At a time when e-commerce is all about failed start-up stories, former Kotak Capital MD Falguni Nayar's online beauty market place, Nykaa, is an exception. Her Rs 280 crore enterprise is set to break even by December. It would be profitable soon.
Nayar, an ace investment banker, got the basics of the business bang on. When most e-commerce peers were aggressively giving discounts to acquire customers, Nayar was clear. "We don't discount from our pocket. We pass on discounts that brands want to offer," says Falguni Nayar, Founder, Nykaa.
"You need to get your digital marketing right, have a low cost of customer acquisition, and have the ability to extract greater value from customers, for which you need to make them stay with you for long and make them excited about shopping. This makes retailing an art. There is no set formula for success," she says.
Nayar's inspiration are global beauty retail chains such as Sephora. "When I saw pure-play beauty retailers such as Sephora doing well despite big departmental stores such as Harrods, Macy's and Bloomimgdales giving prime space to beauty brands, I was convinced that this concept will work."
Like Sephora (which gets 40 per cent business from its online portal), Nayar is also building an omni-channel business. Nykaa already has seven stores. By March next year, it will have 15. It plans to take the number to 40 by 2019. "If you look at the beauty landscape, 80 per cent ccustomers are still not buying online. There is also demand for physical stores. Today's customers shop both online and offline," says Adwaita Nayar, Nayars daughter, who is the COO at Nykaa.
The beauty company also has a private label, Nykaa Cosmetics, which has the entire range of colour cosmetics, essential oils and a bath and body line. Nayar's vision is to scale up Nykaa Cosmetics as a full-blown FMCG business by reaching out to close to 9,000-odd stores. "We want to bring the best to Indian consumers and fill the gaps in the market."
In addition to e-commerce, retail and brands, Nykaa's other business vertical is exclusive deals with leading global cosmetic brands such as Estee Lauder and Mac, which are available online only on Nykaa.