TO STUDY NYKAA’S ECOSYSTEM

GROUP NO: 6

LITERATURE REVIEW/ CASE STUDIES OF NYKAA.

2) When you are a company that touches almost all of India's online
beauty and cosmetic products shoppers, there are a few perks you
enjoy. Brands not only look at you to help sell their products, but also
turn to you when they need to study the end consumer better. So, why
not charge them for it?
Nykaa, India's largest e-commerce marketplace for beauty and
cosmetic products is doing exactly that.
The company claims it gets 9 million unique visitors on its platform
every month, and if we extrapolate this over a two-to-three-month
horizon, it would be the case that the entire set of 16-20 million online
women shoppers in India visit its website. These customers are
involved with the site in various ways; some explore the products and
then head towards the shopping cart, some watch the beauty video
logs, some blog and so on.
All of this throws up a more nuanced understanding of the Indian
beauty market. The Indian beauty industry has for a long time been
segmented into premium branded products and cheap unbranded
products, but in recent years, the lines have blurred as e-commerce
has opened up new channels for marketing, sales and promotion.
"They [big global brands] keep asking us for data, so we give it to
them. We give some data for free and for some we charge," says
Falguni Nayar, chief executive officer (CEO) of Nykaa. "We are
willing to share data, but we have to analyse a whole lot, we don't see
why we should give it for free. It's very valuable."
While Nykaa's eyes are keenly set on making its core business of
selling cosmetics to women online achieve Ebitda (earnings before
interest, tax, depreciation and amortisation) profitability by this
September, it says data services too can become an offshoot business.
The latter will not exist without the former, so Nayar says that the
main focus for Nykaa will always be to reach out to more customers.
Customer data is a secondary by product, albeit a valuable one.
3) Nykaa raises $24 M in fresh funding from existing investors

Online beauty retailer Nykaa has announced raising Rs 165 crore ($24
million) of Series D round of funding from existing investors. This
brings the total funding to $60 million for Nykaa. A few weeks ago,
Nykaa had raised Rs 75 crore ($11 million) at a valuation of Rs 3,00o
crore.

Nykaa’s early-stage investors -Sunil Kant Munjal, Chairman, Hero

Corporate Service P Ltd, Family Offices of Harsh Mariwala, and
Dalip Pathak, private equity veteran – also participated in this round.
Other than angel investors, Nykaa is also backed by Max Ventures
and TVS Capital Funds.

A press release from the company states that the fresh funding will be
used for growth and expansion. It adds that, for the financial year
2017-18, Nykaa reported net revenue of Rs 570 crore as compared to
Rs 214 crore for FY 2016-17. According to this statement, Nykaa is
continuing to see strong year-on-year growth and is expected to be
profitable in FY 2019.

Launched in 2012 by Falguni Nayar, former Managing Director of

Kotak Mahindra Capital Company, Nykaa aims to be a one-stop
destination for online shoppers looking for personal care and
cosmetics items.

Nykaa follows inventory–led model, with inventory spaces in Delhi,

Mumbai, and Bengaluru. The Mumbai-based company claims to
provide over 850 brands including M.A.C, Bobbi Brown, Clinique,
and Estee Lauder among others. Luxury vertical contributes to 10
percent of Nykaa’s total revenue.

In 2015, Nykaa launched its own private label, an essential tool to

attain profitability in e-commerce. Around the same time, Nykaa also
tried its luck in omnichannel model by opening brick and mortar
stores - with curated, best-selling products under ‘Nykaa On Trend,’
and luxury brands under ‘Nykaa On Trend.’ Altogether, there are 17
Nykaa stores now, and they plan to make it 55 by the end of FY2019.

The Indian beauty market is expected to touch $13 billion by 2020, 20

percent of which will be from the online medium. But it is not a
winner-takes-all market. Today, Nykaa competes with Mumbai-based
Purplle as well as marketplaces like Amazon, Flipkart, and Myntra
who are all building on the beauty category. In an earlier conversation
with YourStory, Nykaa CEO Falguni had said that the company was
gunning for IPO in 2018.

