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How Nykaa Works | Nykaa Business Model & How You Can Replicate It

By Tarannum Aggarwal 17th August 2020

Creating a successful business is all about finding the perfect idea and nurturing it with the best resources and tools possible. That’s exactly what Falguni Nayar, founder of beauty and fashion ecommerce platform Nykaa Business model did.

Nykaa, which is Sanskrit for Nayaka (one in the spotlight), is a Mumbai-based retail seller of beauty, fashion and wellness products. The ecommerce startup lists products from over 1200 global brands along with its own line of products Nykaa Cosmetics and Nykaa Naturals.

Nykaa’s Business Model Structure

Nykaa is one of the few ecommerce brands to follow an inventory based business model. Here’s how the inventory based e-commerce model works:

  • Nykaa purchases products directly from manufacturers and stores it in their warehouses in New Delhi, Mumbai and Bangalore
  • Products are sold either on Nykaa’s website or through its three offline store formats; Nykaa Luxe, Nykaa On Trend and Nykaa Kiosks

The 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 Journey

In 2012, Nykaa started out as an ecommerce portal curating beauty and wellness products from a wide range of global brands. Soon after, Nykaa launched its first offline store in New Delhi and presently has over 68 offline stores across 20 cities in India. In 2015, Nykaa launched its in-house beauty products collection and expanded to the bath and body care category in 2016. The brand gained worldwide recognition after much publicized tie-ups with supermodel Gigi Hadid and Indian actress Katrina Kaifq, and more importantly its girl-next-door marketing campaigns launched on social media platforms like Youtube and Instagram.

Nykaa has raised a total of $110 million in funding from investors such as TVS Capital Funds, TPG Growth, and Lighthouse India among others.

Revenue Model

As of 2020, Nykaa has an estimated worth of $1.2 billion, making it one of the most successful startups in the country. Thanks to the inventory-model, Nykaa was able to break-even in 2017, only 5 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 FY2019, Nykaa generated a revenue of Rs 1,159.32 crore, up 108% from the previous fiscal year. The company turned profitable in FY19 with a profit of INR 2.51 crores.

Customer Base

At present, a majority of Nykaa’s customer base includes women in the age range of 18-35. Given the different price points available, customers from all walks of life use Nykaa’s platform to buy beauty and wellness products. Nykaa has also recently launched a separate website Nykaa Man featuring products designed for men.

What’s Nykaa’s Unique Proposition?

What sets Nykaa apart from most other e-commerce platforms is its singular focus on beauty and fashion. That, coupled with an enviable selection of products, competitive prices, and availability of global brands makes Nykaa a true powerhouse in the beauty business. The brand’s omni-channel presence, including an easy to navigate website, kiosks and pop-up stores, and dedicated offline stores also help cement Nykaa’s position in the market.

What Lies Ahead?

While Nykaa is currently the most successful omnichannel platform in the beauty space, there’s competition brewing with Myntra and Amazon making moves to establish themselves in the omnichannel market. In the ecommerce market, Nykaa has a new competitor – Orange Something, backed by Grofers.

How You Can Create Your Own Nykaa Clone?

Inspired by Nykaa’s amazing journey? You can create your very own version of Nykaa with Yelo’s online marketplace builder. Our on-demand business solutions require no coding, have no setup fees, and can help you launch your online business in a day. Here are some features that make Yelo’s online marketplace builder the go-to choice if you’re looking to start your own online business:

  • Support for all types of marketplaces, including products, services and rentals
  • Customizable and mobile-friendly customer ordering website
  • Merchant apps to enable easy onboarding of merchants and products
  • Powerful admin dashboard with a host of useful features
  • 100+ payment gateways and user-friendly integrations

Build your dream business today with Yelo’s online marketplace builder. Want to learn more about our services? Get in touch with us today!

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