Mittal School of Business

Course Code: MGN 358 Course Title: E- Commerce

Academic Task No: 1 Academic Task Title: Assignment

Date of Allotment: 16.02.2023 Date of Submission: 27.02.2023
Students Roll No: RQ2004B41, RQ2004B42, Students Reg. No: 12007100, 12007114,
RQ2004B43, RQ2004B44, RQ2004B45 12007605, 12007694, 12007765
Faculty name- Mr. Vinod Kumar Section: Q2004
Max. Marks. 30 Marks. Obtained:
Learning Outcomes: I have learnt The marketing agenda and E-commerce marketing tools.

Declaration: I declare that this Assignment is my individual work. I have not copied it from any
other student’s work or from any other source except where due acknowledgment is made
explicitly in the text, nor has any part been written for me by any other person.

PEER RATING:
NAME MARKS
Pranjal Agrawal 10
Danyal Sahab 10
Mohammad Sahil 10
Hardik Bajaj 0
Pandamaneni Sanjana 10

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 Nykaa is an Indian e-commerce company that sells beauty, wellness and fashion
products across websites, mobile apps and 76 offline stores. It is a kind of unicorn
startup, founded in the year 2012 by Falguni Nayar a former managing director at Kotak
Mahindra Capital Company.
Nykaa sells products that are manufactured in India as well as internationally. In 2015,
the company expanded itself from online-only to an omnichannel model and began
selling products apart from beauty.
In 2020, Nykaa launched Nykaa Pro and in December 2020 Nykaa Fashion launched its
first store in Delhi, intending to make its fashion business omnichannel. It also started
retailing over 2,000 brands and 200,000 products across its platforms. This startup is an
inspiration for many women who want to start their e-commerce businesses.

Quick Stats on Nykaa

Founder Falguni Nayar

Year Founded 2012

Origin Mumbai, India

No. of Employees 2,000+

Company Type Public

Market Cap Rs 1 Lakh Crore (2021)

Annual Revenue Rs 1,860 Crore (2020)

Net Income/ Profit Rs 278 Crore (2020)

Products by Nykaa
Since Nykaa has come a long way, serving for 9 years, let’s have a look at its products.
 Beauty
 Fashion
 Wellness

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 Competitors of Nykaa
The top 5 competitors of Nykaa are as follows:
 Purplle
 Plum
 MyGlamm
 Scentials
 FabAlley

Our Vision

Bring inspiration and joy to people, everywhere, everyday.

Our Mission

To create a world where our consumers have access to a finely curated, authentic
assortment of products and services that delight and elevate the human spirit.

So mainly what is a brand image and why it is important in E-Business?

It is a way that the market or the consumer perceives about you or their thinking for a brand. Can
be termed as a unique bundle of associations within the minds of target customers. It signifies
what the brand presently stands for. It is a set of beliefs held about a specific brand. It conveys an
emotional value and not just a mental image. Consumers develop various associations with the
brand. Based on these associations, they form brand image. An image is formed about the brand
on the basis of subjective perceptions of association’s bundle that the consumers have about the
brand.

Channels have evolved greatly over the years with digital presence playing a major role in a
company’s/brand’s sales. It has been observed that digital presence increases their sales by
significantly. Social platforms are a key part of digital marketing, as they can be used to
communicate brand news, interacting with the audience and for business networking. Given how
many people in India use social media, companies are jumping on the bandwagon. Organizations
such as Facebook, LinkedIn and twitter provide various tools to facilitate businesses market
towards their customers. They're the ideal platforms for expanding brand recognition and
reaching new customers.

SWOT Analysis of Nykaa

Talking about the Nykaa business, let’s understand how this corporation can cater to
different individuals using SWOT Analysis. SWOT Analysis of Nykaa helps us to understand

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 companies through the lens of internal and external factors. Internal factors refer to
strengths and weaknesses, which can be controlled by the corporation.

