• Tanvi Bhamare

The Black Horse of the Ecommerce industry!



It is hard for a person to quit a stable job at the age of 50 and think about starting a business from scratch. Well, had it been easy, the exemplary story of the brand Nykaa and its founder Falguni Nayar would not exist. She bid adieu to a well-established career to launch her entrepreneurial dream - The Brand: Nykaa!


Nykaa is an Indian Lifestyle retailer of beauty, wellness and fashion products that was founded by Falguni Nayar in 2012. It's a unicorn start-up and as of 2020 was valued at $ 1.2 billion. Falguni Nayar was a former Managing Director at Kotak Mahindra capital company before she founded Nykaa. It was launched as an E-Commerce portal offering a range of beauty and wellness products. Nykaa it got its name from the Sanskrit word Nayaka which means 'one in the spotlight'! The meaning of this name is epitomized in the growth story of this start-up that has gone from strength to strength to become of the most popular brands in the country!

THE MARKETING STRATEGY:

Many companies have marketing strategies that help them to grow and expand in the world of business and here’s what Nykaa’s strategy is! Nykaa's 360 degree coordinated marketing and content strategy developed over the last seven years made it one of the largest omnichannel beauty players in the country. For an online retailer like Nykaa customer experience is a key component of a robust customer retention strategy. The company has said that it adopts this 360° marketing strategy to promote products but on the same level influencers play a vital role for the company too. The brand has been leveraging social media platforms to promote its products which is evident from the marketing strategy that they have adopted aggressively in the last few years. The current covid-19 pandemic has caused a tectonic shift in marketing strategies and Nykaa has followed suit by roping in more influencers to promote the brand.



Influencer Marketing Strategy: Introduction

Nykaa uses the influencer marketing strategy which involves a business promoting its products and services by partnering up with popular social media users, bloggers, content creators or vloggers. Nykaa mainly operates in two segments in the retail fashion products industry and they are:

  1. Nykaa Beauty

  2. Nykaa Fashion


Nykaa beauty sells products right from drug stores to premium products within the section of cosmetics, personal care, hair and hair care space whereas Nykaa fashion sells apparel and accessories including shoes, footwear, bags, purses, perfumes at best prices for men and women.



Influencer Marketing Strategy: The COST SAVER

Nykaa believes that this influencer marketing strategy is a cost-saving one. For instance, in 2019 when Katrina Kaif launched her beauty brand KAY beauty in partnership with Nykaa, the beauty retailer had invited Instagram bloggers and vloggers for the launch and collaboration. Even the recently concluded Nykaa pink Friday sale was also extensively promoted by content creators from YouTube and Instagram. One of the insights identified and exploited by Nykaa is the potential revenue that can be earned with the help of a large number of micro-influencers is greater than collaborating with a few mega-influencers. According to experts, prominent social media influencers charge anywhere from 5 to 10 lacs minimum for a video promotion while micro-influencers charge as low as rupees 5000 for promoting a product.


Nykaa's Business Model Structure:

Nykaa is one of the few E-Commerce brands to follow and inventory-based business model. Here is how the inventory-based e-commerce model works:


  • Nykaa purchases products directly from the manufacturers and stores it in the warehouses in New Delhi Mumbai and Bangalore.

  • Products are sold either on Nykaa's website or through its 3 offline store formats that include: 1. Nykaa Luxe 2. Nykaa On Trend 3. Nykaa Kiosks.


And here's how exactly Nykaa earns!

This inventory business model allows for high-profit margins with the responsibility of product damages lying with the company. Businesses can also ensure product authenticity and follow competitive pricing using the inventory model.


Nykaa’s Revenue:

As of 2020 Nykaa has an estimated worth of dollar 1.2 billion making it one of the most successful start-ups in the country. Thanks to the inventory model Nykaa was able to break even in 2017 only five years after they started operations. While the initial cost of acquiring a new customer was approximately INR 1000, it was brought down to INR 200 - 250. In FY 2019, Nykaa generated a revenue of Rs. 1,159.32 crore, up 108 % from the previous fiscal year!


Nykaa’s Revenue from 2016-2019:

Nykaa reported a revenue of approximately 157 million U.S dollars. This was an increase of almost 80 percent compared to the previous fiscal year revenue.


FY 2016 - 10

FY 2017 - 32

FY 2018 - 88

FY 2019 - 57


Nykaa’s growth strategy in Tier 2 cities:


Nykaa is witnessing a boom in orders from Tier 2 cities and has tapped into these markets successfully. Its strategy of setting up offline stores in tier 2 and 3 cities sets it apart from the competition.


It is also giving people from these cities access to brands that would otherwise be difficult to obtain. It gives them a competitive advantage over other companies as they cannot compete with the range and offer of brands that Nykaa provides. Recently, Nykaa set up its 55th offline store in the city of Raipur.


Archit Nair, the chief executive of Nykaa retail, has said that,

“Cities like Bhubaneswar are one of the Nykaa’s biggest markets now.”

He also added, “The product mix of Nykaa ensured that it doesn't lose money selling offline. Also, rent in Tier 2 cities is low, which doesn't add too much to the base cost”.


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