Nykaa Business Model | How Does Nykaa Make Money?
🔍Insights
Are you aware of any lucrative eCommerce platforms from the last ten years? Technically, no. As they were either bought, as Walmart did with Flipkart, or they were categorized as Infibeam. However, none of them succeeded on their own. In the last decade, over 20 online stores have attempted their fortune in India, but none had succeeded until Nykaa, a retail label that sells cosmetics, wellness, and fashion items, entered the fray. This firm has developed so much that it extended from an internet label to an omnichannel approach in 2015, which has enabled Nykaa to become a market leader.
About Nykaa
How Was Nykaa Founded?
Nykaa Business Model
What Is Unique About Nykaa?
How Does Nykaa Make Money?
About Nykaa
Nykaa is an Indian eCommerce firm that offers cosmetics, wellness, and fashion items through its portals, apps, and over 100 physical locations in India. Falguni Nayar, a senior managing director at Kotak Mahindra Capital Firm, started it in 2012 as a billion firm. It offers items made in India and those made elsewhere in the world.
The firm transitioned from a web-based to an omnichannel business in 2015 and started selling things other than beauty products. It introduced Nykaa Pro in 2020, and Nykaa Fashion Limited began operating in Delhi in December 2020, with the goal of making its fashion company omnichannel. It also began selling over 2,000 labels and 200,000 items through its multiple networks. Several women who desire to begin their own eCommerce firms can draw ideas from this company.
Anik Banerjee
How Was Nykaa Founded?
Nykaa's triumph is encouraging to us since few people over 50 have the confidence to resign and create a business from the ground up, yet Falguni Nayar did just that and founded Nykaa. She grew up in Mumbai and earned a finance degree from IIM Ahmedabad. She accepted a strategy consulting role after her MBA and served in a fine position at Kotak Mahindra Bank. However, in 2012, she launched the "Nykaa" label.
She once visited a Sephora store in another country and was astounded by the diversity of beauty merchandise under one dome. There were also complimentary samples, makeovers, and a bunch of discourse about beauty going on around the store. It was a woman's fantasy come true.
This level of beauty diversification, expertise, and impartial advice was not offered to Indian women. For them, purchasing makeup meant a trip to the local pharmacy or a cosmetics boutique with untrained employees. High-end products were usually accessible in malls and high-street retail stores, giving customers little option. Falguni spotted a chance. At the stroke of 50, she left her senior management post at Kotak Mahindra and started Nykaa.com. The rest, as they say, is history.
Nykaa’s in-house brands consist of:
| Nykaa Subsidiary | Description |
|---|---|
| Nykaa Cosmetics & Naturals | In-house personal brand offering makeup, body care, and skincare products |
| Nykaa Fashion | Provides apparel, bags, accessories, and more |
| Nykaa Man | Offers men's skincare, haircare, and grooming products |
| Nykaa Pro | Grants beauty and makeup professionals access to multiple brands |
| Nykaa Network | An interactive beauty forum for users to engage and share beauty tips, tricks, and recommendations |
Nykaa Business Model
Let's explore Nykaa business model and the key factors that have contributed to its success.
Its inventory-driven business model for the BPC (Beauty and Personal care) category is one of its key benefits. While it faces the risk of expiration and incurs inventory costs, it enables the firm to provide identification for all its items and ensures availability and prompt delivery. Its solution enables fungible stock across traditional and digital channels, making stock management easier.
Online BPC buyers are concerned about the increasing availability of counterfeit goods. As a result, a guarantee of legitimacy provides buyers with peace of mind.
Omni-Channel Strategy
Nykaa has a strong omnichannel marketing strategy that includes various touchpoints to engage with customers. This includes email marketing, social media marketing, influencer marketing, and offline events. By leveraging these various touchpoints, Nykaa has been able to reach a wider audience and create a strong brand presence.
It also has a geographic footprint in over 45 cities. It aims to expand its physical storefronts.
The function of retail stores is twofold:
- They give customers the opportunity to try out things before making a decision.
- They build a more resilient distribution network that will allow for potential hyperlocal delivery.
Shops also provide face-to-face encounters with experts and, in the case of some multinational premium brands, play a key role in personal branding.
Affiliate Program and Content-First Strategy
Nykaa is capable of promoting broad brand and influencer-led learning through innovative and engaging content across video and textual forms, thanks to a team of over 3000 influencers and 12.6 million fans across prominent social media sites. The Nykaa army generates and shoots the bulk of Nykaa's material in-house.
Furthermore, the Nykaa Affiliate programme uses influencers on a wide scale, allowing external creators to create material on their part across multiple digital channels. The support of well-known influencers adds to the platform's credibility.
Focus on Beauty and Wellness
The business model of Nykaa is focused exclusively on the beauty and wellness industry. By narrowing its focus to a specific niche, it has been able to establish itself as a specialist in this area. This has helped Nykaa create a unique brand identity and gain the trust of its customers.
