Beauty’ful Story of Beauty Unicorn “NYKAA”

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Nykaa roots from the word Nayaka, which means a celebration of the one in spotlight: beautiful, confident, and perfect. Brands-brands-brands, be it cult or domestic, Nykaa has been the one-stop-shopping destination redefining the art of e-retailing beauty & personal care in India.

Though beauty lies in the eyes of the beholder, the global beauty industry has never happened to lose its charm, even during the pandemic. It’s not just the industry growth that led to such triumph, but also the strategic agility responsible for it, so much so that it managed to raise funds and has turned into the first women-led unicorn of India! But how did it all start? And what’s their revenue model?

Nykaa’s Inception Story

It all began in 2012 when Nykaa was established. On the lookout for a promising business opportunity in India, Falguni Nayar came across an inconsistency in the beauty items market which wasn’t at par with the product’s scope in other nations like France and Japan, despite the high demand, largely owing to the lack of product availability in various places. This led to setting up Nykaa alongside her husband Sanjay Nayar. In the beginning, it started as an online corporation, but the platform gradually shifted to an omnichannel platform in the upcoming years.

Business Model of Nykaa

The business model of Nykaa revolves majorly around inventory management as it purchases the products directly from brands or distributors and then provides them to the customers on its platform.

But then how it is different from marketplace models like that of Amazon or Flipkart?

Actually, in the latter, products are listed by third-party sellers for the customers to make a purchase, unlike Nykaa. This helps Nykaa to secure its customers from any fraudulent sellers as well as maintain the authenticity of the platform.

Also, its physical presence format, Nykaa chains, including Nykaa Luxe, Nykaa On Trend, and Nykaa beauty Kiosks, helped it stand out in this competitive e-commerce industry where consumers are generally vendor-skeptic and looking for the best deal. Also, to interact with beauty enthusiasts, the company formed an online platform - Nykaa Network, to connect with the customers by offering a unique experience.

Financial Analysis of Nykaa

The graph below shows how revenue is increasing at a CAGR of 48.2% and its EBITDA.


Legends: GMV Stands Gross Merchandise Value; EBITDA stands Earnings Before Interest Tax Depreciation and Amortization

 

In Nykaa’s case, GMV is increasing for fashion and BPC (Beauty & Personal care) segments, implying its phenomenal performance.

The company also faced net losses of ₹ 24.54 crores and ₹ 16.34 crore in FY19 and FY20, respectively. However, the profitability improved significantly in FY21 as it registered a profit after tax of ₹ 61.95 crores. The net profit margin in FY21 was 2.54%.

Revenue Split

Nykaa’s IPO

The platform's IPO was launched for subscription from Oct 28 to Nov 1 in the year 2021 and fixed a price band of ₹ 1,085-1,125 apiece for the maiden offer. Nykaa's IPO got subscribed 81.78 times over the 2.64 crore shares that were being offered.

Nykaa IPO received an astounding response from the investors once it was introduced for the subscription. The platform got listed on NSE and BSE on Nov 10, 2021, after which it found its place in the ₹1 lakh crore market capitalization club as its stocks concluded at ₹2,206.70, which is twice the offer price making the beauty startup’s valuation at almost $14 billion.

Conclusion:

“Don’t just satisfy your customers, delight them”

-Warren Buffett

Taking these words at heart, Nykaa is driven to delight its customers and aims to provide a one-stop solution to keep up with the wide range of products available to them at their fingertips for their beauty and fashion needs. It plans to expand its physical existence by opening over 180 stores all over India by 2024, growing its offline business in the upcoming years.

Backed by expert promoters, the company checks all the boxes on its “success bucket list” without breaking a sweat. So Nykaa is not just a pretty dolled-up face but also has the brains and brawn to survive the long run.

What are your thoughts on Nykaa? Tell us in the comment section.

References:

  1. https://bit.ly/3PoTLDS
  2. https://www.analyticssteps.com/blogs/success-story-nykaa
  3. https://blog.finology.in/business/nykaa-ipo
  4. https://blog.finology.in/startups-india/success-story-of-nykaa
  5. https://bit.ly/39nzrSL
  6. https://bit.ly/3wuNcXM
  7. https://sugermint.com/success-story-of-nykaa/


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