4) Nykaa: Adding gloss to the beauty business

Nykaa, a specialised online beauty retailer, is set to become a
unicorn in a couple of years on the back of its rapid expansion
plans and the segment’s growth potential.
Taking time off from work is rare for Falguni Nayar, founder of
Nykaa, India’s largest online beauty retailer. But when she fractured
her hand this February, she didn’t have a choice. As it turned out, it
was a real learning experience: She discovered that women aren’t the
only ones who know about Nykaa; even the assistant of the
orthopaedic surgeon who treated her at the Mumbai hospital was
aware about Nykaa and its offerings. “I was so happy that he knew
about Nykaa,” says Nayar, 55, the former managing director and chief
executive of Kotak Investment Banking, who spent 19 years as an
investment banker and broker.
Nayar always wanted to try her hand at entrepreneurship before she
retired. As e-commerce was picking up at the time, the mother of
twins quit Kotak at 50 and researched online models and realised that
customers were looking for a larger array of products in personal care,
bath, and beauty. Thus Nykaa—which gets its name from the Sanskrit
word nayaka, or the one in the spotlight—was born in 2012.
It’s been barely six years since, but Nykaa has successfully created a
spot for itself in India’s $6.5 billion cosmetics market. Other online
retailers, such as Myntra and Amazon, also offer personal care and
beauty products, but they’ve only intensified their focus on these
products over the past year. Mumbai-based Nykaa, on the other hand,
has become almost synonymous with the online beauty business. The
valuation of the startup, according to industry insiders, is touching
$500 million (around Rs 3,000 crore); and going by the way it is
scaling up, and the growth potential of this segment, it seems well
positioned to become India’s first beauty segment unicorn in a couple
of years.
The numbers tell a story. Nykaa dispatches nearly 15,000 packets a
day, which helped it close the year ending March 31, 2018, with
revenue of Rs 570 crore, up 166% from Rs 214 crore in the year-ago
period. It broke even last year and is hoping to turn a profit next year,
thanks to its breakneck growth.
How did Nykaa race its way to the top so soon? Being a specialised
online beauty retailer certainly helped. Unlike e-commerce giants
Flipkart and Amazon, which sell everything from books to groceries,
Nykaa focussed on beauty products. The only other online beauty
retailer is purplle.com. “In fashion and apparel, Myntra tends to be
better than Flipkart. Being a specialist helps in this [beauty] category;
be it in assortment or filters or narrowing down of choice, specialists
tend to offer a very specific experience, which can be habit-forming,”
says Harminder Sahni, founder and managing director, Wazir
Advisors, a Gurugram-based retail consultancy firm.
Sahni points out that Nykaa has been aggressive in its strategy of
going for exclusive partnerships with global brands, creating private
labels, and having an offline presence. Nykaa was the first retailer in
the country to tie up with global beauty brands such as Wet n Wild
and Huda Beauty from the U.S. and South Korea’s innisfree to bring
their products to India. Brands such as Kiehl’s, Clinique, Estée
Lauder, KIKO Milano, MAC, The Face Shop, and Bobbi Brown are
also available online exclusively on Nykaa. “Nykaa has managed to
keep the basics right from the beginning. From its initial days to now,
it continues to be well-stocked, customer experience has improved,
and it has price points for customers across segments,” says Sahni.

5) The story of Nykaa

Nykaa.com is the market leader and a preferred destination for online
beauty and wellness products in India. With almost 400 curated, well
priced and 100% genuine brands and 35,000 products, Nykaa prides
itself on offering a comprehensive selection of makeup, skincare, hair
care, fragrances, bath and body, luxury and wellness products for
women and men.

Nykaa.com was founded in 2012 by Falguni Nayar, former

managing director of Kotak Mahindra Capital Company. Since then,
Nykaa has become a popular brand in the eCommerce & Retail
Industry.

“Falguni saw there was a huge opportunity in the online space and
considering all the different areas she could invest in or start a
company, she focused on beauty” Nihir Parikh, Chief Business
Officer at Nykaa.com

Nykaa has grown strength to strength over years; they have always
focussed on customer needs and worked closely with their brands to
achieve the desired results.

Sachin Parikh, CFO, Nykaa advised ” The only advice I can give to
startups is to focus on sustainable growth. You know, I can spend a
lot of money, acquire the customers, get a certain level of growth but
if the customers are not coming back or the growth is not sustainable,
you are not going to achieve the targets so make sure you get to
sustainable growth.”

From last year to this year, Nykaa has grown by about 350% and this
year onwards they are going to grow on other 300%. Today they are
running at about 600 Crore run rate and have got very aggressive
targets, which they are assured to achieve.

6) Case Study on Nykaa : E-Commerce Platform for Beauty and

Cosmetics Products
How Nykaa Started:

After leaving her job from Kotak Mahindra Capital Co. Falguni as
looking for business opportunity in India and she noticed a huge gap
in the beauty products markets in India. She noticed that the demand
was on the top but there were very few places to get the genuine
beauty products. So she launched Nykaa with her banker husband
Sanjay Nayar.

Fundings:

Nykaa has managed to raise 25 million dollars so far from 7 different

investors in 4 rounds.

Series A: In the first round of funding held in July 2014. Nykaa abled
to raise 3.4 million dollars.

Series B: In series B round of funding Nykaa raised 9.5 million

dollars from series of investors including Michael Carlos, Dalip
Pathak, TVS Capital Funds, Atul Nishar, and Harsh Mariwala.

