In 2012, investment banker turned entrepreneur, Falguni Nayar, Founder & CEO, Nykaa.com, left the comfort of her 19-year-old job to pursue her dreams. She entered into the beauty space and launched a beauty portal, Nykaa, for the growing number of beauty consumers in India and since then there has been no looking back.
Talking about the idea of entering an altogether new space in the business of beauty, Falguni says, “I once walked into a Sephora store and was amazed by the profusion of brands, the beautiful displays and the women behind counters who offered advice, sold beauty products and helped women discover a whole new side to themselves. This and other exposures to multi-brand online retail made me realize there was such a huge gap in India with a severe dearth of good multi-brand retail experiences in the beauty and wellness space. I saw the need for a multi-brand retail format that gives unbiased advice to consumers, being able to guide them on the right products for their beauty and health concerns. It was a risk I was willing to take but, I am happy to say that they have been well-received by our customers.”
And there is no doubt, Falguni has achieved what she dreamt of. Today, Nykaa is one of the strongest players in the e-commerce space, which is all the more impressive since the portal caters to a niche category unlike others that have a multi-category offering.
“We started as a multi-brand player with 500 brands on-board. And at that time, there was no other like us. It was not so tough to attract customers and make them to shop from Nykaa.com, but at the end of the day, our private label is an incremental value add for our customer. We will never push only our private label and we continue to be a multi-brand retailer. Currently our private label business contributes less than 10 percent to the overall revenue,” says Adwaita Nayar, Head-Retail, Nykaa.com.
“When she started the brand, Falguni’s vision was to be synonymous with beauty in India. We started as online retailers, but we knew from day one that we will open stores as well. For the first four years, we were solely online-focussed and after that we added two more business verticals – our private label business and physical store business. At present, we have around 300 SKUs of our private label and 22 stores,” she adds.
At present, the company delivers to 19,000 pincodes and has 1,20,000 SKUs to offer.
Reiterating on the key aspects that Nykaa has implemented which make it among the top players in e-commerce today, Adwaita says, “There are three things which have helped us perform well. First is our selection. We wanted to have the widest brand assortment in India for beauty. Any beauty brand you can imagine whether it is a local brand, national brand or international brand and even luxurious brand, we have it all. A large part of our focus is on brand assortment and getting brands and maintaining those brand relationships. We became known as the place to buy the largest selection of brands possible and that has been one of our core strengths.”
Another strength of Nykaa’s has been content. Beauty as a category needs a lot of education and advice. We wanted to integrate a lot of content into the experience. A team of 50 people work on content – making videos, beauty tutorials, and organising chat sessions of customers with beauty advisors to spread awareness of products.
The third largest pillars of strength for Nykaa have been marketing and brand creation. The digital marketing team of the company has had success in terms of creating a buzz around products.
Offering a Luxe Experience
All Nykaa stores are company-owned and come in two formats – Luxe and On Trend. Luxe stores span around 1,500-2,000 sq. ft. while the size of On Trend stores is around 600 sq. ft. Luxe stores are brand-focussed, whereas On Trend stores are less brand driven and – as the name suggests – more about hosting products that are in vogue and category-led.
The company has recently launched a flagship Nykaa Luxe store an exclusive beauty retailer in DLF Group’s newly-opened lifestyle destination mall, The Chanakya, in New Delhi. The store is spread over 2,500 sq. ft. and offers a unique set of luxe brands across makeup, skincare and fragrances, including M.A.C Cosmetics, Estée Lauder, Bobbi Brown, Clinique, Christian Dior, Guerlain, Givenchy, Forest Essentials and Kama Ayurveda.
As an exclusive first, the store showcases a shop-in-shop experience from Jo Malone London and Tom Ford as well as the entire range of Huda Beauty products. Also available at the store is Nykaa’s in-house portfolio of beauty products across cosmetics, naturals, bath & body and fragrances, Nykaa Beauty.
