Nykaa's make-up for beauty retail
Right marketing and product strategy have helped Falguni Nayar build a beauty retail business
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When Falguni Nayar left investment banking firm Kotak Mahindra Capital to start Nykaa, a multi-brand beauty retailer, little did she know the business would gross Rs 600 crore in four years. Nykaa earned Rs 225 crore for the year ended March 2017 and is eyeing a break-even at the operating earnings level by September and hopes to end the year with a top line of Rs 750 crore; it is doing Rs 600 crore on a run rate basis.
What has it done well? The key differentiator has been its marketing (focus on digital media than on expensive television advertising), product strategy (right ones and exclusive brands), and an inventory-led model that allows it to deliver fresh products. ‘‘The key is to be a retailer than chase customers with discounts,’’ says Nayar.
Adding: ‘‘We bought a lot of content on our website and understood the art of retailing, which is to intertwine advice with sales, not just push sales. We have an online magazine and are very active on social media (2.1 million Facebook likes, 225,000 followers on Instagram) to connect and educate customers on new brands and trends. New is a big thing in beauty and drives 30-40 per cent of all sales.”
Nykaa follows an inventory-led model. It has big warehouses in Delhi and Mumbai (50,000 sq ft each) and a 15,000-sq one in Bengaluru. Beauty is a long-tail inventory business, requiring it to carry a wide variety of brands and SKUs or stock keeping units (say, 50 shades of a nail enamel). Nykaa sells 650 brands on its website. Many brands are offered exclusively on its website. These include MAC, Kiehl’s, Innisfree, Ciaté London and LA Girl that are available online only at Nykaa in India; brands like The Shave Doctor or Milani Cosmetics are available exclusively at Nykaa in India. It also sells products under the private label, Nykaa, which accounts for eight per cent of its sales. The plan is to grow this to 20 per cent.
Shalini Raghavan, chief marketing officer at the consumer products division of L’Oréal India, says the online space holds great potential to educate and inform customers through influencers such as bloggers and social media, where content is very important. “The key is to integrate content into e-commerce, so that the consumer does not miss the ‘touch and feel’ aspect on which the make-up category has been thriving so far.”
Nykaa has raised Rs 183 crore in funding since 2014. In end-2016, it raised Rs 21.8 crore from Max Ventures, after raising Rs 82.5 crore in early 2016 from the family offices of Sunil Kant Munjal, Harsh Mariwala and TVS Shriram Growth Fund. In 2015, Nykaa had raised Rs 60 crore from the TVS fund, family offices of Atul Nishar, Harsh Mariwala and others. In 2014, it began with Rs 20 crore from private investors.
What has it done well? The key differentiator has been its marketing (focus on digital media than on expensive television advertising), product strategy (right ones and exclusive brands), and an inventory-led model that allows it to deliver fresh products. ‘‘The key is to be a retailer than chase customers with discounts,’’ says Nayar.
Adding: ‘‘We bought a lot of content on our website and understood the art of retailing, which is to intertwine advice with sales, not just push sales. We have an online magazine and are very active on social media (2.1 million Facebook likes, 225,000 followers on Instagram) to connect and educate customers on new brands and trends. New is a big thing in beauty and drives 30-40 per cent of all sales.”
Nykaa follows an inventory-led model. It has big warehouses in Delhi and Mumbai (50,000 sq ft each) and a 15,000-sq one in Bengaluru. Beauty is a long-tail inventory business, requiring it to carry a wide variety of brands and SKUs or stock keeping units (say, 50 shades of a nail enamel). Nykaa sells 650 brands on its website. Many brands are offered exclusively on its website. These include MAC, Kiehl’s, Innisfree, Ciaté London and LA Girl that are available online only at Nykaa in India; brands like The Shave Doctor or Milani Cosmetics are available exclusively at Nykaa in India. It also sells products under the private label, Nykaa, which accounts for eight per cent of its sales. The plan is to grow this to 20 per cent.
Shalini Raghavan, chief marketing officer at the consumer products division of L’Oréal India, says the online space holds great potential to educate and inform customers through influencers such as bloggers and social media, where content is very important. “The key is to integrate content into e-commerce, so that the consumer does not miss the ‘touch and feel’ aspect on which the make-up category has been thriving so far.”
Nykaa has raised Rs 183 crore in funding since 2014. In end-2016, it raised Rs 21.8 crore from Max Ventures, after raising Rs 82.5 crore in early 2016 from the family offices of Sunil Kant Munjal, Harsh Mariwala and TVS Shriram Growth Fund. In 2015, Nykaa had raised Rs 60 crore from the TVS fund, family offices of Atul Nishar, Harsh Mariwala and others. In 2014, it began with Rs 20 crore from private investors.