with director and head of the institutional equities commercial enterprise. Naysayers were aplenty while she decided to install Nykaa; however, her entrepreneurial urge became too robust to face up to. “I met a whole lot of marketers in my career as a funding banker. Their ideas in what they have been creating and their aspirations motivated me to do something like that for myself,” says the graduate from IIM Ahmedabad, who met her husband, KKR India CEO Sanjay Nayar, whilst in college.

Why it is a Gem

“Nokia is in an excellent phase,” says Arvind Singhal, chairman of studies company Technopark. Personal care, he says, is developing swiftly because of its movements beyond the upper-middle magnificence to the middle elegance. Investors appear to agree: Nykaa raised ₹104. Three crores final 12 months from a clutch of influential traders, which includes Max I India (a subsidiary of Max Ventures), Hero Group’s Sunil Munjal, and Marico founder Harsh’s family office Mariwala among others. Since 2014, Nykaa has received a total of ₹185 crores in funding from diverse buyers.

This investor self-belief comes from Nokia’s sturdy “growth engines,” as Rishabh Mariwala—he oversees his circle of relatives workplace’s investments and has a startup—places it; he counts Nokia’s online portal, its personal labeled products (that it started in 2015), and its shops as drivers of growth. They have helped strengthen Nykaa thru the ultimate year-and-a-half of, all through which the e-commerce region become reeling from the aftereffects of sky-excessive valuations accorded to start-ups. It posted revenues of ₹214 crores in FY17 and is on course to obtain effective Ebitda by the end of the year, says Nayar. Although it’s miles a multi-brand store, Nykaa delivered its private label of nail enamels in 2015, accompanied by the launch of affordable lipsticks, kajal sticks, and frame mists. Nayar says privately labeled merchandise, where margins are 10-15 percentage better, are expected to contribute 20 percent to total income within the future.

As a part of its multi-logo strategy, Nokia struck Estée Lauder’s remaining 12 months to sell its top-class brands MAC, Clinique, and Bobbi Brown online in India for the first time. The partnership worked, boosting Nokia’s sales within the luxury section that now contributes 15 percent to basic sales. Critical to Nokia’s strategy is its omnichannel presence. It plans to open some other 10 stores by using the top of this financial and 30 by way of 2020. In addition to Nykaa Luxe—stores that inventory an assortment of luxurious labels—there will be ‘Nykaa on Trend’ shops, with a purpose to inventory best sellers from its e-commerce platform. “We’ll leverage the facts and insights we need to stock the proper products,” explains Nayar. Moreover, with the aid of curating beauty merchandise and imparting clients with rich content material make-up tutorials, reviews, and suggestions on its blog and YouTube channel—Nykaa has created a sticky, engaged community of users—a key moat within the reduce-throat discount-based global e-commerce.

Risks and Challenges

While horizontal marketplaces like Amazon and Flipkart don’t have the range Nykaa does, e-commerce portals like Purple awareness solely on splendor merchandise. Yet, Nayar doesn’t do not forget them to be opposition. “In the artwork of selling, Nykaa supplies,” she asserts. Even so, as Nykaa implements its multi-pronged approach, Mariwala points out that it will want to decide on which “lever to tug.” “Right now, Nykaa is cozy exploring all 3 regions, however one or years down the road, it will want to determine how much of mindshare and focus it wants to commit to each approach.” While the commercial enterprise of beauty will continually remain huge, can Nykaa seize a percentage of the marketplace? Nayar is sure it’s going to.