“…your beauty our passion”
A few years ago around 2013, 2014, there was no real buzz around an e-commerce platform called “Nykaa”.
Currently, in 2020, Nykaa is ruling the e-commerce industry like nobody’s business.
But this is not really a fairytale that everything happened overnight with 1,78,659 customers & over 650+ brands!
So what was the ‘mantra’ behind such a phenomenal success?
Let’s dive in.
The Brand – an introduction
Nykaa is an Indian e-commerce platform for beauty, wellness & makeup products predominantly.
Recently, it has ventured into accessories, lingerie & even dresses.
It offers a wide range of categories which include skincare, makeup, luxury products, fragrances, and hair care products for both men and women.
It currently has over 25 luxury brands with big players in the market like MAC, Clinique, Estée Lauder, NYX, Bobbi Brown, Calvin Klein, L‘Occitane, Yves Saint Laurent, Innisfree, The Face Shop, etc.
Reportedly over 15,000 orders fly out every day & numerous physical stores have recently opened all over the country along with its app & website.
A Story To Tell
The founder & CEO of Nykaa is Falguni Nayar, an IIM Ahmedabad graduate & was the Managing Director of Kotak Mahindra Capital Co.
Nayar noticed a huge gap in the Indian beauty market scenario- the demand was far more than the number of outlets in the country.
She along with her husband Sanjay Nayar started Nykaa, with $2 million dollars. The company controlled the majority of stakes which was around 95%.
The name of the company “Nykaa” was actually derived from “Neyka”, Bengali word which means someone in the spoilt.
The Business Model
The reason why the brand rose to such fame was due to its Inventory-based model. The products are 100% genuine sourced directly from the brand.
The products were directly shipped from warehouses in New Delhi, Mumbai & Bangalore keeping the profit margin maximum.
The primary focus of the company was three types of customers:
- The ones who had no time
- The ones who were expert in beauty & makeup
- The newbies
By this, the company covered almost all the areas which were un-tapped in the market.
The SWOT Analysis
For those of you who are unaware of SWOT analysis, it is usually defined as strategic planning by an organization of strengths, weakness, opportunities & threats.
SWOT analysis is the basis of any marketing planning for an organization which helps them to identify the company’s USP, their competition & new business opportunities.
Some of the Strengths of Nykaa:
- Due to its strong distribution game, the market has a wide reach to its customers making sure that products are available easily.
- Nykaa’s low-cost structure helps it to sell more products to its customers.
- The dealer community is extremely strong for Nykaa that not only gives them supplies but also focuses on promoting the company’s products and training.
- Social media is a big factor when it comes to Nykaa. Thanks to a strong social media presence with millions of followers it allows the brand to have a thorough customer engagement.
- The geography and location of Nykaa.com A Passion for Beauty provide it with a cost advantage in serving its customers, when compared to that of the competition.
- The company’s innovative ideas have allowed them to come up with new products & enter a new market.
- The partnership program is another major strength of Nykaa. Collaborations, partnerships with its suppliers, dealers, retailers and other stakeholders.
- Nykaa has a large product portfolio where it provides products in a large range of categories.
These are only a few of the most recognizable strengths of the company.
Now let’s look at some of the weaknesses.
Some of the Weaknesses of Nykaa:
- Nykaa is spending more than the average research and development expenditure within the industry
- A large amount of the company is rented rather than purchased leading to higher costs.
- The company’s ability to meet its short term financial obligations is lower than the industry average.
- Nykaa hasn’t conducted market research within the market that serves for the past 2 years.
- Due to its lower budget for its quality control department than competitors, the consistency may not remain the same in the near future.
Some of the Opportunities for Nykaa Beauty are:
- The vast internet users all over the world which means there is a huge opportunity to expand their presence online; by using the internet to interact with its customers.
- The rise in e-commerce can lead Nykaa to earn revenue by opening online stores and making sales through these.
- There has been an increase in the number of social media users worldwide. The three social media platforms; Facebook, Twitter, and Instagram, have shown the greatest number of increase in monthly active users. Nykaa has a huge opportunity to use the medium for their promotions.
- Technology enables better data to be collected on customers and improves marketing efforts.
- The population has been growing and is expected to grow at a positive rate which will increase the sales rate of potential customers that it can target.
- With the number of niche markets growing in the last few years, Nykaa can take full advantage of it.
- Consumers within the industry are becoming more conscious of health, and this is a segment that is growing.
Now for the competition part, we need to analyze the threats of Nykaa Beauty.
Some of the Threats of Nykaa beauty:
- Technological developments by competitors; New technological developments by a few competitors within the industry pose a threat to Nykaa.
- New entries in the market and are gaining market share by gaining existing companies’ market share. This is a threat to Nykaa.
