Nykaa - Story of the Top Beauty Retail Platform of India

Anik Banerjee Anik Banerjee Purbalee Dutta Purbalee Dutta
Aug 6, 2022 18 min read
Nykaa - Story of the Top Beauty Retail Platform of India

Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by Nykaa.

The cosmetics market was valued at $1.3 Billion in FY2020 and is estimated to grow at a double-digit CAGR of 16.39% through FY2026 to reach $2.89 Billion by FY2026.

This amazing growth of the cosmetic industry is the result of the growing demand for cosmetic products, mainly from teenagers and young adults, and the rapid digitalization of the industry, much to the benefit of all.

Nykaa is one of the key players in the cosmetic industry, which boasts of its wide range of beauty, fashion and wellness products that it makes available to both physical and digital customers. Besides, with its foray into the men's and women's innerwear segment, by launching Nykd and GLOOT, Nykaa is planning to earn a big name in the personal care space too!

Read all about Nykaa, its Latest News, Founders and Team, Funding and Investors, Marketing Strategy, Business Model, Revenue Model, Growth, Acquisitions, Future Plans, and more, here in this StartupTalky article!

Nykaa - Company Highlights

Startup Name Nykaa
Headquarters Mumbai, Maharashtra, India
Industry Cosmetics, Beauty, Personal Care
Founder Falguni Nayar
Founded 2012
Total Funding $341.9 mn (December 2021)
Revenue $485.75 Million (INR 3773.9 cr in FY2022)
Valuation $8.3+ Billion (June 2022)
Parent Organization FSN E-Commerce Ventures Ltd.
Website nykaa.com

Nykaa - Industry
Nykaa - About
Nykaa - How Did It Start?
Nykaa - Founder And Team
Nykaa - Mission And Vision
Nykaa - Name, Tagline and Logo
Nykaa - Marketing Strategy
Nykaa - Business Model
Nykaa - Revenue Model
Nykaa - Funding And Investors
Nykaa - IPO
Nykaa - Challenges
Nykaa - Acquisitions
Nykaa - Growth
Nykaa - Future Plans

Nykaa - Industry

Nykaa stands as a leading company in the cosmetics and personal care market, which is estimated to reach $33.33 bn by 2027. The market was last valued at $24.53 bn in 2022 and is currently growing at a CAGR of 6.32%.

Nykaa - About

Nykaa is a beauty retail company that sells cosmetic commodities and fashion products, including men's innerwear, both online and offline. The company also offers comprehensive content that includes product reviews, beauty how-to videos, expert-written articles, and even an e-beauty magazine. The Nykaa helpline is designed to help its customers choose products and services that are tailored to their needs. The products that beauty and wellness brand boasts of are sourced directly from the manufacturing brands and are therefore authentic, and are also available for delivery!

Nykaa currently ships its products all around the Indian subcontinent and to Nepal as well and will start its international deliveries to many other countries soon!

Nykaa - How Did It Start?

It was the inconsistencies witnessed in the market of beauty products, which gave the initial impetus to Falguni Nayar, the founder of the company. The beauty and cosmetic products market of India was not at par with the scope of the products, as it was in other nations like France and Japan though the market demand was high. Furthermore, the products were also discovered unavailable in many places around the country, all of which led to the formation of Nykaa.

Nykaa was founded by Falguni Nayar in the year 2012. Nayar founded Nykaa with limited knowledge of beauty products, retail industry, and technology, with just 3 employees. The company started in 2012, and has received around 60 orders in its initial days. However, Nykaa didn't compromise on its price proposition. Yes, it could have lowered the rates to multiply sales, but it didn't do that.

โ€œWeโ€™d rather sell the proper shade of lipstick at full price than the wrong shade at half price,โ€ said the Founder and CEO of Nykaa once. ย 

It initially started as an online corporation and eventually switched to being an omnichannel strategy.

Based out of Mumbai, Nykaa is well-known for its wide range of beauty and cosmetics products, fashion, and intimate wear that the company makes available through its online website, app, and via its online stores. Making simple women extraordinary in every aspect is one of the main focuses of the brand.


