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Interview 2016-06-29

We’re gona raise another Rs100 crores, to offer retail services: Nykaa.com

Online beauty retail giant Nykaa.com has over 400 brands and 40,000 products on offer which a comprehensive selection of make-up, skin care, hair care, fragrances, personal care and luxury products that are delivered across 900 cities in India.

We’re gona raise another Rs100 crores, to offer retail services: Nykaa.com

Founded in 2012, Nykaa is spearheaded by Falguni Nayar, the former Managing Director of Kotak Mahindra Capital Investment Banking along with a team of experienced professionals. Nykaa has expanded its team aggressively and product offerings. The startup is committed to help contemporary Indian women and men make beauty and wellness choices best suited to their needs and stage of life, whether it is products, advice, content, tools and services. Nykaa.com has sold 1.25 million products to date, with over 4 million visitors to the site every month.

In an exclusive interaction with WI Bureau, Falguni Nayar, Founder and CEO, Nykaa.com, shared some undisclosed facts and plans of her venture. Here is the edited excerpt:

Changing dynamics of Personal care products

Beauty industry can benefit from the digital revolution, both on marketing as well as retailing side. Both in India as well as developed markets like Europe, the pace of growth of beauty consumption is increasing. Thanks to digital ode and what we’re seeing that marketing through bloggers, You Tube DIY videos and advice through digital content, is leading to consumption growth as beauty advice is an important part of beauty consumption, can be handle very effectively through Digital Media. I also believe that the way businesses developing, the way products specialise to meet one’s product requirement. It’s a long tail inventory business. You need to have a lot of items in stock. Hence, it is difficult to have in a market like India, which is still at its nascent stage. It’s difficult to have the right stock in neighbourhood store, cities all over India. Ecommerce plays a very important role like you can select from varied options, all in one place that are able to ship products all over India and all over the world.

Product gaining preference

We have 450 brands online and digitally, there are 40 million shoppers online among the 250 million people available online as per the reports of 2014. The number is expected to go to 100 million by end of 2016 which was expected to be more than double in next 2 years. It’s just going through what you call as explosion. There is whole explosion of demand which is being tapped digitally. A lot of beauty brands which shift to sell as 1-2 per cent sales online, now tell us that 6-30 per cent of sales is online. Thus, online has become a very good contributor of sale for premium brands. Mass brands are sold through neighbourhood shops but for premium and luxury brands, ecommerce is the biggest channel. I think these are the numbers published by Indian Beauty & Hygiene Association they did a report along with Bane & Company and Google, which says that penetration of online for consumer retail will be very big. Especially in Beauty and hygiene industry, it’s going to be 20 per cent in 2020. I think beauty and hygiene will be $18 billion market out of which 20 per cent which is 3.6 billion will be online.

Opportunities in personal care products’ space

Personal care is a big space. There are simple products which are just about availability. But there are products which are about knowledge, skill and how to use that. So, If I tell you, how to choose a primer, how to use a primer, how to use an eye shadow, which eye shadow will suit your skin colour of type, which lipstick you should use. So, there are complex as well as simple products. My recommendation to everyone is beauty advice go hand in hand. So, if you’re able to tap how to advice a customer online, it’s a big topic. When I am in front of someone, they look at my skin; they help me with what suits me. The whole world is moving towards virtual reality and digital world is going to tap this virtual reality to come up with solutions which will take away the pain of not being in front of someone.

Observation & prediction of Indian personal care products market

I think the report says that it’s going to be a huge market of $18 billion market out of which 3.6 billion will be online, which is a huge market to tap and we’re getting there to serve and capture this large market.

Latest trends observed

In this wide market, there are 3-4 trends we see. One trend is Natural, I won’t call it Ayurvedic. Naturals products are gaining popularity. Though in India, it could be Ayurvedic or like harnessing the power of wine for glowing skin because that’s also an anti-oxidant, harnessing the power of tea for your skin. There are different countries which are harnessing the power of natural resources to come up with natural products and I think it’s a very big trend. The second trend is Make-Up. People are happy about using more make-up, they have ample products to chose from want to try different lip colours, eye shadows, liners and coloured Kohl etc and it’s a proliferation of products in that category all over the world. And, the third trend is hair.

Kids personal care products- I think the big trend across ages is moisturising and sun protection. It helps in protecting kids’ skin as their skin is soft and pure. So, it’s like how to treat it with special care, so it advises to use mild products on their skin.

Key growth boosting factors

Our brand got consumer’s trust in very early hour and how we got consumers’ trust? We took a lot of care. We were an inventory led brands so had fresh and genuine products. We do not take products which are expiry pushed by sales professionals and brands which are not reliable. We took a lot of care in leading upto the customer promise. We don’t pull customers by saying one thing and delivering other. We communicate clearly to our customer and we work very closely with powerful brand to get the best to our consumers.

Challenge of maintaining high position

We have to do things which are ahead of the market. We started with content beauty book and we came up with a very good social media presence on facebook, you tube. We have 40,000 subscribers on the You Tube and we’re very popular on Instagram. In each area, we keep ahead of the time and also, now we’re focusing so much on content and we have got 2-3 exclusives on our page. You may go to our lipstick section and may select the right shade for you as per your skin tone and face cut. There are many unique features we keep adding to our website. So being industry leader, we’re able to do that.

Current turnover

We’ve plan to reach about Rs300 crore turnover by the end of this financial year. We’re on path to profitability and hope to dawn EBITDA positive next year.

Therapeutic area to enter

We will expand our offerings. So have some service offerings on the website where you can avail good services from our website. We don’t offer services, we retail services. We’re going to bring pop-ups of active or intimate wear and all; we’re going to bring other products to our consumers.

Geographic presence

Right now in India, we are a country centric brand. We have presence in all over India, even in smaller cities, we service in 30,000 zip code. We’re largest in make-up and skin care and hair care. So, we’re there in every category.

Funding process

We’re gona raise another Rs100 crore. We’re meeting investors. I think during the festive season this year, we’ll manage to bag the fresh round of funding.

Scaling up of the venture

Our biggest scale is on Ecommerce beauty. So we continue to grow at 4X every year and that’s gona continue. So right now, the focus is on scaling up beauty ecommerce. Though we haven’t unleashed it, but we talked about it. We’re introducing Nykaa private label. We’ve introduced Nykaa nail colours, we also have Nykaa bath and body scrubs. There are number of products we’re introducing online.

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