In the wake of India’s startup boom Nykaa has built quite a reputation for itself. Reaching unicorn status in March 2019 when it raised Rs. 166 Crore in a primary transaction from Steadview Capital, the company headed by Falguni Nayar has seen steady growth over the course of this pandemic recording a revenue totaling ₹ 1,690.98 Cr with a projected growth rate of 40% on a consolidated level for FY2021.
Beauty was an untapped market in India and was on the way to experiencing an explosion – CEo Nayar
With the objective to transform and democratise the scattered online marketplace for beauty products in India and creating a seamless online experience for the blooming market, Nayar chose a deep discount marketing tactic to slowly but steadily garner a loyal customer base.
Their expenses were minimal and most of their lead generation was being funneled through influencer led campaigns which has shown consistent results for consumer products such as the ones Nykaa was selling. This was a core strategy for them as cosmetic products are inherently difficult to sell especially online. It involves trust building and an innate understanding of market trends. To that extent, their influencer campaings paid off as customers in this niche at least is distrustful towards large institutions.
Building their trust and goodwill while generating substantial engagement levels significantly added to their traction. This organic and high engagement community helped Nykaa establish a firm market share in this industry in it’s early days. Eventually Nykaa, pursuing its aggressive omni-channel approach opened up its first brick and mortar store in 2015 and multiple offline outlets since with plans to expand the network to 180 outlets in five years as CEO Nayar noted in an interview with Businessline.
The next development in the company’s core profile came with the introduction of its very own line of cosmetic products. This although does not amount to a great margin primarily due to the company not having achieved economy of scale in that regard yet. It can be envisioned however that going forward this might be the harbinger of significant growth for the company.
Nykaa however plans to pursue its intense growth by opting for an IPO exit as indicated in an article by vccircle. Eyeing a listing at a valuation of over $ 3 billion by early 2022 to join other e-commerce market leaders such as Zomato, Pepperfy, and Flipkart who are also preparing to go public.
With all the praise I can shower upon Nykaa however, I must note that Nykaa has been its fair share of hot water. Ranging from allegations about the company’s work culture to poor customer service, Nykaa has like a lot of other quick growing startups failed to address these pivotal issues. The company has also been under scrutiny over charges of plagiarism. Can Nykaa steamroll over these allegation and have a succesful IPO? Only time will tell.