Seven years. Over Rs 5,000 crore ($720 million) in valuation. Nearly Rs 580 crore ($83 million) in revenue. Nykaa, India’s largest online beauty and cosmetics retailer, has come a long way. Launched in 2012 by veteran investment banker Falguni Nayar, the company was one of the first to take beauty from brick-and-mortar to e-commerce.

“People used to tell me early days that, who buys lipstick without trying?” says Nayar, 57. But the bet on a latent market for mid-to-high-end cosmetics worked well.

The startup brought a slew of cult beauty brands like Wet n Wild, Innisfree and Huda Beauty to India, establishing itself as the destination for makeup enthusiasts. With a particular focus on premium or luxury brands.

“The cheapest mangoes are probably not the best mangoes. I just believe as an individual that you need to get better quality at a better price,” Nayar says during an interview with The Ken at her Mumbai office.

Nykaa has so far raised over Rs 350 crore in capital, including Rs 100 crore ($14 million) from global private equity fund TPG Growth in April. A deal that valued the company at about Rs 5,100 crore ($724 million). And it’s now planning for an initial public offering (IPO), says Nayar, though she declined to give a timeline.

But it’s not all smooth sailing.

Over the years, the startup has added to its premium beauty business. It has expanded into the mass market, private labels, physical retail and even apparel—all segments with well-established competitors.

And at the same time, beauty, once a fringe category for most retailers, has caught the attention of companies both offline and online. E-commerce giants like Amazon India and Walmart-owned Flipkart are ramping up their personal care businesses. And traditional retail chains like Health & Glow and Shoppers Stop are increasingly focusing on e-tail.

Now, Nykaa needs to step up its game, in everything from product categories to delivery, or risk losing its hard-won lead.

Trying on new shades

A beauty assistant applies mascara to the roots of a lady’s eyelashes at a Nykaa store in the middle of an upscale shopping complex in Mumbai. Another helps a customer choose the right shade of foundation. A few girls, mostly in their late teens, try on the latest nail paints and shades of lipstick.

In 2014, two years after its launch, Nykaa opened its first brick-and-mortar outlet. Today, it has 39 stores across 20 Indian cities, selling about 40 brands in each outlet. This, admittedly, is only a small selection of the 1,000-plus brands on Nykaa’s online platform.

“15% of customers buy only online and 15% buy only offline and 70% of the customers are omnichannel,” says Nayar. That is, they shop through multiple touch points, both online and offline.

Offline stores, though, account for only 10% of Nykaa’s sales.


Rozelle Laha

Rozelle joins The Ken in Mumbai from Fortune magazine, where she was a Principal Correspondent covering retail and FMCG. In her seven years of experience, she has written for publications including Hindustan Times, Mint, and Businessworld. Rozelle also spent some time working in the PR industry. At The Ken, Rozelle will track leading retail and internet companies from Mumbai.

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