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Nykaa - Founder And Team

Falguni Nayar

Falguni Nayar, CEO & Founder, Nykaa.com
Falguni Nayar, CEO & Founder, Nykaa.com

Falguni Nayar is the founder of Nykaa, which currently stands as one of India's biggest lifestyle and fashion portals. The Founder and CEO of Nykaa is known as the richest self-made woman in India, and is listed in the 10th position among the richest self-made woman in the world. Falguni's net worth was last registered at around Rs 57,000 crore. Her wealth grew 963% in a year to become the same. ย 

Nayar was a student of IIM Ahmedabad from where she completed her MBA in Finance.

Nayar completed her graduation and then her MBA, after which she joined A F Ferguson & Co as a Manager, where she worked for over 8 years. She then joined Kotak Mahindra Capital Company, a leading investment bank in India. Nayar initially headed Kotak Securities, and later became the Managing Director of Kotak Investment Banking in December 2007. She served with the bank for 18 long years after which resigned in order to dedicatedly follow her entrepreneurial dream: Nykaa.com.

Falguni worked for 25+ years in the corporate sector, post which, she started her entrepreneurship career when Nayar was nearing 50.

Nayar is also recognized as a Founding Member of the Asia Society in India. She has her name listed on numerous boards, including the Aviva Insurance Board, Dabur India, along with serving as an Independent Member on the Tata Motors Board. Being a successful entrepreneur as well as a responsible homemaker, Falguni is a source of inspiration to everyone in Nykaa and beyond. Falguni's passion for her business, attention to detail, and involvement in every aspect of the firm can be defined as some of the qualities that made her a great leader. She has also set a big example for the entire world and validated the saying, "age is just a number" when it comes to entrepreneurship.

Falguni has been the recipient of tons of accolades throughout her career including the FICCI Ladies Organization (FLO) award for the top woman achiever in the field of banking and the Business Today award, which hailed her as one of the top 25 women in business.

โ€œRetail is all about detailโ€ is one of the most popular mantras that Falguni Nayar lives by and is often heard propagating the same.

Nykaa Growth story

Nykaa - Mission And Vision

Nykaa's mission rests on 3 prominent ideals - curation, information and personalization. The company believes in bringing the best offering to its customers to help them make the right choice for their holistic beauty needs.

The mission statement of Nykaa reads as -

"Inspiring Indians, both men and women to make fashion & lifestyle choices that best suit them."

The brand name 'Nykaa' is derived from the word 'nayaka', which means 'one in the spotlight' in Sanskrit.

The company's tagline is 'Your Beauty, Our Passion'. There was a partnership between Nykaa and Peanut Butter as a result of which generated another slogan, 'Beauty Anytime, Anywhere'.

The brand colour was very carefully chosen because the brand targets the ladies and the colours red and pink would perfectly reflect a modern girl's flaws and vibrancy.

Nykaa logo
Nykaa logo

Nykaa - Marketing Strategy

Nykaa has stood as one of the most competent players in the beauty and fashion space due to its robust marketing strategy, which is carved with digital marketing at its core. The brand not only focuses on marketing in the Tier 1 cities but also pitches all the potential customers from the Tier 2, 3, and 4 cities.

Social Media Marketing

Nykaa has 4 social media accounts for the marketing of its in-house brand My Nykaa, Nykaa beauty for the promotion of its e-commerce platform, Nykaa fashion to promote its e-commerce apparel store, and Nykaa beauty book, which helps the audience with numerous beauty and makeup tips.

The company has its accounts on diverse social media platforms to extensively promote the brand on social media. The brand is also engaged in posting the content created by its influencers via its social media handles. Therefore, influencer marketing plays an important part in the promotion of Nykaa.

Youtube Marketing

Nykaa has a full-fledged Youtube marketing strategy. The brand refrains from focusing on selling its products via its Youtube channel but concentrates more on offering consumable content, including beauty, personal care tips, makeup hacks, and much more, to its target audiences.

