Nykaa founder Falguni Nayar with her team. Photo: Abhijit Bhatlekar/Mint

Nykaa founder Falguni Nayar together with her crew. Photo: Abhijit Bhatlekar/Mint

Mumbai: From three massive warehouses situated in Mumbai, Delhi and Bengaluru, greater than 15,000 on-line orders fly out each day, delivering gloss, perfume and aspirations to properties throughout the nation.

In simply 5 years, Nykaa.com has come from nowhere to turn out to be synonymous with on-line cosmetics and private care merchandise in India, whereas additionally making it to world market research. It’s the vacation spot for ladies from cities and small cities attempting to find their favorite manufacturers of deodorants, lipsticks and make-up kits, and people eager to check out new worldwide merchandise. The model has now stepped into offline gross sales as effectively, organising 5 luxurious cosmetics shops.

Nykaa is former funding banker Falguni Nayar’s reply to Sephora, the worldwide luxurious cosmetics retailer chain owned by LVMH (Moët Hennessy Louis Vuitton). The Nykaa founder needs her on-line retailer to host each common cosmetics and luxurious manufacturers, a tricky process in an business the place high manufacturers want to be amongst these of their very own variety. 

Ask why she is constructing luxurious cosmetics shops to enhance her standard portal, Nayar pauses for a second earlier than saying, “We wished to be like Sephora. I say we’re like Sephora, however Sephora by no means sells standard, cheaper manufacturers similar to Neutrogena, or Nivea, however we don’t wish to hand over on that; we wish to promote that, as a result of in India these issues are necessary.” 

Nykaa got down to get Indian shoppers used to the concept of shopping for make-up and private care merchandise on-line with out bodily attempting them on first. The plan was to subsequent introduce them to luxurious manufacturers they know and belief sufficient to purchase on-line. And lastly, it wished to turn out to be the one door for brand spanking new high-end and luxurious manufacturers to return to India, and entry a big market by way of a retailer the place prospects have reposed their belief. 

My entire start line was that it’s important to give shoppers what they need– Falguni Nayar

The systematic method appears to have labored. In 2016-17, Nykaa clocked gross sales of Rs214 crore and its gross merchandise worth—the overall worth of products offered on the web site—rose three.6 occasions year-on-year to Rs275 crore. The firm is operationally worthwhile, says Nayar. 


Nayar spent practically 20 years at Kotak Mahindra Capital Co., transferring from organising its worldwide operations to heading the institutional equities enterprise, lastly ending up as managing director of Kotak’s funding banking enterprise. She suggested main offers together with Hutchison’s sale to Vodafone Plc and the three way partnership between Bharti Enterprises Ltd and Wal-Mart Stores Inc. She continues to serve on the boards of a number of corporations together with Tata Motors Ltd, Dabur India Ltd and ACC Ltd. 

Beauty struck in 2012.

“My entire start line was that it’s important to give shoppers what they need,” says the finance specialist-turned-entrepreneur. “That’s the start line for magnificence (merchandise). There is model proliferation all around the world and the client is utilizing plenty of manufacturers. We wish to be an excellent retailer, we wish to be a multi-brand retailer, we wish to be the greatest magnificence vacation spot.”

With Sephora as benchmark, Nayar arrange Nykaa, changing into India’s first unique on-line cosmetics vendor. The intention: turn out to be the nation’s one-stop store for all cosmetics and private care manufacturers. 

Unlike Sephora which has the posh of specializing solely in high manufacturers, in a rustic the place penetration of magnificence and private care merchandise is low—much more so on-line—and shoppers have simply began elevating discretionary spends, Nayar has to mix luxurious manufacturers with lower-priced ones which can be higher identified, in demand and simpler to spend on on-line. 

Falguni Nayar set up Nykaa, becoming India’s first exclusive online cosmetics seller. Photo: Abhijit Bhatlekar/Mint

Falguni Nayar arrange Nykaa, changing into India’s first unique on-line cosmetics vendor. Photo: Abhijit Bhatlekar/Mint

“I used to be a believer that you need to be an aspirational retailer,” says Nayar. “So we work very exhausting to persuade luxurious manufacturers that they need to be on our web site. They wish to be subsequent to different luxurious manufacturers. Because I knew India, I advised them that tomorrow’s luxurious shopper might be shopping for Dove at this time. So, to make an exception in a market like India, they need to sit subsequent to standard manufacturers like Maybelline and Lakme, and others.” 

And she may persuade them, which is why at this time Nykaa hosts a lot of overseas luxurious manufacturers together with MAC lipsticks, OPI nail paints and Bobbi Brown make-up. Luxury gross sales now account for about 15% of its enterprise, a section Nykaa doesn’t provide on low cost, “as a result of luxurious manufacturers don’t wish to low cost”, says Nayar.  