- There has been an increase in competition within the industry putting downward pressure on prices. This could lead to reduced revenue
- Consumer tastes are changing, and this puts pressure on companies to constantly change their products to meet the needs of these customers.
- Substitute products available are also increasing, which is a threat collectively for the whole industry as the consumption of current products decrease.
- Increased promotions by competitors have been a threat for Nykaa
Marketing Strategy for Nykaa Beauty
If there is one thing that Nykaa does very well, apart from quality products of course, is the promotion & marketing.
A huge amount of marketing for the brand depends on content marketing.
High-quality content to showcase global trends, along with influencer marketing & social media promotions solidify Nykaa as a key player in the industry.
Their remarketing game is also quite strong which they use social media mainly. Nykaa also collaborated with Femina to host the ‘Nykaa.com Femina Beauty Awards’ in 2015 and 2016 to create brand awareness.
Content Marketing
Their content team is really good.
Nykaa has rightly used eye-catching content engaging for the audiences & alluring customers to buy their products.
They have a great blog, focusing on beauty, makeup & wellness.
Along with that their ad-copy contents are always on point.
Plus the idea of using hashtags like “#Nykaaland” or “#Iamnykaaeveryday” made it stand out from the rest of the crowd.
Youtube Videos
Nykaa has its own youtube channel “Nykaa TV” to provide the best guidance for makeup or campaign launch.
Recently Janhvi Kapoor became the first brand ambassador of Nykaa business under Nykaa cosmetics. And they released a number of “how-to” videos with her.
This attracts the young crowd which Nykaa is targeting.
Social Media
Over time Nykaa has acquired a strong social media following which has influenced a massive lead generation for the company.
Their social media game is strong for new targets as well as for remarketing. They have a massive 1.4 million followers on Facebook with “Shop Now” integrated options.
Janhvi Kapoor plays an active role in social media campaigns through her Instagram handle.
Influencer Marketing
Nykaa’s popularity is also because of the fact that it used social media beauty influencers to collaborate & establish brand awareness.
Nykaa regularly collaborates with influencers like Roshni
Bhatia, Masaba Gupta, Rohan Joshi, Shreya Jain & others to maintain a buzz in the market.
Discounts & Offers
The best thing about Nykaa is their discount & offers which goes on nearly the whole year. They have a regular on-going discount waivers from awesome makeup brands, skincare products to attract the customers.
The results
Nykaa intentionally stays away from foreign funding to be inventory-led.
Nykaa completed its first round of fundraising in June 2014, raising $ 3.2 million from a consortium of influential Indian investors.
The result?
Since its establishment in 2012, the company has grown drastically within 4 years.
Within three to four years of its launch, Nykaa generated around 220 crores revenue in 2015-2016.
50% of customers are routine customers.
Their month or season-specific stores like Summer Store, Monsoon store, Diwali Store, Eyeliner and Kajal store, Foundation Finder, Lipstick Finder, Skincare by age are created for the convenience and benefit of the customer. Buying guides contribute to 3% of GMV in a year.
Nykaa’s Routine Finder is a comprehensive skin, hair, and wellness tool that allows customers to build their perfect beauty regimen with recommended products best suited for their skin, hair and wellness concerns and needs.
Nykaa has 10 million visitors a month & NYKAA focus is that at least 50 % should be new customers
Averagely, the Routine Finder garners close to 15,000 visits per day across all platforms, of which 90% is through the App users and 10% are website. The average AOV is Rs 1400 across platforms.
Nykaa, customer experience is a key component of a robust customer retention strategy. Content contributes 2.5% to the GMV of Nykaa, with the average order value of content consumers being 15% higher than non-consumers.
On a recent statement, a spokesperson said, “Given that more than half of all shoppers spend 75% of their total shopping time conducting online research, guided selling; education and tight curation have been the hallmark of Nykaa’s online content strategy. “
They also added, “The idea is to bring the offline shopping experience online and provide a store-like shopping experience to digital customers,”
At present they have around 45 physical stores in the country.
The latest omnichannel leadership report by New store suggests that companies investing in omnichannel strategies have a 91% average higher year-on-year customer retention rate than companies who don’t.
Talking about their Youtube channel, Nykaa TV has more than 5 lac subscribers with 121M video views. They have more than 45 videos with 80 industry experts and influencers are created every month, which are also streamed at all Nykaa offline stores with over 1.4mn views.
They even have Hindi tutorials targeting Tier 2 & Tier 3, an average of over 200,000 views per video.
The company is also eyeing for an initial public offering in 2020.
Nykaa is receiving 15,000 orders a day, mostly from consumers between the ages of 22 and 35.
Overall, Nykaa with its unique content & mass appeal has found an amazing audience tapping a major part of the e-commerce market in India.
It all started with an idea- a “need” of the market to create an empire of Nykaa World.
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