Furthermore, the brand also runs Youtube ads from time to time to target its customers. Thus, the Youtube marketing of Nykaa is fueled with quality content that keeps the audience engaged and relevant ads.

Content Marketing

Nykaa relies majorly on its content marketing. The D2C beauty and fashion marketplace offer a variety of consumable content to the audience, which helps them convert into its customers.

Nykaa has its own blog, โ€œNykaa beauty book,โ€ which the brand uses to publish blogs on beauty, makeup, and personal care. Furthermore, the brand is also engaged in creating video content like makeup tutorials, DIYs, and more.

Event Marketing

Event marketing is another important marketing strategy that Nykaa leverages to pitch the target customers at the right time and right place.

Nykaa has successfully sponsored the popular Femina Miss India event, one of the largest beauty events in India on a number of occasions, and is still tied to the same event.

Besides, Nykaa also sponsors numerous college fests and events like the Red Brick Summit, 2019 IIM Ahmedabad, and the Mumbai college fest, Mood Indigo.


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Nykaa - Business Model

Nykaa is a D2C consumer products eCommerce brand, which relies on an inventory-based business model. The company purchases its products directly from the manufacturers and keeps them in its designated warehouses located in New Delhi, Mumbai, and Bangalore. These products are sold either on the website of Nykaa or through its 3 offline store formats: Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks.

The inventory-led model of business of the company helps the company witness high-profit margins and has resulted in a profitable business. Besides, the company also ensures the authenticity of products and follows competitive pricing.


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Nykaa - Revenue Model

Nykaa earns its revenues through the below-mentioned ways.

Sale of products

The brand sells its own products and the products of its partnered brands, which is the primary source of revenue for the brand.

The banner advertisements of the company also help it bring in a lot of traffic, many of which turn into sales.

Discount income, income from commissions, and miscellaneous income are some other sources of revenue for the brand.

Nykaa - Funding And Investors

Nykaa's valuation crossed the $13 billion mark in its blockbuster debut on the Indian stock exchanges. The stocks of the famous Indian cosmetics platform initially started trading at a premium of 82% and have surged to around 96%. The current market cap of Nykaa, which was listed on the BSE in November 2021, is estimated at $8.3 bn.

The funding journey of Nykaa was initially started with funds that came from Falguni Nayar and her husband Sanjay Nayar, who is currently the CEO of KKR. Though the founder of Nykaa and her husband had huge connections in investment banking, they didn't reach out to institutional investors until the company witnessed high growth metrics. An institutional lead investor, TVS Capital only funded Nykaa in its Series B round at a valuation of Rs 500 crore. Angel investors like Harindarpal Singh Banga of "The Caravel Group", had earlier supported Nykaa. However, these investors helped the startup raise funding of Rs 20 crore in its Series A round, but that came at a higher cost as it diluted 16% of the Nykaa stakes. The stakes of Hardindarpal Singh after Nykaa became a unicorn, were worth a whooping Rs 1600 crore!

The total funding amount that Nykaa raised is around $341.9 million. The last fundraising round of Nykaa came in the form of an undisclosed round on November 26, 2020. The Nykaa investors include Lighthouse, Steadview, Sunil Kant Munjal of Hero Group, and Fidelity Management, among others.

Date Round Amount Investors
April 23, 2018 Series D $10.07 million -
May 14, 2018 Series D $22.83 million -
September 2018 $14.77 million Lighthouse India Fund III
April 2019 Series E $13.43 million TPG Growth
December 1, 2019 Secondary Market $30 million Steadview Capital
March 31, 2020 Series F $13.43 million Steadview Capital
May 8, 2020 Series F $9 million Steadview Capital
June 2, 2020 Series F $196 million Hero Groupโ€™s Sunil Kant Munjal
October 16, 2020 Secondary Market - -
November 26, 2020 Secondary Market - Fidelity Management & Research Company

