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How Nykaa evolves in the new age companies?

Updated: Jul 18


There is a vast market in India for almost everything. However, if you look closely, you'll notice that there is a lot of noise, which makes it difficult for brands to take a stand. Rare are the brands that have successfully used market research and execution to create an empire.


From recent e-commerce news Samit Vartak founding partner & CIO, Sage One Investment Advisor LLP, said, "In new age companies like Nykaa it is very difficult to predict how they will evolve because there is no way you can predict how the competition will evolve given that they do not have that much of history,".

This statement tends to make blog on the success of Nykaa and the reason behind it.


About the company:


The value of the cosmetics market, which was $1.3 billion in FY2020, is expected to increase by a double-digit CAGR of 16.39 percent through FY2026 to reach $2.89 billion. The astounding rise of the cosmetics sector is a result of both the industry's quick digitalization, which is to everyone's advantage, and the rising demand for cosmetic items, which is driven primarily by teens and young people. One of the major companies in the cosmetics sector is Nykaa, which is proud of the extensive selection of beauty, fashion, and wellness items it offers to both in-person and online customers.



Inception story of Nykaa:





Falguni Nayar founded it in 2012, and it has its main office in Mumbai. She entered the market to clean up the unjust practices in the cosmetics sector. The industry was not up to par despite the enormous demand. Her experience in investment banking has taught her to value a company's long-term viability.


Despite the fact that it was a capital-intensive industry, she made the decision to generate and provide the necessary finances. The business was the first to offer a single point of shopping for all domestic brands, foreign brands, luxury and prestige brands, premium brands, niche brands, and cult brands.


How Nykaa achieve success?


One unicorn was in the making back when all the startups were making headlines for the wrong reasons, like laying off employees because of losses, etc. Nykaa even succeeded in securing further finance, bringing its valuation to $1.2 billion. A handful of the main factors that helped Nykaa become famous are listed as follows.

  • Purchasing from manufacturers results in superior profit margins because there are no other intermediaries to syphon off their share of the pie. Nykaa is also well-positioned to negotiate the deals they get from the producers because of their first mover advantage.

  • Addressing first copied products, the greatest consumer complaint when purchasing fashion or cosmetics online. Duplicate products are one of the major worries people have when purchasing cosmetics and clothing online. Such worries were allayed by their inventory model and direct sourcing from the producers, which made the buying decision that much simpler.



  • Inventory-based model: Nykaa adopted an inventory model before the majority of other e-commerce companies created marketplaces. As we will see later, this guarantees that they have greater control over quality, which is a perquisite for this sector.

  • Plans for growth and expansion with a focus on the customer and a true omnichannel experience: In order to help customers, focus on the products, Nykaa built a VR system after realizing that fresh launches weren't doing well on the platform. Additionally, they expanded into actual locations where you can sample out the most recent new releases and premium brands.

  • Using all the different client purchase information, they were prepared to establish their own private label, which took off nicely and improved their bottom lines.

  • No direct rival; nevertheless, Purplle is a close second because they cater to several personas. Users of Purplle tend to be younger, less experienced with fashion, and on a tighter budget.


Through its brick-and-mortar stores, the company intends to continue its offline expansion. By 2024, it intends to have more than 180 outlets. This will enable the business to increase both sales and revenue. In addition, the business will shortly start an IPO, which could increase its valuation to $4 billion. It will be the first business in the online beauty industry to do so. Additionally, the business wants to turn a profit before going public.


One can say Nykaa has become into the Amazon of the cosmetics sector. Because of this platform, the myth that e-commerce and beauty retail don't function well in India has been decisively disproven. The company's plan to start the IPO has been postponed due to an ongoing increase in sales and profitability.



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