BUILD THE NEXT NYKAA
Have you always dreamt of becoming the next Elon musk? Or the next Ritesh Agarwal? Or the First ‘you’ and building a multimillion-dollar company from the ground up?
Did you know that 98% of Indian startups are loss-making ones?
So certainly, a lot has to be learned from any startup that has managed to break even, let alone one that has become a market leader and made millions in profit.
One such startup is Nykaa!
You might be disinterested or even disgusted by make-up products. There is so much to learn of Nykaa’s success in the short span of 9 years that it has been in existence.
Nykaa’s been valued at ₹24000 Crores in 2021. While its operations were affected like any other because of the pandemic, its fundamentals were strong enough to withstand the COVID-19 pandemic, unlike many others.
With this blog, we aim to give you insight into how Nykaa became the giant it is and how you can build a multi-million dollar startup too!
Nykaa was started in 2012 by Falguni Nayar, an investment banker, and thus had extensive experience working with startups. It was truly her know-how and vision that has brought Nykaa this far.
Nykaa’s Business Strategy
If Nykaa’s business strategies had to be boiled down to 6 basic fundamentals, they would be as follows:
1 – Recognizing the Right Industry
The cosmetics space was always a thriving industry with increasing demand, high margins but low profits. Profits were low because of the simple reason that the cost of maintaining physical stores was too high.
Nykaa saw this as an opportunity and built an E-commerce brand, due to which most of the operating expenses of running a physical beauty store have completely vanished.
2 – Not settling on a Niche
Having a niche market is nice, but sometimes the market can be such a niche that you might not have enough customers to whom you could sell your products.
Nykaa realized this very early on and thus got every brand, whether drugstore to high end, to sell their products on Nykaa. This expanded their customer base more than you and I can ever imagine.
3 – Solving the Right Problems
One of the biggest problems in the beauty industry was duplicity. Women are and should be wary of applying fake, low-quality products that can damage their skin.
Nykaa solved this problem by ensuring 100% authentic products and providing the consumers with the convenience of shopping from their homes, thus earning them trust and loyalty.
4 – Expanding Extensively
Nykaa has leveraged its consumer data extensively without exploiting it. They didn’t settle on just retailing products of other brands, but after having enough success selling those products, they had enough data to know consumer preferences, pain points, hesitations, spending patterns in and out. They had captured what we can call ‘digital real state’.
The same data was used really well while building and selling their own line of products, which substantially added to their bottom line as all the profit was to be retained.
5 – Expansion into Multiple Segments
Nykaa’s thirst for growth and success was never quenched by being the market leader in just one single segment. It has six other lines of revenue as follows: Nykaa Luxe, On Trend, Nykaa fashion, Nykaa Naked, Nykaa Man, Nykaa naturals which deal in luxury products, trendy products, apparel, lingerie, men’s products, chemical-free products, respectively.
This way, they are leaving no consumer segments untapped and collecting even deeper insights into consumer behaviour.
6 – Adaptive Marketing
Ever experienced a sales personnel annoying you with the same old sales pitch at the make-up store while not listening to what you want for once?
Nykaa’s ensured that their marketing feels more like a conversation and not noise by engaging in content marketing, social media marketing, and now affiliate marketing.
How Nykaa Engage their Customers
This has been made possible by hiring competent social media managers, graphic designers, UI-UX designers and partnering with those who collectively run informative blogs, engaging YouTube channels, aesthetic Instagram pages to keep the audience engaged and captivated.
They were early adopters of Affiliate Marketing too. I mean, who wouldn’t be tempted to buy a product that they see their favourite celebrities and Influencers endorsing.
The simple idea behind the same is that sometimes buying leads is easier, more effective, and cheaper than creating leads through your own efforts.
By partnering with key influencers, Nykaa could tap into their audiences and their credibility without having to build it themselves. They can leverage the principle of ‘Social Proof’ by getting celebrities to endorse their products.
A concrete proof for the same is, they managed to reduce their Cost of Customer Acquisition (COCA) from ₹1000 to ₹200!
What’s more impressive is the fact that more than 50% of its customers are recurring ones.
This also goes to prove the competencies of their CRM and supply chain teams. As acquiring a customer isn’t the only struggle, retaining your current customers is also a big challenge!
Conclusion
These were the key insights that we thought would be helpful to build any business, be it in the beauty space or not.
Strategies, Analytics, Marketing are all excellent skills to know, but they can only go very far if you aren’t driven about what you are building!
So make sure that you also put your heart and soul into whatever you are trying to build along with the insights mentioned above.
Too corny? Yes
But, it’s only the passion, drive, and innate knowing that you are trying to build something truly value-adding that will get you through the bad days, which means you will have many an entrepreneur.
With this, we come to an end of this blog; we hope you found this blog post very insightful. Let us know about your key insights in the comment section.
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