Nykaa - IPO

Nykaa opened its IPO on October 28, 2021, and it was not just an IPO but a real test for an Indian eCommerce player of today. It attracted 82X subscriptions in 3 days. The bids that Nykaa shares attracted were worth around $32.53 bn. Nykaa shares are listed at a premium of nearly 80%. On the BSE the shares of Nykaa were listed at Rs 2001, at a premium of 77.87% over its issue price of Rs 1125. On the other hand, the scrip was listed at Rs 2018 on the NSE at a premium of 79.38%. The Nykaa shares were open for subscription from October 28 to November 1, 2021. The Nykaa listing also had seen Ashneer Grover locked in a controversy after he was involved in an abusive phone call with a Kotak Mahindra bank employee. This saw both the ex-Founder of BharatPe and the BharatPe being involved in a huge hustle. ย 

Nykaa - Challenges

Being a latecomer in the cosmetics market, Nykaa has to battle numerous professional players. Ajio and Myntra are some of the biggest players operating in Nykaa's market. Besides, it also needs to create a USP in fashion.

In the initial days when Nykaa started, its website would crash every now and then. When it touched 100 orders, its system would shut down. However, it fixed these issues and continued growing the business.

In a recent statement, Kannan Sitaram, a Venture Partner at Fireside Venture, stated that one of the biggest of Nykaa's challenges is to remain interesting to the shoppers because if it fails to provide an excellent experience, then they would be disappointed. ย 

A case was filed against Nykaa by French cosmetic giant, Lโ€™Orรฉal, which had filed a civil lawsuit against the Indian cosmetic startup in November 2019 at the Delhi District Court, alleging that Nykaa has infringed copyright. The case on Nykaa was due to the similarity that the French cosmetic major found in some packaging that Nykaa does, which was similar to the Maybelline brand. The court battle seemed long-drawn, which is why both the firms decided to call it off and settle terms between them, which are currently approved by the Delhi District as well as the High Court of Delhi. Under the new settlement terms, Lโ€™Orรฉal has approved the new, modified artwork that Nykaa has created.

Nykaa - Acquisitions

Nykaa has successfully acquired 5 companies to date. The company last acquired New Delhi-based Nudge Wellness on April 22, 2022. It acquired Kica on the same date along with picking up 18.5% stakes in the beauty brand Earth Rhythm for $5.45 mn. It previously acquired the Kolkata-based skincare brand, Dot & Key on October 22, 2021.

Nykaa is in the late stage to acquire Little Black Book, as per reports dated June 20, 2022. The companies had been in talks regarding the acquisition for a couple of months now and have recently given a term sheet to LBB. Fast forward to August 6, 2022, Nykaa has already received its board's approval for the acquisition in an all-cash deal, which is to be completed within 60 days. Little Black Book's brand discovery and content delivery platform will greatly help Nykaa drive consumer engagement and retention. Furthermore, its creator network will help the beauty ecommerce commerce scale operations.

Nykaa is currently looking forward to embolden its offerings, and all of its last acquisitions were in line with the same aim so that it can stay ahead of its competitors like Purplle and horizontal marketplaces. Sources have also revealed that Nykaa will likely be acquiring MensXP.

Accquiree Name Date About the Company Amount
Nudge Wellness April 22, 2022 Nutraceuticals and wellness brand from Delhi $471.71K
Kica April 22, 2022 Women swimwear brand based in New Delhi $590.94K
Dot & Key Wellness October 22, 2021 Kolkata-based skincare brand -
Pipa.Bella April 12, 2021 Fashionable and affordable costume jewelry brand from Mumbai -
20Dresses March 22, 2019 Fashion and lifestyle ecommerce platform from Mumbai -

Nykaa - Growth

Nykaa is a leading ecommerce company that specialises in the sales of beauty, cosmetics, and fashion products, which is already listed and that too, at a valuation higher than some of the oldest and the largest Indian businesses like Coal India, Bharat Petroleum, SBI Card, and Godrej.

Nykaa became the leading e-commerce and beauty retail platform within just 4 years.

Nykaa currently boasts of having over 17 million monthly active users and processes 1.5+ mn orders. Here's taking a look at some more growth highlights of the brand, as of October 2021:

  • Nykaa claims to have over 15 million registered users.
  • It has 105 stores across India.
  • It has 23 warehouses across 11 Indian cities
  • The company boasts of offering over 4000 brands.
  • Nykaa is packed with over 3.1 million SKUs that can be accessed from its website, through its app, or at its stores.