The interiors are a completely new retail concept – a luxurious beauty lounge. Focused on experientials, the signature feature of the store is the 100 sq. ft. horseshoe shaped vanity area where customers can touch and feel products for a first-hand experience. Also featured is a dedicated social media section framed by the inspirational LED sign ‘Led by Dreams’.
Nykaa first introduced luxury beauty to the online consumer in 2016 with the launch of M.A.C Cosmetics, Clinique, Bobbi Brown and Estée Lauder. Since then it has expanded its portfolio to include over 50 luxury beauty brands across makeup, skincare and fragrances with the luxe category now accounting for over 15 percent of the total sales at Nykaa.
According to Falguni, “This Nykaa Luxe flagship store is designed to allow customers to indulge themselves. It brings together our largest collection of luxury beauty brands with opportunities for customers to experience the products first hand at our vanity stations. Our expertly trained beauty assistants will be available to offer personalized solutions to every need. The growth in luxury beauty purchases reflects the discerning nature of our customers who are ready to invest in the best of beauty. With our Omnichannel access and educational content we look to be able to guide and engage our customers as they build their beauty regimes.”
Why Should Women Have All The Fun?
To captialise on the growing interest among male consumers towards grooming and personal hygiene, Nykaa launched NykaaMan.com, India’s first multi-brand e-commerce store dedicated to men’s grooming.
Launched in July this year, NykaaMan.com offers products across categories like shaving, hair care, grooming kits, bath & body, beard care, sexual wellness and sports nutrition with brands such as The Shave Doctor is exclusively available in India with NykaaMan as well as brands like Kielh’s, Clinique for Men and Beardo.
The e-tailer offers expert advice and opinions on choosing the best regime. Male customers currently account for 20 percent of the Nykaa database and 15 percent of the social media following. A significant focus of the product selection is on men’s fragrances, luxury skincare and premium natural products as well.
Falguni says the market for male grooming in India is estimated to be worth more than Rs. 5,000 crore with male customers spending more time and money on personal grooming and this has led to the launch of several brands and product ranges specially targeted to men.
“We think by next fiscal year end, NykaaMan will be 10 percent of the overall revenue,” states Adwaita.
The Nykaa Man curation will also extend soon to Nykaa’s offline offering, available at Nykaa On Trend and Nykaa Luxe stores across the country.
Exploring Other Categories
Apart from this, the beauty e-tailer has also introduced new verticals including Nykaa Design Studio, a curation of premium Indian fashion designers and Nykaa Pro – a portal for professional beauty consumers.
“Nykaa Design Studio is already live, and we will slowly start building in lingerie, athleisure into that,” says Adwaita.
In March 2018, Nykaa also launched Nykaa Network – a community for encouraging consumers to engage and create beauty conversations, which today has already built a user base of 300,000 followers.
Expansion & Growth
Nykaa reported a revenue of Rs 570 crore in 2017-18. The brand has been EBITDA positive for two quarters in a row. The retailer is on a path to 100 percent revenue growth in the current financial year.
“We have set a target of growing by 100 percent our revenue to about Rs 1,100 crore in the current financial year,” asserts Falguni.
Going forward, the company looks to expand its portfolio with the launch of exclusive brand partnerships and increasing its offline footprint to 180-200 Nykaa stores in the next 4-5 years. The beauty retailer is looking to spend Rs 20-30 crore to aid the physical expansion plans.
At present, physical stores contribute under 10 percent to the online beauty retailer’s revenue.
“I think offline will eventually contribute about 15-20 percent of the whole business but online will remain the main focus,” states Adwaita.
When asked if the company is looking raising funds to support its expansion plans, Falguni reveals, “We may look at raising funds. But it will not be a lot.”
Falguni concludes, the company is looking at bringing in about 20 new brands this year. At present, it sells over 850 brands across makeup, skincare, hair care and wellness categories.