With its first-mover benefit, Nykaa has additionally been capable of avert an previous debate in e-commerce: horizontal versus vertical marketplaces. Some specialists contend that verticals which promote just one sort of products —say Myntra for vogue and UrbanLadder for furnishings—are finally subsumed by horizontals like Flipkart and Amazon which have extra money and clout to easily add that enterprise on their platforms. But Nykaa has turn out to be synonymous with shopping for make-up and now, slowly, different private care objects on-line. A July report Emergence of Online Beauty Specialists in India by world shopper market knowledge agency Euromonitor devoted a particular part to Nykaa and its function in shaping on-line gross sales of cosmetics in India. 

This, in a market the place Amazon and Flipkart are engaged in a fierce, costly battle to dominate e-commerce in India. 

“We are very certain that we’ve been capable of construct a really distinctive web site,” says Nayar. “A model has received created, a vacation spot model, a product model. And that’s what is exclusive to our enterprise mannequin in comparison with different e-commerce web sites the place I don’t suppose they succeeded in making a model vacation spot.” 

Nykaa has a well-liked weblog referred to as Beauty Book which presents a spread of make-up suggestions

An evolving market

Euromonitor estimates India’s Internet retailing market grew at a CAGR (compound annual progress fee) of 67% in worth from 2011 to 2016. But this was largely pushed by bigger classes together with attire, footwear, shopper electronics and eyewear; magnificence and private care was nonetheless lower than 1% of this market in 2016, it mentioned. 

“One of the important thing the explanation why this channel was nonetheless comparatively area of interest was the dearth of dependable on-line retailers specialising in magnificence and private care merchandise,” mentioned the report. “However, this was within the technique of present process gradual change, with the expansion of the corporate Nykaa.com.” 

And that’s mirrored in the truth that two million prospects have purchased merchandise from Nykaa to this point. 

Mehak Sagar Shahani, founding father of magnificence weblog Peachesandblush and wedding ceremony planning web site WedMeGood, says Nykaa has turn out to be a window for a lot of non-metro ladies to purchase worldwide luxurious magnificence merchandise. 

“Quite a lot of issues that aren’t obtainable outdoors are on Nykaa, like NYX (Los Angeles-based cosmetics agency NYX Cosmetics),” says Shahani. “Even Sephora could not have the entire inventory. Quite a lot of Nykaa’s gross sales should be coming from tier II and tier III cities as a result of if a lady is in a tier II city and desires Bobbi Brown, the place will she get it from?” 

Nykaa has turn out to be a window for a lot of non-metro ladies to purchase worldwide luxurious magnificence merchandise– Mehak Sagar Shahani, founding father of WedMeGood

In truth, Nayar confirms that a few of Nykaa’s most loyal prospects—profiled from repeat purchases—are from smaller cities in Bihar and Jharkhand. 

Beauty bloggers like Shahani are those who introduce ladies in smaller cities and cities to costly worldwide manufacturers. The hottest type of this can be a now-ubiquitous “contouring” video on YouTube the place a number of bloggers run tutorials on the newest tendencies in make-up strategies—shaping the strains and construction of your face to a extra flattering impact with quite a lot of make-up merchandise together with basis, face color, pallettes and cream sticks. 

“The very first thing somebody asks a blogger is what lipstick are you sporting, what is that this contouring make-up you’ve used? And then they’ll resolve, okay, my pores and skin tone is near theirs and so I’ll purchase these merchandise. Without on-line reviewers, it will likely be very exhausting to run a enterprise like this,” says Shahani. “Beauty bloggers may also introduce folks to manufacturers, like in a video if I see somebody use MAC or Bobbi Brown, I’ll purchase it.”  

In truth, in step with the significance of the wonder blogger neighborhood, Nykaa additionally has a well-liked weblog referred to as Beauty Book which presents a spread of suggestions—from tips on how to hold cool in the summertime to eyeliner tutorials to product suggestions for skincare. It additionally runs Nykaa TV, a YouTube channel with make-up tutorials by well-known “vloggers” (video bloggers) who run the whole lot from bridal make-up courses to tutorials on the fundamentals of making use of metallic eyeshadows. Nykaa says it reaches greater than 2.5 million folks by way of its YouTube channel, Instagram feed and Facebook web page. 


Running a vertical on-line retail enterprise is difficult. 

“It is hard to stay vertical; extra of those horizontal gamers (Flipkart, Amazon) are including well being and sweetness additionally,” says Rajat Wahi, companion at Deloitte India who heads the patron, retail and agri-practice. “Pure play segments discover it robust and an increasing number of we see that individuals gravitate to at least one portal and purchase the whole lot from there. If you’ll be able to provide high-end tech, superb visuals, superb supply and types, then it may be attainable. With premium manufacturers you’ll be able to perhaps survive. But for mass shoppers, I’m unsure.” 