Strengths of Nykaa
As strength is an essential component of SWOT. Nykaa has several strengths that
make them one of the largest e-commerce companies in the beauty and wellness sector
in India.
 Innovation: Nykaa is constantly adding innovations to its product range and offerings to capture
the attention of customers and meet the dynamic business environment by shifting from online-
only to omnichannel.
 Strong Social Media Interaction: Nykaa has been able to attract many social media users as
potential customers with regular online campaigns, contests such as Nykaa Beauty Femina
Awards, brand endorsement, magazines, and web series etc.
 Wide Range of Products: Nykaa has very well managed in showcasing a wide range of
products in both online and offline stores to prevent customers from migrating away from the
brand due to lack of stock.
 Geographical Presence: Since geographic presence in different regions is considered to be
one of the company’s greatest strengths. It helps to determine the reach of the company in the
target market and ensures easy accessibility.
 Affordability: As the ability to pay and willingness to buy is a factor determining demand.
Nykaa also has considered this factor and has priced its product keeping in mind the needs of
different classes.

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 Less Charging Suppliers: Access to suppliers that offer raw materials at a lower cost can
improve the overall efficiency of the business.
 Property Rights: A company may own various intellectual property rights that can make the
product offering unique and exclusive, making it difficult for competitors to imitate.

Weaknesses of Nykaa
Everyone business has its positive and negative sides, so Nykaa’s. Though Nykaa is
one of the current market leaders in beauty product e-commerce companies in India,
many weaknesses can become a nightmare for Nykaa’s growth.
 Poor Waste Management: Nykaa has been criticized by environmentalists for its poor waste
management and inability to integrate sustainability into its business operations.
 R&D: Low spending on research and development activities may weaken the company’s
performance due to a lack of local/international market knowledge.
 Delivery Charges: It offers free delivery for orders above Rs. 700, which excludes some of the
prospective buyers.
 Customer Care: Nykaa has not been able to resolve customer complaints so effectively.
 Decision-making Process: Decision making at Nykaa takes too much time, leading to costly
delays in bringing new products to market.

Opportunities for Nykaa

The environment within which our organization operates offers opportunities. An
organization can identify such opportunities and enjoy benefits arising from them by
planning and executing required strategies.
 Expanding Reach to Population: The exponential growth of the population and especially the
existing or potential customer segments is a great growth opportunity for the company.
 E-commerce & Networking: The emergence of e-commerce and social media networking as a
trend can be a great opportunity for Nykaa. It can ensure a strong online presence on various
social networks.
 Government Subsidies: Government provided subsidies and other measures that make the
business environment friendlier are a positive external environmental factor for Nykaa.
 Matching Lifestyle of Customers: Improving customers’ lifestyles and standards means more
consumption of consumer goods and services and more opportunities to encourage purchases.
 Business Model: Nykaa’s business model is climbing a new ladder to increase its international
reach and boost profits.

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 New Technologies: The development of new technologies to support the production and
delivery process of products can be used to integrate innovation into business operations.
Advanced Technology integration can reduce costs, improve efficiency, and lead to the rapid
adoption of innovative products.
 Following Trends: The changing needs, tastes, and preferences of customers can be an
opportunity if the company has good market knowledge.

Threats to Nykaa
Every coin has two sides, so does Nykaa have.
 E-commerce Regulations: The altering legal framework and the introduction of new, stricter
regulations pose a major threat to Nykaa. Inability to comply with the changing regulations
increases the risk of costly litigation.
 The Rise in Competitors: The increasing number of direct competitors such as purplle, indirect
competitors such as small businesses selling organic and cruelty-free products affects the
company’s ability to maintain and expand its customer base.
 Health Concern: The growing trends of organic and cruelty-free products poses a great danger
if the products offered are not environmentally friendly. Nykaa should now focus more on
expanding its reach to natural and organic products.
 Economic Conditions: During the pandemic, the purchasing power declined to an extent and
the business got affected in the first phase of lockdown as the economic conditions of people
deteriorated.

How does Nykaa Works?

Nykaa offers a well-curated selection of products across makeup, skincare, haircare, bath
and body, fragrance, grooming appliances, personal care, and health and wellness
categories from domestic, in-house, international, luxury and premium brands. Nykaa
Fashion, Nykaa's fashion vertical was launched in 2018 as a curated and managed
marketplace to inspire the customer to make fashion choices that suit them. Nykaa Fashion
houses 1,500+ brands and over 1.8 million products across five consumer segments:
women, men, kids, tech and home offering a mix of brands across established national
brands, international brands, luxury brands, and emerging labels and designers. Nykaa has
built a separate business vertical and channels for beauty and personal care brands and
fashion brands since the customer journey to purchase these products are quite different.
Apart from a wide range of brand collections, and personalized customer experience Nykaa

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has built a good range of content, and communities to educate customers about the
products.