Nykaa has seen its tough days during the lockdown as a result of the outbreak of the coronavirus pandemic when the company witnessed a fall of up to 70% of its sales in April 2020. However, the company was swift in its reactions and listed all the essential items effectively to keep them in stock and removed all the other non-deliverable inventory. Immediately afterwards, the company started advancing its physical stores by leveraging the facility of its hyperlocal delivery.

Nykaa recovered fast from the ill effects of the COVD-19 pandemic and had already recovered by more than 90% from what it was during the pandemic outbreak towards the end of 2020.

The unicorn cosmetics, fashion, and beauty products brand have witnessed a major shift of the consumers towards the essential categories, including personal skin and hair care items, and this is what helped it beef up faster than its rivals after the coronavirus onslaught. Furthermore, the company's shift from an online model to an omnichannel retail model also contributed a major hand to the same. All of these not only changed the customers' perception of the brand but also helped Nykaa gain audiences, whom it did not or perhaps could not target earlier.

The company also launched Nykd, an intimate wear brand, as soon as it began to shake off the pandemic effects in October 2020. It has again explored the same segment, but this time, it will present men's innerwear and athleisure products.

Nykaa announced its foray into the men's innerwear category on July 6, 2022, by announcing GLOOT, which will stand as a Nykaa brand for underwear and athleisure categories. As soon as Nykaa announced its foray into the men's innerwear and athleisure categories, the Nykaa parent's shares witnessed a jump. It closed 4% higher at Rs 1,453.9 on the BSE on the very next day. The innerwear products for men will start from Rs 499 while the GLOOT athleisure products will start from Rs 899.

Nykaa Launched Beauty&You India, an Incubation Programme

In partnership with Estรฉe Lauder Companies (ELC), the beauty e-commerce platform Nykaa launched an incubation programme named Beauty&You India, which is designed to support beauty entrepreneurs in India. Estรฉe Lauder and Nykaa gathered funds worth nearly $500K (INR 4 crore) as prize money that will be distributed to the winners of the programme. Beauty startups and entrepreneurs can apply for the Beauty&You India initiative and the winning applicants will receive non-equity grant money as a reward.

Nykaa Shares and its Growth

Falguni Nayar, the CEO of Nykaa has announced that the platform has clocked a surge both in its sales and profitability. This is why it successfully launched its IPO on October 28, 2021, where the band was fixed at INR 1,085-1,125 per share. The company had sought a valuation of $7.4 billion for its upcoming IPO round. Nykaa was already turned into a public company limited by shares on July 16, 2021, and had filed it's Draft Red Herring Prospectus (DRHP) back in August 2021.

Nykaa had a dream debut in its IPO where the market cap of the company crossed Rs 1 lakh crore. The company has recorded its shares 81.78 times oversubscribed, at the end of the IPO round on November 1, 2021. The valuation of Nykaa surged almost to $13 billion in its Indian market debut.

Nykaa's parent FSN E-Commerce, witnessed a record rising in its share values on the stock market on November 10, 2021, which resulted in 96% returns on the investments of the company's investors. FSN E-Commerce's shares, the issue price of which were INR 1,125, closed at INR 2,206.70 per share, 96.15% higher on the BSE. On the other hand, they closed at 96.26% higher than the listing price at INR 2,018 apiece. The net worth of Falguni Nayar, Nykaa CEO, rose to $6.5 Bn after the record listing of the brand, as per Bloomberg Billionaires Index.

Nykaa parent FSN E-Commerce Ventures Ltd. reported a sharp, 96% fall in its profits, which resulted in the decline of its share prices on November 15, 2021. The fall in the company's profits is traced to the surge in its marketing costs in the quarter before its initial public offering. The net income of the company in the quarter that ended in September, was recorded at Rs 1.2 crore, which was Rs 27 crore in the previous year. It was noted that the 92% increase in the expenses helped the company witness around 47% gain in its revenues. The shares of the company decreased by 5.2% on 16th November, which saw a decline of close to 7.3% at an earlier trade.

