Beauty
lies in the eye of the beholder, in the same way for the Indian financial arena
year 2021 rests for Initial Public Offerings (IPO). You must be wondering how these
two quotes complement each other? The answer is Nykaa's IPO.
The
global beauty industry has never lost its allure. Along with its steady growth,
the industry has amassed a slew of devoted customers over the years. However,
with the emerging technological trend and internet boom, people cannot
physically visit cosmetic stores. Why should physical stores be the only option
when online cosmetics stores allow customers to order products at any time and
from any location?
Nykaa
is one of these e-commerce platforms for beauty and wellness items, and it has
quickly become the first choice for all cosmetic lovers in India. Anyone who
has even the slightest interest in using beauty and wellness products has heard
of Nykaa at some point in their lives. This is an e-commerce site that specializes
in Beauty and cosmetic products. Since its inception in 2012, this platform has
played a critical role in dispelling the myth that e-commerce and beauty retail
do not perform well in India.
Nykaa's
success is the epitome of the Indian startup's innovative ideas and long-term
sustainability vision. A beauty and personal care product brand founded by IIM
Ahmedabad graduate and former investment banker Falguni Nayar started its
journey as an online store. In nine years, the brand has ventured from an
online store to an omnichannel model and from Beauty and personal care products
to a seller of fashion products. With more than 350 brands and 3000 products,
Nykaa.com is the most significant player in the nation in its segment. Apart
from its online presence, the brand has around 80 physical retail stores in 40
cities.
At
the time of its IPO company has valued at $1.2 billion, and with its 4000-crore
funding raising activity, the brand tried to expand its verticals by fortifying
the financials. The investors will take Nykaa's shares and how it will perform
in the index that time will tell us. Still, the story of the hour is how in the
era of e-commerce giants Amazon and Flipkart, Nykaa came up as a dark horse and
established itself as a household name in Indian Beauty and personal care
products. Let us decode the strategies that make Nykaa a giant killer.
A
Brand for Solution
Nykaa.Com
is the one-stop online terminus for you to sit back, relax, and shop at your
leisure, with free beauty advice and assistance over the phone, advice from
beauty experts, the latest beauty trends, product reviews, tutorials, and
celebrity looks on the Beauty Book Blog, and a fun Virtual Makeover tool. This
is the uniqueness Nykaa brought in the arena; they are not there to only sell
products; they care for their consumers. The brand published a magazine that
provides all sorts of information about a product and its usage. It usages
influencers and beauty experts to connect with its consumers directly, offer
them customised solutions for their problems, and help them understand products
according to their needs. This process provides them with enormous customer
loyalty and brand reputation.
"Unlike
Kareena Kapoor, who is promoting kajal, or Aishwarya Rai, who is promoting
shampoo, these are 23–25-year-old girls of Nykaa who dress and speak as if they
are customers, rather than speaking from a pedestal."
Model
of Competitive Advantage
E-Commerce
businesses usually function on two types of business models, the Marketplace model,
and the Inventory model.
In
the Marketplace Model, Customers will be able to interact with a limited number
of vendors through e-commerce platforms such as Flipkart, Snapdeal, and Amazon.
For example - when a person purchases a good from Flipkart, he is acquiring them
from a Flipkart-registered vendor. Flipkart does not sell the goods directly.
Flipkart is merely an online platform where a buyer and a vendor meet.
The
inventory model of e-commerce refers to an e-commerce activity in which the
e-commerce firm owns the inventory of goods and services and sells them
directly to customers. This is the model that set aside Nykaa from the crowd,
and the model helps them hold the secure item and allows them to avoid
counterfeit items on their platform. The brand has three warehouses in
Bangalore, Mumbai, and New Delhi. The model also helps brands cut costs and
receive economy of scale as they can order in bulk with various BPC product
manufacturers and sell them over their platform. With the model, the brand able
to build up trust among the consumers due to authentic products and on time and
quick delivery.
Nykaa's
management also played smart by choosing the inventory model. They received the
benefit of government regulation which says, "In the eCommerce industry,
100% FDI in the marketplace model of e-commerce is allowed under the automatic
route. Whereas in the inventory model, no FDI is permitted, with their
awareness, the brand developed a competitive advantage over foreign players and
foreign investment operated brands such as Amazon and Flipkart
Adaptable
and Learner
Nykaa
is a virtual store that sells everything from low-cost items to high-end
brands. Nykaa has only lately begun cooperating with and presenting non-Indian
brands such as HUDA Beauty, Kiko Milano, Wet and Wild, and others, which is a
significant accomplishment in and of itself. This has turned Nykaa into a haven
for cosmetic junkies who can now get their hands on goods previously
unavailable in India. Nykaa also fostered the careers of several YouTube beauty
gurus, showcasing their talent and pushing their chosen career path to the best
extent possible. Nykaa's community network, which is an interactive platform of
product users and experts, has around 1 million subscribers and Nykaa's YouTube
channel has approximately 1 billion subscribers, which showcase the brand's
mastery in content marketing, every week around 40000 users join their network
community without any marketing push.
Nykaa
Luxe and Nykaa On Trend are two offline store formats of Nykaa's offline store.
The Luxe format includes Indian and worldwide luxury beauty brands and Nykaa
Beauty, the company's line of cosmetics. Products are preferred by category
based on their reputation in the latter format. The brand explores 92% of the
BPC market consumer segment who are not in the online space.
Nykaa's
fashion e-commerce store has expanded its worldwide delivery to 13 countries as
part of the multi-brand company's distribution network expansion. International
customers can now shop the retailer's comprehensive multi-brand collection of
Indian fashion brands and its private labels. Nykaa's distribution network
includes Zariin, The Jodi Life, The Pink Elephant, Global Desi, and FKSN.
Conclusion
The
brand has grown remarkably in the last three years; income has doubled. Nykaa
has returned to profitability in FY20-21. This year, they made a profit of 60
crores, which is unusual for a business in its early days. Apart from its
financial recklessness Nykaa has established itself as one of the most successful
businesses. Thanks to its calm and steady approach, it is positioned to become
one of the top beauty and wellness companies in the industry. For all its
consumers, it is the epitome of trust, wellness, and care. In the word of its
founder, Nykaa's as a brand wants to become a demand-led retailer, not a push
retailer and the BPC market leader is aptly dedicated to her vision.
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