Nykaa has survived not simply with its concentrate on luxurious, but in addition some investment-heavy enterprise choices it made early on. 

One of those is to stay an inventory-led enterprise, that means Nykaa.com sells solely what it shares in its personal warehouses. That means no third-party sellers.

“We consider magnificence is a long-tail stock enterprise, within the sense that there are various merchandise of ours which can not promote,” says Nayar. “We are inventory-led; so we don’t present out of inventory. We present zero whether it is out of inventory as a result of in any other case we will’t fulfil an order. We do greater than 10,000-15,000 orders a day so we don’t wish to should cope with (having to inform the client), ‘Oh, 5 merchandise can be found, two aren’t obtainable, maintain this order’. All this occurs attributable to know-how.” 

Nykaa shares greater than one million merchandise at its three warehouses each month—one 50,000 sq. ft warehouse in Mumbai, one other 50,000 sq. ft one in Delhi and a 15,000 sq. ft warehouse in Bengaluru. The firm lately upgraded two of its warehouses at a price of Rs60 lakh every, says Nayar.

Nykaa is now operationally profitable and has managed to bring down its cost of customer acquisition significantly.Photo: Abhijit Bhatlekar/Mint

Nykaa is now operationally worthwhile and has managed to convey down its value of buyer acquisition considerably.Photo: Abhijit Bhatlekar/Mint

The know-how crew’s largest job is stock administration, to be able to make sure that sudden fluctuations in demand aren’t allowed to have an effect on the corporate’s shopping for cycles. Nayar explains: “We can’t handle our enterprise with out studies, so we get plenty of every day studies, like early snapshots on what number of orders we get each hour. If we’ve extra stock, then we are going to cease shopping for. We received’t enable our model managers to purchase that any extra. Say in the event that they take 100 items—and we usually work on one-month stock cycles—they’re assuming that 100 items will promote in a single month. But they’re not even promoting one piece per week, which suggests they’re at a run-rate of simply 4 items a month. So, we are going to wait to appropriate that stock first.” 

This additionally means transferring to purchase rapidly when a product begins promoting extra, as an illustration, standard manufacturers of kajal and eyeliners, magnificence necessities in India. “What we resolve to drop, we do month-to-month. Everyday, vis-à-vis our anticipated sell-through fee (the variety of items of a product offered in a time interval) we monitor our precise sell-through fee. And we hold making changes each week. But each week, changes are executed for our high sellers. And the clean-up (of the stock) is finished each month or each two-three months,” she explains. 

Going offline and personal labels 

Inevitably, massive on-line retailers who’ve created formidable model names have chosen to open bodily shops. While the newest amongst them is Bengaluru-based furnishings retailer UrbanLadder, Nayar began organising Nykaa Luxe shops in Mumbai, Delhi and Bengaluru to promote offline the posh manufacturers she has satisfied to return to India. 

The firm now has 5 Nykaa Luxe shops in coveted purchasing areas (Khan Market, Delhi) and malls (VR Mall, Bengaluru and Infiniti Mall, Mumbai). 

“So the shops are an necessary a part of our omnichannel technique,” says Nayar. “It’s simply that we’ve been rising at a fierce tempo, we grew 1,000 occasions one yr and a 150 occasions one other yr, after which one other 150 occasions…so there’s been plenty of work on e-commerce itself. So our shops have gone slower than anticipated. Like this yr, we wished to be at seven shops, we’re solely at 5. But we don’t wish to go to the flawed location.” 

These cater to Nykaa’s luxurious prospects, individuals who will check out a luxurious model as soon as in individual after which purchase it on-line repeatedly. Only the very costly, together with Davidoff fragrances and Estee Lauder lipsticks priced at Rs2,500 every can be found right here. 

“Retail is all about omnichannel,” says Pankaj Renjhen, managing director of retail providers at actual property agency Jones Lang LaSalle India. “One of the manufacturers in a mall we had spoken to in Europe had gone on-line (with their very own e-commerce web site completely for his or her model). We requested them why they had been additionally staying within the mall. They mentioned wherever we shut down (bodily) shops, our (on-line) gross sales additionally fell by 30%.” 

Renjhen believes being current offline, particularly for inventory-led retailers who’ve their very own model title, is necessary to assist on-line gross sales. It additionally turns into a gateway to check out manufacturers and persuade folks to purchase magnificence merchandise, together with costly luxurious ones, on-line. 