Nykaa has positioned itself as a lifestyle retail platform offering a diverse range of beauty,
personal care and fashion products including domestic, international, luxury and in-house
brands. Compared to other beauty and personal care brands, Nykaa has built a strong
brand recall and trust among its customers. Nykaa understands the whole customer
purchase journey beginning from exploring products to making the purchase decision and
provides personalized customer experience through their online platform and physical
stores. Customers trust Nykaa for its diverse collection, authenticity and customer service.

Nykaa Growth Story

Falguni Nayar founded Nykaa in 2012 with the vision of building a multi-brand
omnichannel beauty-focused retail business. After graduating from IIM Ahmedabad,
Falguni Nayar started her career with A.F. Ferguson & Co.

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Later she joined Kotak Mahindra Bank, where she helped several businesses and was the
Managing Director of Kotak Mahindra Investment Bank, and was the director at Kotak
Securities. After spending 18 years in Kotak, she decided to pursue her entrepreneurial
dream and was evaluating several ideas. She saw a large gap in the Indian BPC market, at
one end there are few high-end beauty brand retail outlets serving customers in Tier-1
cities and at the other end, customers buy beauty products from unorganized sectors
including local grocery and department stores. Traditional beauty brand outlets have a
limitation in reaching customers and offer customers a limited variety due to space
constraints. In the last decade, online shopping saw an increased adoption from Generation
Z and Millennials who are also the major customer segment for the BPC sector. Generation
Z and Millennials together account for ~70% of the smartphone users in India and are the
most active consumers of social media content. She saw this as an opportunity and started
Nykaa with a mission to deliver authentic beauty products from domestic, international
and luxury brands to Generation Z and Millennials customer segments. According to the
RedSeer Report, Nykaa has a large BPC market opportunity of ₹1,120 billion (US$16
billion) growing at 12% per annum to ₹1,981 billion (US$28 billion) in 2025. The fashion
opportunity of ₹3,794 billion (US$54 billion) is expected to grow at 18% per annum to
₹8,702 billion (US$124 billion) in 2025. Nykaa has a total addressable market across
beauty and personal care and fashion of ₹10,683 billion (US$152 billion)

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Nykaa Business Model
Nykaa started as an online e-commerce brand in BPC(Beauty and Personal Care) space and
repositioned to an omnichannel model in 2014. Apart from its online business, Nykaa has
three offline store formats:

Nykaa Luxe - Nykaa Luxe focuses on the luxury beauty experience showcasing prestige
international and domestic brands.

Nykaa On Trend - Nykaa On Trend offers current best-selling products that are trending
based on reviews and ratings.

Nykaa Beauty Kiosk - Nykaa Kiosks are comparatively smaller outlets mostly selling in-
house brands.

Customers would like to touch and feel certain products before they make the purchase
decision, and physical stores play a key role in providing this customer experience. Brand
presence across online and offline channels elevates customer experience and increases
customer acquisition organically. The company has a network of about 120 physical stores
spread across India and aims to increase the count to 300 in near future. Apart from
offering a wide range of brands, Nykaa has its beauty and personal care products under
“Nykaa Cosmetics”, “Nykaa Naturals” and “Kay Beauty” which are available in online and
offline channels. Nykaa follows an inventory business model in which products are bought
from brands, and authentic distributors directly and stored in warehouses. These products
are sold through the Nykaa website, mobile app, and physical stores. The inventory
business model allows Nykaa to own product quality, pricing and on-time delivery.

Nykaa Marketing Strategy

Nykaa has carved out a brand identity for itself in the Indian BPC market by communicating
what the brand stands for with its marketing strategy. The core marketing strategy of
Nykaa has been digital marketing since the majority of its customer segments are digitally
native and make their purchase decision through social media content.

Social Media Marketing:

Social media marketing has become one of the important channels as it has the potential to
alter consumer buying behaviour. Customers discover new beauty and fashion products
through the latest trends in social media and their networks on these platforms. Nykaa
uses social media marketing to create brand awareness, and acquire new customers by
promoting their products. Nykaa's social media channels engage with customers by sharing
useful tips about beauty and personal care brands and also posting content created by
influencers about Nykaa products. Nykaa gets the majority of its social media traffic from

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Youtube, followed by Facebook and Instagram. Nykaa has a very strong social media
presence with 3.4M followers on Facebook and 2.2M followers on Instagram.

