Nykaa, a Mumbai-based company, is one of India’s most successful beauty and wellness startups. In March 2020, Nykaa became a unicorn company because of its strong content marketing strategies to expand the Nykaa business model.
Primarily, Nykaa’s business model was focused on bringing awareness among the people about their beauty products with the help of video content, personal blogs, DIY tutorials and much more.
“Did you know that in 2016 the beauty market in India was more than 800 billion, and in 2025 it will be around 1900 billion?”
With the scope of expansion in the beauty market, you can also find opportunities to start your business like Nykaa. In this article, we have discussed the business model of Nykaa, the Nykaa franchise model, and how Nykaa earns.
- Nykaa Founder: Falguni Nayar
- Founded: In 2012
- Industry: Cosmetics – beauty, fashion, and wellness products
- Website: https://www.nykaa.com/
- Nykaa Tagline: ‘Your beauty, our passion’, ‘beauty anytime, anywhere
- Nykaa business model: Inventory-led, Marketplace, and Omni-channel
Some interesting facts about Nykaa
- “Nykaa” is a Sanskrit word which means “one in the spotlight.”
- Nykaa is the only unicorn startup in India headed by women.
- In 2012, Nykaa started with 60 orders per day.
- In 2019, Bollywood actress Katrina Kaif launched her beauty brand “Kay Beauty” in partnership with Nykaa.
How Nykaa Started?
Nykaa founder Falguni Nayar found the opportunity to sell cosmetics items through an online platform, which was a gap in the Indian beauty industry. She observed that the beauty sector is distributed among small retailers only, and it is not organised.
She got the idea to build the Nykaa business model when she was shopping for cosmetic products in the Sephora store. There she finds various products from different brands under a single brand name, “Sephora.”
So, she saw a massive opportunity in this business model in India. Moreover, there is also a huge demand for beauty products in India, and many small brands are selling beauty products. Still, there was no organised online platform to connect all these retailers to a single platform.
However, many cosmetics brands already sell their products online in other countries.
And that’s how Nykaa started with a fundamentally powerful business model of Nykaa.
Initially, Nykaa started by selling reputed brand products on their e-commerce platform.
Later on, Nykaa started to create its own products with its brand name as she found the opportunity that different skin tones people prefer different products. So, she started working on customising beauty products.
Further, to bring in-personal touch with the customers and extend their services, Nykaa also took the opportunity to build a strong offline presence in their Nykaa business model and made a footprint in offline retail stores.
- There is no single platform to buy cosmetics from brands like Lakme, Mac, Nivia, etc.
- The beauty sector was highly unorganised in India.
- People don’t have time to visit physical stores to buy cosmetics.
Nykaa Business Model
Inventory Led Model
Initially, Nykaa’s business model started with the inventory-led model, where Nykaa buys beauty and personal care products in bulk, such as skin care, hair care, body care, bridal makeup, grooming, etc., from the manufacturers and stores them as inventories in their warehouses. Currently, they have more than 2400 brands (both domestic and international) registered on their website.
When customers place an order via the Nykaa website, they dispatch their products through their warehouse. In the inventory model, Nykaa has a monopoly on setting the prices; hence, they sell them at high margins.
Marketplace Business Model
Another Nykaa model is a marketplace business model for its apparel industry, where the company sells clothes, watches, accessories, bags, shoes, etc. It has 1400+ brands registered.
In this model, the company doesn’t maintain inventory; in fact, they directly place your order with the manufacturer, and the manufacturer delivers the product to the customers directly. Here, Nykaa’s online platform connects buyers and sellers and charges commission from both parties.
Next, Nykaa’s business model is an Omni-channel strategy, where the company established its own physical beauty stores and online presence. Currently, it has more than 80 stores in India, namely:
- Nykaa Luxe
- Nykaa On-trend
- Nykaa Kiosk
Nykaa Products And Services
Under the Nykaa business model, Nykaa focuses on two significant segments under the business model of Nykaa:
- Beauty and personal care segment
- Fashion segment
Nykaa sells its products through three channels, i.e., website, mobile app, and physical outlets. Currently, Nykaa has more than 2400 brands registered with around 1.9 lakh products in their warehouse.
