Recently you might have heard about the news that Nykaa entered among the top-50 most valued- firms. The company has reached a market capitalization of Rs 1.10 trillion and grabbed the 48th position in the overall market cap. Its founder is now among India’s 20 richest people.
However, this didn’t happen overnight right?
So what was the reason that makes Nykaa a premier online beauty, fashion, and wellness destination?
In this article, we will explore the major facts behind Nykaa’s success.
Nykaa beauty app: The brand history
Falguni Nayar, a former managing director from the Kotak Mahindra Capital Company founded Naykaa in April 2012. Initially, it started as an eCommerce portal for beauty brands and wellness products.
- 2014: The brand received a major investment of $3.4 million from HNIs and NRIs.
- 2015: The company expanded its online-only service to an omnichannel model, with the opening of its first physical store.
- 2016: Hero group’s Mujal led a $12 million Funding.
- 2018: The company launched a fashion vertical for both men and women.
- 2019: The beauty brand raised $14million in the Series E-funding round from the TGP Growth.
- 2020: Launched Nykaa Pro a premium membership program that provides app users special access to professional beauty products and offers.
Nykaa Business Model Analysis
There are many fashion and beauty brands in the market but they didn’t succeed in the way Nykaa does. So, what makes the brand successful in the world of eCommerce?
Here, are some unique aspects of the Nykaa business model.
Nykaa app as an e-commerce destination
• Reduced operating cost:
Starting an online business can seem to be challenging in the earlier stage but have its own advantages. Nykaa deals in the cosmetic and fashion business where they have high-profit margins but the cost of starting and operating the physical stores is too high.
Nykaa has reduced its operating cost of the physical store such as electricity bills, expenditure on store employees, interiors, maintenance, etc. This is how it has increased the profitability of the business by lowering the operating cost.
• Reduced customer acquisition cost:
The business can target a large number of customers due to its online presence, understand their buying behaviors and the types of products they love to buy and share. This helps to reduce the cost of customer acquisition from Rs 1000 to Rs 200-300.
• No compromise with quality:
The brand ensures the delivery of the best quality products by following the Inventory based E-commerce Model.
Nakyaa realized the core issue that suppresses the growth of the beauty product business. They understand that people always go for quality products and selling duplicate products is ruining the business potential.
So, they tied up with multiple beauty brands totally eliminating the middleman. Also, they started an inventory model to maintain the product quality. With this, they started getting products in their warehouse directly from beauty brands.
• Multichannel Marketing:
Nykaa does multichannel marketing to attract new customers and to keep the existing ones. It includes content marketing, influencer marketing, digital marketing, online advertising, and social media marketing.
Apart from the above Nykaa uses sponsorship marketing techniques to gain a competitive advantage in the marketplace. They also offer thousands of discounts yearly to attract customers.
• Categorizing customers based on their interest:
It’s difficult to target individual customers according to their interests. Therefore, Nykaa started Nykaa Luxe, Nykaa on trends, Kiosks stores, Nykaa fashion, Nykaaman, and Nykaa Naturals.
- Nykaa Luxe features premium and luxury brands such as Estee Lauder, Dior, Huda Beauty.
- Nyka on trends is limited to trending and fashionable brans.
- Nykaa Kiosks physical stores provide beauty assistance to customers who have little knowledge about how to choose and use the products.
- Besides the woman beauty brand, Nykaa also has a range of grooming products for men on the Nykaaman website and app.
- Nykaa fashion for women, kids, and men.
- Nykaa Naturals for the customers who like using only natural chemical-free products
also the brand has an online community for beauty enthusiasts called Nykaa Network.
Nykaa has raised $107.9 Million in funding in just 8 rounds. On April 1st, 2019 in the series E round funding. Recently, in October 2021, it has raised Rs 22,396 crore from anchor investors ahead of its initial share sale, which is now open for public subscription.
An overview of Nykaa UX and UI
The app and website reflect brand uniqueness with seamless UI and great UX.
The app has managed to organize its content brilliantly so the user does not have to spend a lot of time searching for what they want. By providing the one-click tabs for different categories just at the top of the page. They have a separate tab for offers so users do not need to filter, search and scroll to get the item with an offer.
The app experience is gamified by adding the points for each purchase so the customers who are buying the products will like to come back for the next purchase. Also, it gives special privileges to the Nykaa Prime members, by offering discount coupons, birthday gifts, and much more.
In this article, we have learned how Nykaa became a successful brand by incorporating multiple tactics, such as starting with the online e-commerce business and then expanding into multiple sectors such as fashion and men’s grooming. You can also implement such ideas in your e-commerce business application.
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