The Echo-nomist

#4- Women Entrepreneur series

Nykaa delivers fashion and excitement to your door step. Beauty consultation, fashion inspiration, nail paint, clothes, makeup and more. Falguni Nayar founded this company and took the Indian e-commerce market by storm. She broke the norm by operating e-commerce, as well as brick and mortar stores.

Falguni Nayar is the founder and CEO of Nykaa. She is among the top ten richest self-made women of India. Before the e-commerce and fashion industry, she was an investment banker with a whopping 18-year experience. She held the position of Managing Director at the Kotak Mahindra Capital Company.

She had always been interested in beauty and wellness. When she turned 50, the Indian startup scenario was thriving, and at the same time, e-commerce was gaining popularity. The idea of her own beauty business venture flickered in her head, and thus Nykaa came into existence.

Determination and $2 million venture capital from family savings is all it took for Nayar’s dreams to become reality in 2012. The name is derived from the Sanskrit word “Nayaka,” which means actress or one in the spotlight.

Falguni Nayar saw the need for a multi-brand retail format that gave consumers unbiased advice that could guide them towards the right products from a beauty and health perspective. It’s an omnipresent company which started off solely as an e-commerce company. Soon they expanded to brick and mortar stores, with their first one at the Indira Gandhi International Airport in 2015. Now, they have 70 stores across 34 cities and continue to expand.

They changed the ways a customer shops for beauty products. They changed the customer preferences. They changed the reach of beauty products.

People sitting in tier 2 and tier 3 cities, who lack access to luxury stores, also have access to the online stores of Nykaa. They can scroll through a vast catalogue of more than 700,000, directly sourced products of luxury brands like Blue Nectar, Forrest Essentials, Dior, The Body Shop and 1200 more…

Whether you’re buying from Amazon or Nykaa or Myntra, the process is the same for the customer. But what goes on behind the scenes isn’t… Nykaa has an inventory-led model. This means that they buy the products from the seller at a low price and sell it to the customers at its MRP, or a discounted price. It’s different from Amazon’s marketplace model. Amazon simply provides warehousing services to the sellers and a platform, known as the marketplace, for buyers to meet sellers. They’re different because Amazon doesn’t own the product. Whereas Nykaa is buying the products from the seller and hence own the products they’re storing in their warehouse.

Nykaa’s model gives them considerable control over what they’re selling. But it also means that they are responsible for any damaged goods received by the customer, allergic reactions etc. Amazon can simply blame such complaints on the seller.

Because of the Covid-19 pandemic, brick and mortar stores were shut. But that’s where being an omnichannel company benefited them- they relied on their online retail. Self-care became the new norm as people stocked up on masks, moisturizers, toners, cleansers, serums etc. It was a good year for Nykaa. In the midst of all the chaos, they became a Unicorn in 2020. There have also been talks of Nykaa going public this year. Their IPO could value them around $3 billion.

But it has not been such a smooth journey for her. She was a new entrepreneur, working in an industry she hasn’t worked with in the past. Three chief technology officers quit in the first four years. She had to figure out strategies to compete with others like Amazon and Shoppers Stop. One of the main challenges was asserting dominance in the market and making Nykaa the go-to site for beauty. While they still face competition from them, Nayar has been successful in asserting their authority in this industry.

In the process, she also made label brands under Nykaa to fill market gaps in the country- Nykaa Cosmetics and Nykaa naturals. They also introduced Kay Beauty, in collaboration with the actress Katrina Kaif. Recently, her newest addition has been Nykaa fashion.

Her family has always supported her dreams. In fact, since she was a child, the household chatter revolved around investments, the stock market and trade. Now, her twin son and daughter head the online store and fashion department respectively. Adwaita Nayar is the CEO of Nykaa Fashion, and Anchit Nayar is the CEO of their online stores. Just imagine their dinner table discussions…