They have a wide range of products for men and women, such as cosmetics, skincare, haircare, perfumes, bath and body, luxury, beauty, lifestyle, and wellness.
Solutions Offered To The Customers
- Nykaa’s business model has provided an organized beauty sector to the customers, which has huge demand in India.
- The company has helped small retailers to grow their businesses with their e-commerce platform.
- Customers got the one-stop solution to shop for beauty products from any brand, domestic or international.
- Nykaa has encouraged everyone to enjoy the lifestyle they love.
Nykaa Revenue Model
As we have explored the Business model of Nykaa, now, let’s see how Nykaa became a profitable business with its different income sources.
Nykaa’s revenue model is solid with high-profit margins as the company sells products without discount unless the brand specifies to offer discounts.
Moreover, the company has 50% repeated customers, so their customer acquisition cost is also low.
Now, when we talk about how Nykaa earns, then these are the Nykaa income sources:
- Sale of the products – Inventory led model of the company includes other brand products and own products that witness high-profit margins, resulting in a profitable business.
- Advertisements – Nykaa model also allows banner advertisements on their online platforms.
- Commission income – In the Nykaa fashion segment, the company charges a commission from both parties for connecting them to a single platform.
Nykaa Business Model – Marketing Strategies
The business model of Nykaa got massive success with the digital marketing strategies, which include:
Social media marketing – Influencer marketing
Under social media marketing, Nykaa relies heavily on influencer marketing, where the company promotes its products through influencers and content creators on the social media platform.
The company focuses on making people aware of its products through beauty tips, makeup tutorials, and beauty care advice while advertising its products to influential people. It helps their products become viral and establishes a strong connection with the audience.
The same pattern Nykaa follows for YouTube marketing also expands Nykaa’s business model.
Nykaa has 4 official social media accounts for marketing, i.e.,
- My Nykaa, Nykaa beauty – to promote the e-commerce platform
- Nykaa fashion – To promote apparel e-commerce store
- Nykaa beauty book – To engage customers with beauty and makeup tips
Nykaa invests a lot in its content marketing. They have their own blog, “Nykaa beauty book”, where they publish blogs on personal care tips, product reviews, hair care guides and many more. It helps to attract a larger audience and consequently increases their sales.
Another solid marketing strategy that the Nykaa model uses is event marketing. The company targets college-going students through college fests and attracts teenagers to invest in beauty, wellness, and fashion.
Nykaa has also sponsored the popular Femina Miss India event. Moreover, they create a massive buzz before their special Pink Friday sales through influencers and live sessions with experts.
With the stunning fashion outlets, the Nykaa model is creating a personal touch for providing an experience to the customers. The customers can try their products in the stores and buy online or offline at their convenience.
Nykaa Franchise Model
As per our research, Nykaa doesn’t offer any Franchise, but you can sell your products with Nykaa under the “Sell on Nykaa” program.
You can access it here https://www.nykaa.com/sellonnykaa and register as a brand owner, distributor, or wholesaler.
If you like the Nykaa business model, you can establish your brand.
Read More:- Zomato Business Model
Frequently Asked Questions
1. Is Nykaa an Indian Brand?
Yes, Nykaa is a Mumbai-based Indian brand started by Falguni Nayar. The brand deals in beauty, wellness, and lifestyle products.
2. Is Nykaa a profitable company?
Yes, Nykaa is a profitable company. The company reported a profit of around Rs. 8.56 crore in Q4 FY2022.
3. How to take the Nykaa franchise?
Nykaa doesn’t provide any franchise opportunity. However, you can sell your products with Nykaa by registering your business under “Sell on Nykaa.”
4. What is Nykaa’s business model?
Nykaa follows an inventory-led model for its beauty products and a marketplace model for its fashion segment.