Nayar is now engaged on one other retailer format whilst she has set a goal of 30 Nykaa Luxe shops, essentially the most she says a market like India can take up. She declined to share extra particulars. “Physical retail can, if profitable, turn out to be as a lot as 25% (of complete gross sales) within the subsequent 5 years,” she says, including its contribution is minimal proper now. 

Nykaa’s largest buyers embody the household workplace of Marico founder Harsh Mariwala, TVS Capital Funds and Sunil Munjal, joint managing director of Hero MotoCorp

While shops are being arrange and luxurious manufacturers persuaded to promote on Nykaa, the corporate is increasing its personal label choices to plug the gaps within the Indian magnificence market the place manufacturers aren’t but obtainable. For occasion, Nykaa’s personal “bathtub and physique” vary of lotions and bathe gels operates in the identical section as American manufacturers Victoria’s Secret and Bath & Body Works, which aren’t in India but. The firm largely sells color cosmetics below its title, together with lipsticks and eye pencils. This can be Nykaa’s largest promoting class throughout manufacturers, with 50% of income coming in from this section as per Euromonitor. Private labels make up Four-5% of Nykaa’s gross sales, mentioned the report. 


Nykaa’s largest buyers embody the household workplace of Marico Ltd founder Harsh Mariwala, TVS Capital Funds (Pvt.) Ltd, and Sunil Munjal, joint managing director of two-wheeler maker Hero MotoCorp Ltd. The firm’s final fundraising was in September 2016 value roughly Rs102 crore in two tranches, says Nayar. 

“To be capable of legally, legitimately do the stock mannequin, we stayed away from overseas cash and we raised solely home funding,” she Nayar. As per India’s guidelines, overseas direct funding shouldn’t be allowed in inventory-led e-commerce companies. This has been a hotly debated situation round funding rounds of corporations like Amazon and Flipkart which have raised funds from overseas funds and likewise function partially on their very own stock. 

Nykaa is now operationally worthwhile and has managed to convey down its value of buyer acquisition considerably. “It has slowly and steadily come right down to sub-Rs200 ranges,” says Nayar. “The business is someplace between Rs650-2,000. That is a serious achievement at a time when Amazon and Flipkart are nonetheless engaged in a discounting battle to win over buyer loyalty.”

Meanwhile, Nykaa’s prospects are already demonstrating that elusive loyalty with common ticket sizes of Rs1,200-1,500. “Most prospects put three.5-Four objects in a cart,” says Nayar. “And that has stayed fixed for the final three years.It tells us that we’re reaching an experiential web site the place folks wish to study and check out new issues. So they’re not coming for simply that one or two merchandise, they’re including extra to the cart.” Besides, she says, 75-80% of the 10 million guests on the web site and the app are “non-paid” that means they weren’t routed to Nykaa with a paid commercial. 

Earlier this yr, there was information on startup blogs Yourstory and Inc42 in February about Nykaa’s supposed plans to go public the subsequent yr. Nayar says there isn’t any reality to that. 

“That was misquoted,” she says. “What I used to be attempting to say was that I’m not constructing this firm to promote. I’m constructing it to have a lifetime of its personal. I’ve additionally taken different folks’s cash, so I’ve to present them exits, proper? So the logical factor to do can be to do an preliminary public providing (IPO) on the proper time.” 

In truth, the IPO specialist has a transparent timeline in thoughts for when a enterprise ought to think about going public. For Nykaa, she says, it’s not going to be instantly. 

“I’ve executed extra IPOs than anybody else,” says Nayar. “I used to be in funding banking and my specialty was IPOs. So, I consider that corporations ought to have a internet revenue of at the least Rs100 crore earlier than they do an IPO, with a Rs200 crore gross revenue. So, proper now, we’re not creating wealth. Once you begin creating wealth, you begin paying taxes additionally, so it’s important to make double the cash.”

Start-ups are the embryos of tomorrow’s enterprise ecosystem. They give us hope for the long run whereas laying the inspiration for progress. In the 1990s, India had the likes of Bharti Airtel, Axis Bank and, after all, Infosys for inspiration. In an earlier period, there was Reliance and Nirma, which set the gold normal for entrepreneurship. Now, as we stand bang within the centre of a brand new digital revolution, Mint seeks to search out the potential superstars of the long run. Our goal was easy: to establish the constituents of a Mint40 inventory index in 2030. The selection of corporations can be apparent in some circumstances, debatable in others, however there might be no arguing that these corporations symbolize the zeitgeist of this new age of Indian enterprise. Over the subsequent few months, Mint will profile these 40 corporations, throughout industries and segments.

To learn concerning the start-ups lined to this point, click on right here.

Nykaa: Selling magnificence on-line by: Pamela Hendrix published:


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