We all want to look perfect during festive seasons like Navratri. Nine days of celebrations can take a toll on our wallets, right? But it’s not just during Navratri—finding quality beauty products at affordable prices is a daily struggle for many. Despite India’s vast market, the variety still falls short compared to international standards.
Until one visionary woman decided to change the game and establish a ₹571.90 billion empire where quality didn’t come at a premium, read on to discover her inspiring journey.
With A Leap of Faith
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The Early Days of Setting up
Nykaa, meaning “heroine” in Sanskrit, was born out of Falguni’s passion for beauty and her vision to create a platform that offered quality products and a seamless shopping experience.
Starting with just three employees in her father’s small office, Nykaa quickly gained traction by fulfilling 60 orders in its early days. Prioritizing quality, the company initially offered products from 200 brands, specializing in cosmetics, skincare, and haircare.
A Unique Selling Proposition
As a newcomer, Nykaa needed to stand out from established players like Myntra and Ajio. Its unique selling point was a commitment to quality and authenticity.
While others often sold discounted, low-quality products, Nykaa focused on offering genuine full-price items.
Team Attrition & Tech Glitches
The company had its share of initial setbacks. The founding team faced burnout and attrition, with several members leaving within the first year. Technical difficulties plagued the website, which struggled to handle even a modest influx of orders.
The system would crash on hitting the 100th order. The absence of an enterprise resource planning (ERP) system further complicated these challenges.
Early Hurdles
Despite these obstacles, Nykaa persevered. By investing in marketing and improving its technology infrastructure, the company was able to overcome these hurdles and experience significant growth.
The turning point came in August 2013, when Nykaa participated in the Google Online Shopping Festival and saw a surge in orders, reaching approximately 1,000 per day.
Nykaa’s Unconventional Path
While many e-commerce players adopted a marketplace model, Nykaa opted for an inventory-based approach, ensuring better product availability and quality control.
The company also resisted the trend of brand-funded sales, prioritizing customer satisfaction over short-term gains. Nykaa believed in passing discounts directly to consumers rather than relying on brands to subsidize sales.
Another strategic decision was to avoid the popular “beauty box” model, which offered curated selections of products. Nykaa focused on providing a wider range of products and empowering customers to choose favorites.
A Blend of Experience and Youth
Nykaa’s success can be attributed to its diverse team, which includes experienced professionals and young talent.
The company’s younger members, who grew up immersed in social media, understood its power and leveraged it effectively. This digital-first approach played a crucial role in Nykaa’s marketing strategy.
As a Marketing Tool
Nykaa recognized the importance of educating its audience. The company-built trust and credibility among its customers by creating informative content and leveraging influencer marketing.
This educational approach proved successful in driving sales, especially for more complex products.
Expanding Horizons
2015 saw Nykaa open physical stores alongside its online platform to boost customer engagement and accessibility.
Recognizing the fashion market’s potential, Nykaa Fashion quickly gained traction, with its GMV growing by an impressive 256% in just two and a half years and unique transacting customers reaching 1.3 million.
Expanding its offerings to include kids’, men’s, and home products, Nykaa Fashion solidified its lifestyle brand status. It now features over 1,500 brands, including five of its own.
Challenges & More
The COVID-19 pandemic presented significant challenges for Nykaa. Despite facing a revenue decline during the initial months, Nykaa remained resilient and adapted its strategy to meet the changing needs of its customers.
To mitigate the impact of the pandemic, Nykaa introduced hyperlocal deliveries for essential goods. This strategic move helped the company maintain its customer base and explore new revenue streams.
Of Company Performance
By July-September 2020, Nykaa began to see signs of recovery. The company’s performance continued to improve, culminating in a strong quarter from October to December.
However, the supply chain constraints limited revenue growth during this period. The pandemic did not deter Nykaa’s growth ambitions.
Despite the challenges, the company pursued an initial public offering (IPO). After a rigorous process that took nearly a year, Nykaa successfully listed on the stock market in November 2021.
A Successful Listing
Nykaa’s IPO was a resounding success, with shares being oversubscribed 82.5 times. The company’s shares debuted at ₹2,001, representing an 80% premium over the issue price. This strong listing reflected investor confidence in Nykaa’s future.
Post-IPO Challenges and Triumphs
Following the IPO, Nykaa faced challenges related to customer acquisition costs, which led to a 95 percent decline in net profit at ₹1.2 crore for the September-ended quarter compared to ₹27 crore in the year-ago quarter.
However, the company remained focused on long-term growth and continued to invest in marketing and expansion.
In FY23, Nykaa’s operating revenue reached INR 5,144 crore, with a small profit of INR 21 crore. The company’s growth trajectory continued in FY24, with operating revenue reaching INR 6,386 crore and a profit of INR 40 crore.
In the Indian Business Landscape
Notable achievements mark Falguni Nayar’s entrepreneurial journey. Under her leadership, Nykaa has gained recognition for its innovative approach and disruptive impact on the beauty and fashion industry.
The company’s impressive performance is evident in its stock market surge, with returns on investors’ capital reaching 96%, propelling it into the exclusive unicorn club. In 2022, Falguni was named India’s richest woman by the IIFL Wealth Hurun India Rich List.
Nykaa’s Vision for the Future
The company’s future focus on expanding its multichannel reach, blending the best of online and offline shopping. Nykaa aims to double its physical store count from 187 to 400 by 2027.
Nykaa’s fashion vertical is also poised for significant growth. The company expects this segment to expand by 2.5-3 times over the next three years, reflecting the increasing demand for fashion products and accessories.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
