Tuesday, May 28

The Success Story of Nykaa – India’s first beauty product based Unicorn startup

Before writing about this article, I would like to know how many eCommerce platforms become successful in India? Here successful means profitable.

The answer is Zero. Either they got acquired (Walmart acquire Flipkart) or listed (like Infibeam) but none of them become profitable.

Over 20+ eCommerce platform try their luck in India in 10 years but none of them become successful until Nykaa, a retailer brand selling beauty, wellness, and fashion products came into the online service.

In 2015, the company expanded from online-only to an omnichannel model and began selling fashion products.

Journey So far:

Falguni Nayar, a former managing director at Kotak Mahindra Capital Company, founded Nykaa in 2012. It was launched as an eCommerce portal curating a range of beauty and wellness products. The brand name Nykaa is derived from the Sanskrit word nayaka, meaning ‘one in the spotlight’.

Nykaa sells 1,30,000 products online from 1300+ curated brands. Nykaa has grown by about 350% YoY. They also have 70 offline stores to represent their products.

Nykaa posted revenue of Rs 1,159.32 crore in FY19, which is more than 108% of revenue posted in 2018 at Rs 555.1 crore.

But the success behind this revenue data is Nykaa’s profit of Rs 2.3 crore against a loss of Rs 17.7 crore a year earlier.

Nykaa has raised a total of $145.9M in funding over 10 rounds. 

Their latest funding round on May 8, 2020 was $13 million make its valuation of over $1.2 billion. Which entered Nykaa into a startups unicorn club (billion-dollar valuation).

Nykaa has acquired only one company named 20Dresses on 22nd March 2019.

How Nykaa Makes Money?

As per our initial research, Nykaa charge a good commission from luxury brands after selling their products online.

Also in an offline mode, they make their inventory model where they buy beauty products directly from the manufacturers and store them in their warehouses.

Which makes its services fast, reduces its time, and also saves its cost from price variation.

Recently, Nykaa launched its own 400+ curated beauty products, which opens a new source of profit and makes less reliability on the commission from high-end brands.

Secret of Success:

In 2012, Nykaa entered into the market solely focused on beauty and fashion-based products while other large players like Amazon, Flipkart, Snapdeal, Shopclues targets large varieties of goods.

And target only these sections were the major reasons for the company’s success.

The cosmetic retail market in India is growing at about a 16% CAGR and is expected to reach $20 billion by the year 2025 and we hope Nykaa is going to capture a large share percentage in it.