Influencer Marketing: Influencer marketing is an efficient way to reach customers to

build brand awareness and trust. Nykaa uses influencer marketing to educate customers
about beauty products through creative and entertaining content. Apart from its
relationship with celebrity influencers, Nykaa leverages influencers via Nykaa Affiliate
Program, which enables more content creators to publish content on the brand's behalf
across digital platforms. Nykaa has the largest influencer network in the online beauty and
personal care segment in India with influencers including the likes of Generation Z
trendsetters, mommy bloggers, beauty, fashion and lifestyle bloggers, makeup artists and
celebrities. In Dec 2021, Nykaa collaborated with influencers for the promotion of its newly
launched ‘Clay it Cool’ mask range. The influencers posted pictures on their Instagram
handles with the masks, reviews and how-to videos using the mask. The brand has worked
with female influencers with less than five lakh followers and was able to create a lot of
buzz with 3M views within the first 2-3 days.

YouTube Marketing:

Nykaa follows a distinct Youtube marketing strategy and gets most of the site traffic from
the YouTube platform. Nykaa's YouTube channel, Nykaa TV produces educational content
on the latest makeup trends, skincare routines, expert talks, and makeup tips by famous
beauty influencers. Nykaa does not focus on selling its products through its YouTube
channel, rather helps customers in choosing the right beauty products and helps them to
use them correctly with its how-to videos. Nykaa TV video guide content is produced in
multiple languages to target customers in specific regions. Nykaa TV also produces expert
talk videos to help customers understand the product importance and the need to use
them. Apart from their channel, Nykaa uses YouTube ads to reach out to their customers.
Nykaa TV boasts 1.3M subscribers and is one of the important distribution channels for the
brand.

Content Marketing:

Online content plays a vital role in helping customers to understand and make purchase
decisions in beauty and personal care brands and fashion. Content marketing plays a key
role in Nykaa's marketing efforts since their core customer segments, GenZ and millennial
customers consume online content on all social media platforms. Nykaa’s content
marketing strategy focuses on creating content to educate customers about beauty and
personal care brands. Nykaa’s primary content marketing involves blogs, videos on beauty
and fashion tips, trending products and guidelines on choosing beauty and personal care
products. Nykaa produces most of its content in-house through Nykaa Army, a team of
beauty and fashion content creators. Nykaa also works with brand partners to create

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content to amplify their brand story and products. Nykaa beauty book, Nykaa's blog, offers
weekly top stories about cosmetics. Apart from this, the blog has helpful articles on various
beauty topics like makeup, skin and hair care, personal care and product reviews. Nykaa
launched Explore 2020, an in-app content aggregation hub that provides a “watch and
buys” feature to enable a consumer to watch content and shop for the products featured in
that content in real time. The content is predominately multi-brand and education-focused,
including tutorials on ‘how-to’, reviews, and product trials. Most of the brand content has a
good reach among its customers which eventually helped the brand to have good search
result ratings and generate more leads.

Content Marketing Awards won by Nykaa...

In 2018 and 2019 Nykaa was awarded the Best use of Intelligent Content (Digital Presence)
Award at the Content Marketing Summit and Awards.

In 2019 Nykaa was awarded the Best use of Content to Commerce Award at the content
Marketing Summit Asia.

Email Marketing:

Email marketing is a powerful marketing channel to generate engagement and sales by

promoting a business’s products or services. Nykaa uses email marketing to build a
relationship with its customers and to keep them updated about their upcoming events and
product deals. Nykaa also sends out emails on current popular trends in the industry to
keep its customers aware of the latest trends.

SEO:

Nykaa uses SEO optimization techniques to build brand awareness and attract customers
interested in beauty and personal care brands to their website. Nykaa has implemented an
effective SEO strategy by using relevant keywords and search engine-optimised content on
their web page, beauty blog posts and articles. Nykaa’s main traffic source is through
search, driving 56.88% of desktop visits last month, followed by direct search contributing
to 34.61% of traffic. Nykaa’s SEO strategy has helped the brand to improve its search traffic
and to generate organic leads for customers interested in beauty and personal care
products.