In the third round of funding the company was able to raise 820
million rupees from Harsh Mariwala, Sunil Munjal.

Nykaa Business Model:

The company has an Inventory-based model that has helped the brand
to gain its name in the fashion and cosmetics industry. The products
are 100 percent genuine and authentic, sourced directly from the
brands. Nykaa provides a hassle-free shopping experience, the virtual
makeover tool, beauty advice and assistance on the phone, free expert
advice and articles on beauty trends and tutorials and celebrity looks.
Nykaa sells more than 35,000 products from 650 brands, both
international and Indian, luxury and mass, and is constantly adding
new labels to its stock. In 2015, Nykaa introduced her own brand and
it has gone on to become a best-seller on the platform.

Nykaa Revenue:

Nykaa’s revenue has grown close to 300% in the last two years. In
2016, it raised a total of 104 crore rupees from investors and the
company hopes to break even by the end of this year. The company is
also eyeing for an initial public offering in 2020.Nykaa is receiving
15,000 orders a day, mostly from consumers between the ages of 22
and 35.

Nykaa Marketing Strategies:

Nykaa depends on content marketing for their marketing strategy.

They provide high-quality content to showcase the global trends that
have proved a winning formula for the brand name.On one hand,
where Nykaa is using high-quality content to generate traffic on the
website, Nykaa uses email marketing and social media
marketing for remarketing.Nyka also collaborated with Femina to
host the ‘Nykaa.com Femina Beauty Awards’ in 2015 and 2016 to
create the brand awareness.

7) How Nykaa Used Digital Marketing To Gain 50,000 Visitors In

Just One Month?

With over 35,000 products from more than 400 brands, Nykaa has
achieved its active presence in over 1,000 cities that includes more
than 10,000 zip codes. with the help of an inventory-based model, the
company has gained its name in the fashion & cosmetics industry and
has a growing e-commerce reach even in the remote areas.
The most remarkable point about this beauty and wellness based e-
retailing brand is that they own an active blog providing make-up tips
as well as has an expert panel of makeup stylists, and skin, hair,
personal care experts who answer questions related to beauty, health,
nutrition and personal care.

The Sparking Of The Idea!

While hunting for business opportunity in India, Falguni Nayar, the

ex-MD of Kotak Mahindra, found that there existed a huge gap in the
beauty products markets in India that time and that the country around
2012 was lagging far behind of various other countries like Japan,
France and European countries in the race.

At the same time, she found that the demands for such service
however were unexpectedly high in the country with respect to the
number of places or platforms offering genuine beauty products. The
idea and the right demand led her to jump onto the bandwagon of
entrepreneurship and she launched Nykaa in collaboration with her
husband Sanjay Nayar, who was again from the banking background.

Nykaa’s Marketing Approach

Like all most of the marketers, Nykaa’s marketing strategy includes a

number of relevant discount coupons & offers apart from the usual
campaigning of the marketing ventures. They have a team of experts
for beauty and wellness who educate and help consumers around the
world in the given area. with over 25 experts, Nykaa provide beauty
& wellness solutions online for all the queries that consumers have.

They however get this accomplished through contents and videos over
the company’s product page and social media platforms. They have a
dedicated team to conduct various digital marketing campaigns that
mainly include:

Communicating through the Content

As discussed earlier, the e-retailing brand makes use of high-end
content forms for making the people aware of the global trends that
have made a brand a winning name. They have active blog on beauty
& wellness providing make-up tips and expert advices.

Making it more engaging through the YouTube Channel

Realizing the importance of video advertising, Nykaa owns a

dedicated YouTube channel “Nykaa TV” that provides the consumers
with up to date & best video guidance for using beauty & wellness
products. with the help of a number of “how-to videos” they help the
users and customers in choosing the right products as well as in using
them in the right way.

YouTube Channel of Nykaa has garnered around 50K subscribers.

Encouraging interactions through the Social Media platforms

Like every smart marketer would do, the marketing team at Nykaa
leverages various social media platforms for not just connecting to the
consumers, engaging them and generating leads but also converting
them into sales by offering them with the various discounts.

The company makes use of its Facebook fan page for sharing various
offers & deal posts for Facebook has yielded them with a massive 1.4
million fan following on this platform. In fact, the e-retailing brand
based on the Facebook fan page success has now integrated a “Shop
now” option on it that redirects consumers to their e-commerce
website for purchasing the beauty products if they wish to. The
company has garnered over 11.1K followers on Twitter by posting
attractive & lucrative pieces of content over the platform.

Instagram profile for Nykaa has grown large with more than 133K
followers.

The Stunning Success!

Taking a look at the latest data, with 95% the number of repeat
customers accounts for the major part of revenue generated by Nykaa.
The company has generated INR 220 crores as its revenue in the year
2015-16 itself.