Nykaa's shares opened on August 8, 2022, and hit an intraday high of Rs 1473.65 per piece, which is 2% higher than the share price registered at the close of August 5, 2022. However, this is also 44% lower than the lifetime high of Rs 2573.70 on the NSE.

Nykaa Growth of Average Unique Visitors
Nykaa Growth of Average Unique Visitors

Nykaa Financials

QoQ Financials of Nykaa

Nykaa has already geared up with a 41% YoY increase in its operational revenues in Q1 FY23, which became Rs 1148.4 crore, thereby growing by 18% QoQ. The consolidated net profits of Nykaa in Q1 FY23, were registered at Rs 5 crore, and grew by 42% on a YoY basis, while it declined by 33% on a QoQ basis from Rs 7.6 crore that Nykaa reported in the previous quarter. ย 

The total Nykaa expenses grew by more than 40% YoY to become Rs 1148.4 in Q1 FY23.

YoY Financials of Nykaa

Nykaa's FY22 results revealed a rise in its revenue from operations, which rose by 55% to Rs 3773.9 crore during the fiscal. The gross merchandise value (GMV) increased by 71% to become Rs 6933.2 crore. The unique transacting customers of Nykaa also grew to 1.02 crore, surging by 64%.

Going by the FY22 results, there are some major highlights that you need to know about Nykaa's growth. Here's looking at the numbers of Nykaa growth segment by segment:

Beauty and Personal Care Segment

This segment contributed 72.1% of the GMV of Nykaa at Rs 4998.7 crore, which registered a growth of 49% y-o-y. Summing up the growth highlights of this segment would include:

  • The number of online visits for this vertical grew by 34%to become 88 crores.
  • The Nykaa app downloads increased by 44% to become 4.73 crores.
  • Total orders grew by 58% to become 2.7 crores.

Fashion Segment

The fashion vertical contributed 25.3% to the total Nykaa GMV, growing from 16.1% in the previous year:

  • The fashion vertical's GMV shot up by 168% to become Rs 1751 crore in FY22.
  • The annual unique transacting customers in this segment grew by 182% to 18 lakh in FY22.
  • Total orders doubled from 24 lakh to 52 lakh during FY22.
  • AOV also grew by 25% to become Rs 3240.

Physical Stores

The physical stores of Nykaa also grew 43% to 105 in FY22 from 73 outlets it had in FY21. Nykaa also increased its presence in 11 more cities in India, which now makes Nykaa available in 49 cities in total in FY22.

Nykaa - Future Plans

The company is aiming to expand its offline business. It wants to expand its offline evidence by opening 180 stores all over India by 2024. Nykaa is currently willing to expand its fulfilment centres across the country to boost customer experience. Also, it has plans to expand its warehouse capacity by 40%.

FAQs

Who is the founder of Nykaa?

Falguni Nayar is the founder of Nykaa.

Why is Nykaa so famous?

Nykaa is India's biggest lifestyle and fashion portal with a collection of cosmetics, skincare, haircare, fragrances, bath and body, personal care, and wellness products for both women and men.

Who are the competitors of Nykaa?

Some of the prominent competitors of Nykaa are:

  • Purplle
  • FabAlley
  • Fabindia
  • LimeRoad
  • Craftsvilla

Is Nykaa an Indian brand?

Yes, Nykaa is an Indian lifestyle retail brand of beauty, wellness, and fashion products with headquarters in Mumbai.

How to sell on Nykaa?

Selling on Nykaa is easy. You just have to go to www.nykaa.com/sellonnykaa and then you need to go to fill up a form where you need to enter the Name of your company, Company Website, Pincode, Address, Product Categories, Brand Name, and other details, and then you would be ready to sell on Nykaa. ย 

Who is Nykaa CEO?

Falguni Nayar is the Founder and CEO of Nykaa.

Where is the Nykaa headquarters?

Nykaa headquarters is in Mumbai, Maharashtra.

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