Revenue Model
In Q2 FY23, Nykaa recorded a 39% YoY Revenue growth compared to Q2 FY22. The
Company earns revenue from the below verticals:

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Nykaa, Beauty and Personal Care Products:

Nykaa Fashion

Others - NykaaMan, SuperStore(eB2B platform), Nykaa International, Little Black

Book(LBB), Nudge Wellness

Nykaa - Beauty and Personal Care Products:

Nykaa BPC segment is a major contributor to the overall revenue accounting for Rs.10,825
MM.

Nykaa operates in an inventory model in which the company buys products directly from
brands or authorized distributors and sells them on its web, app and physical outlets.

Nykaa also has its private label produced through contract agreements with third-party
manufacturers.

Nykaa Fashion:

Nykaa Fashion accounts for Rs.1016 MM in the overall revenue.

Nykaa Fashion operates as a curated and managed marketplace with a wide assortment of
offerings catering to women, men and children of diverse demographics.

Others:

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The Other section represents the revenue from NykaaMan, SuperStore(eB2B platform),
Nykaa International, Little Black Book(LBB), and Nudge Wellness.

The combined entities under this section contribute Rs.467MM to the overall revenue.

Nykaa Funding & Acquisition

Nykaa founded in 2012 has raised a total of $148.5M in funding over 13 rounds. On Nov 10
2021, Nykaa made a dream IPO debut with the stock listing at Rs 2,018 with a 79%
premium.

According to NSE data, Nykaa received bids for 2,16,59,47,080 shares against 2,64,85,479
equity shares on offer.

The Qualified institutional buyers and non-institutional investors showed strong interest in
the offer, as their reserved portion was subscribed 91.18 times and 112.02 times,
respectively.

Nykaa has acquired six organizations including LBB, Nudge, Dot & Key Wellness, Kica, Pipa
Bella and 20Dresses.

Nykaa Financials

In the recently declared Q2 FY23 results, Nykaa has displayed strong performance across
all the financial metrics with an increase in revenue of 39% YoY growth and an increase in
gross profit of 45% YoY growth. Consolidated statistics across all three verticals: BPC,
Fashion and Other

Gross Merchandise Value (GMV) represents the monetary value of Orders inclusive of taxes
and gross discounts, if any, across our websites, mobile applications and physical stores

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before product returns or order cancellations and including sales to and through third-
party channels.

EBITDA - Earnings before interest, tax, depreciation and amortisation.

PBT - Profit Before Tax

PAT - Profit After Tax

Consolidated Financial Summary across all the verticals:

Nykaa has recorded a 344% YoY increase in Q2 FY23 recording a net profit of Rs 5.2 crore.
Gross Profit has recorded a 45% YoY growth and revenue recorded a 39% YoY growth
compared to Q2 FY22. Compared to Q2 FY22, Selling & Distribution Expenses and
Employee benefits expenses have increased drastically by 102% and 76% respectively.

Nykaa Future Plans

Nykaa has been expanding its business by entering new markets and products along with
various partnerships. Nykaa aims to increase the number of international brands sold on
its platform and expand its physical store presence. Nykaa is also working out plans to take
its brand international to explore other markets outside India.

Superstore:

Superstore By Nykaa, is a one-stop B2B shop, focusing on beauty and personal care offering
100% authentic products across top brands.

Superstore allows retailers to access the entire range of beauty products on a single
platform with the flexibility to choose order quantity, delivery and credit facility.

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To Conclude

Nykaa has become one of the largest platforms for meeting all the beauty, wellness and
fashion needs of customers and has been successful in doing so.

As we saw Nykaa has strengthened itself in providing products that are affordable and has
been able to do well through its omnichannel mode but at the same time, it somewhere
lacks in doing R&D which will help its competitors to take Nykaa’s customers away from it.

Nykaa has so many opportunities to become more successful in its venture. But there are
many areas where Nykaa still has to work such as reducing the product cost by reducing
the internal expenses so that it can be affordable for the majority of people.

It should increase the frequency of marketing digitally with the campaigns globally to
create a better digital presence and to cut off the competition by influencing the minds of
consumers by frequent advertisement.

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