Within a short span of just 4 years the company has grown vastly
since its inception in 2012. We already have seen in its marketing
strategy section about the stunning success the company has achieved
on various social media platforms.

With over 50,000 unique visitors frequenting the e-commerce website

every month of which 80% on an average are women, the company is
extending its business in other ways as well. They have launched
their first offline retail store at IGI airport terminal 3, which is also
exhibiting the similar success.

FYI: For Your Information!

Funding

The company has raised 20 crore in funding from private investors

that include HNIs (high net-worth individuals) and non-resident
Indians (NRIs) in June 2014 and last year that was in 2015, it raised
$9.5 million from a group of Indian investors.

Collaborations

In collaboration with Femina, Nykaa hosted the ‘Nykaa.com Femina

Beauty Awards’ in 2015 and 2016, which were the award functions
created for highlighting the best products & brands in beauty &
wellness.

Company’s Contribution towards Social Causes

In 2015, on the occasion of International Women’s Day, Nykaa raised

funds for Project “Nanhi Kali”, which is an Indian NGO for girl child
education providing primary education to underprivileged girl
children in India.
8) Nykaa’s 4-day sale set to rake in Rs 85 crore, Firm revises FY19
revenue guidance upwards to Rs 1200 crore

MUMBAI: Beauty retailer Nykaa saw a 5x growth in order volumes

during its 4-day sale starting last Friday, with average order values
surging 46% on the first day alone. The ‘Nykaa Pink Friday’ sale is
expected to rake in gross sales worth $12 million or about Rs 85 crore
over the 4 days for Nykaa.

This is the second edition of the sale for the firm which clocked gross
sales of $2.5 million last year. This would imply a 5x growth in order
volumes and gross merchandise value since 2017. ..

We had planned the sale to be at 3x of our usual order volumes and

growth. But the first day alone saw orders surge 5x. We have been
surpassing our budgeted revenue target by about 18% for the last
couple of months. On the basis of this (sale) and the recent monthly
growth, we believe we will be able to significantly exceed our net
revenue target for FY19 to Rs 1,200 crore,” Falguni Nayar, Founder
and CEO of Nykaa told ET.

The firm, which is backed by Sunil Munjal’s family office,

consumer goods maker Marico’s Mariwala family office as also
private equity fund Lighthouse Advisors amongst others, ended FY18
with Rs 570 crore in net revenue and had targeted net revenues to
almost double to Rs 1,050 crore in FY19.

Nayar maintains that the firm ended October with Rs 110 crore in net
revenue and the strong monthly growth over the last 3 months
coupled with the boost during the 4-day sale period has led the firm to
revise its net revenue projection upwards to Rs 1,200 crore.

9) Nykaa Man To Contribute About 2% To Nykaa’s Overall

Revenue
Online beauty and wellness marketplace Nykaa has added a new
section for men called Nykaa Man. The company expects its new
section to contribute about 2% to the company’s overall revenues. It
further expects the revenues from the men’s section to grow to about
10% of the company’s overall revenues in a couple of years.

A media report cited Nykaa’s chief business officer Nihir Parikh as

saying, “About 15% of our social followers are men and about 20% of
our traffic comes from men and male products.”

The Mumbai-headquartered Nykaa was founded by Falguni Nayar in

2012. The company, which owns 33% of the online beauty
market, raised $24.45 Mn (INR 165 Cr) in a Series D funding.

So far, the total capital raised by Nykaa stands at about $37

Mn (INR 255 Cr).

Nykaa currently offers more than 150-200 brands across categories

such as men’s fragrances, luxury skincare, and premium natural
products, among others.

Until April, it had 17 offline stores India which operate in two

formats — Nykaa Luxe and Nykaa On Trend. The On Trend stores
offer a unique curated experience featuring bestselling products
chosen from over 100 beauty brands, while the Luxe format focusses
on the complete offering from premium beauty brands.

The Booming Beauty And Wellness Market In India

Websites such as NewU and Purplle, with their exclusive focus on

beauty and wellness products, are also leading the space. Mumbai-
based online beauty products marketplace Purplle recently raised
$2.57 Mn (INR 17.5 Cr) from a group of investors in a fresh funding
round. Grocery delivery startup BigBasket has also announced a foray
into cosmetics with its private label.

Prior to this, reports surfaced that Amazon India was planning to

launch its own private label of beauty and personal care products.
Also, Flipkart subsidiary Myntra announced its plans to open beauty
and wellness offline stores.

FICCI estimates the Indian wellness industry to grow at a CAGR of

12% to achieve a $23.4 Bn (INR 1.5 Tn) turnover by 2019. In a huge
serviceable market like India, the launch of Nykaa Man can enable
Nykaa to explore the sizeable potential of the men’s grooming
market.