Beauty’ful Story of Beauty Unicorn “NYKAA”
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.
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.
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:
- https://bit.ly/3PoTLDS
- https://www.analyticssteps.com/blogs/success-story-nykaa
- https://blog.finology.in/business/nykaa-ipo
- https://blog.finology.in/startups-india/success-story-of-nykaa
- https://bit.ly/39nzrSL
- https://bit.ly/3wuNcXM
- https://sugermint.com/success-story-of-nykaa/
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