Exclusive Product Range
Nykaa has a range of exclusive products that are not available on any other e-commerce platform. This has helped Nykaa create a unique selling proposition and differentiate itself from its competitors. The exclusive product range includes its own in-house brand, Nykaa Cosmetics, as well as other exclusive beauty and wellness products.
Tech-Enabled Operations
Nykaa has a strong focus on technology, which has helped it to optimize its operations and enhance the customer experience. Nykaa has invested in various technologies, including artificial intelligence and machine learning, to personalize the customer experience and offer customized recommendations.
What Is Unique About Nykaa?
Nykaa's BPC offering is extensive, with about 200K stock-keeping units (SKU) spread across a range of nearly 2500 worldwide, local, premium, and niche brands. It also sells things under its own label.
The consumer experience starts with a one-of-a-kind approach to product research that includes handpicked pieces and keyword or aesthetic look searches. Buyers may then search for merchandise using ratings, testimonials, how-to videos, and influential material, and interact with product specialists. This enables an immersive element, with the quality of the suggestions constantly increasing based on each client’s unique retail habits.
Tech Supremacy
It’s constantly improving its digital platform, not just to meet today's difficulties but also to ensure future flexibility. The company's data crew can use large volumes of data to offer dynamic, hyper-personalized customer experiences throughout their platform trips.
A Step Into the Glamour
Nykaa Fashion, a selected and supervised Taobao, started in 2018. It houses 1350 labels and over 1.8 million SKUs with fashion items across 4 customer segments: women, men, juniors, and home merchandising, which covers clothing, accessories, jewelry, and housewares. It selects designer labels and evaluates them for design and content. It has a customer base of less than 2% in the online fashion business, which is projected to be valued at INR 439 billion.
How did Nykaa BEAT Amazon & Flipkart in e-Commerce War?
How Does Nykaa Make Money?
Nykaa holds items bought directly from manufacturers in its warehouses, where they are supplied whenever there are online or offline purchases. Buying straight from the manufacturers results in larger profit margins and increased market rivalry. It serves as an overarching brand for its health and cosmetics goods, which are sold through its stores and online. It also guarantees delivery within 1-4 days of the order being placed.
Nykaa's revenue model encompasses a diverse range of strategies, including product sales, B2B sales, advertising and promotions, influencer marketing, and premium product offerings. By capitalizing on these revenue streams, Nykaa has cemented its position as a key player in the Indian eCommerce industry.
In the nine-month period of FY24 (April to December 2023), the company's revenue from operations amounted to Rs 4,717.6 crore. Expenses included Rs 1,028 crore for the purchase of traded goods (adjusted for changes in inventories) and Rs 147.9 crore for employee benefit expenditure during the quarter.
Sandhya Raju
Conclusion
Nykaa has become a prominent player in India's e-commerce industry with its unique business model that focuses on providing high-quality beauty and wellness products, excellent customer service, and innovative marketing strategies. The company's strong online and offline presence, personalized customer experience, and diverse product range have enabled it to differentiate itself from its competitors and establish itself as a leader in the Indian beauty and wellness market.
Moreover, Nykaa's success is not just limited to its business model, but also in its commitment to customer satisfaction, employee engagement, and corporate social responsibility. The company's initiatives to empower women entrepreneurs and promote gender equality in the workplace have been widely recognized and lauded.
FAQs
How does Nykaa make money?
Nykaa is an eCommerce company that sells its products and products of its partnered brands through its online and offline stores.
What does Nykaa do?
Nykaa, headquartered in Mumbai, is a prominent Indian eCommerce company specializing in beauty, wellness, and fashion products. It distributes its diverse range of offerings through its website, mobile app, and an extensive network of over 100 physical stores across the country.
What type of business model is Nykaa?
Business model of Nykaa is an inventory-based model. The company purchases the products directly from the manufacturer and stores them in its warehouse.
What is unique about Nykaa's business model?
Nykaa's business model is unique in that it focuses on providing high-quality beauty and wellness products, excellent customer service, and innovative marketing strategies. The company has also diversified its product range and services through strategic acquisitions, allowing it to offer a more comprehensive beauty and fashion experience to its customers.
Who is the CEO of Nykaa?
Falguni Nayar is the current CEO of Nykaa.
What are some of Nykaa's strategic acquisitions?
Nykaa's strategic acquisitions include the fashion e-commerce platform 20Dresses, the online fashion platform Pipa Bella, and the on-demand beauty services platform Femina Flaunt.
How has Nykaa differentiated itself from its competitors?
Nykaa has differentiated itself from its competitors through its focus on providing high-quality products, excellent customer service, and innovative marketing strategies.
What awards has Nykaa won?
Nykaa has won several awards for its innovative marketing campaigns and customer-centric approach. In 2020, the company was named the most trusted e-commerce brand in India by brand consultancy TRA Research.
Does Nykaa manufacture its own products?
Nykaa operates with a robust inventory-driven business model in the Beauty and Personal Care (BPC) category. This involves Nykaa procuring products directly from manufacturers and managing their storage in its own warehouses.
Is Nykaa a marketplace?
Yes, Nykaa is a marketplace for beauty and personal care category.
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