An Overview of the Nykaa Business Model: How the Cosmetic Powerhouse Thrives in India’s BPC Industry

An overview of how the Nykaa business model makes it a cosmetic powerhouse and business lessons startups can take from it.

People seek ways to improve their appearance. They search for the best beauty product for flawless, radiating skin or rose-red lips. Thankfully, cosmetic solutions make their dreams true, readily available in malls, stores, and the internet.

These products arise from a $254.08 billion beauty industry with a growth rate of 5.3% in 2021. India is a big market for this industry - ranking fourth in the world cosmetic market for the highest sales revenue.

While many brands work tirelessly to meet their target audience’s beauty needs, one major problem persists - brands' inability to connect to their customers. Somewhere along the line, there was an insufficiency in their efforts to meet customer needs - online and in real-time.

Nykaa, a pretty powerful beauty unicorn, stepped in with a solution. The cosmetic e-retailer provides seamless access to personal care merchandise. It offers a variety of beauty products from top manufacturers locally and abroad.

To achieve this, Nykaa utilizes the direct-to-customer (D2C) strategy. This eliminates the middlemen, as the company directly provides buyers with products that suit their lifestyle.

Interested in how this works? Read on to learn about Nykaa business model, marketing strategy, and how it impacts business growth.

Nykaa Business Model: How the Brand Glows Brilliantly as a Multibillion-Dollar Makeup Retailer

Nykaa is a direct-to-consumer (D2C) eCommerce brand that incorporates an inventory-based strategy. The company purchases a variety of products across different product ranges. These are brought directly from manufacturers. It stores them in its warehouses stationed in Mumbai, Delhi, and Bangalore.

These locations enable effective delivery to customers and Nykaa stores. People now have the luxury of buying their favourite makeup kit online or in-store. But that’s not all about the Nykaa business model. This is just a moisturizer for the makeup brand's success.

What makes Nykaa flourish as a household name in the cosmetic industry is its:

  • Marketing strategy
  • Omnichannel customer experience
  • Customer-centric service and product

Nykaa Marketing Strategy

Nykaa's position in the fashion space is all thanks to its marketing strategy. It knows that high-quality lifestyle excitement centers around young and vibrant fashionistas. So, it targets a broad group within 18-50 years; keeping active customers aged 19-25 as its front-row audience.

Nykaa offers this target market a variety of products, including eye-catching skincare, hair, makeup merchandise. To do this effectively, the brand has to nourish a deep customer relationship. It does this brilliantly via:

Content marketing

Nykaa’s core content vehicles include makeup tutorials and blogs about trendy events in the fashion world. For instance, the Nykaa TV web app offers free wellness, makeup, and skincare tips.

This helps fans with an all-around beauty enhancement, from a glowing facelift to sparkling toenail painting.

Also, Nykaa’s expert master classes and celeb beauty secrets segment are irresistible content for fashion lovers. Celebs reveal handy beauty kits for looking stunning on special occasions like birthdays and festive seasons. While the masterclass centers on the best ways to apply certain beautification products.

Nykaa beauty book, the brand’s blog, offers hot weekly stories about cosmetics. For instance, women can access content on hairline care and the best fragrances to rock at different events.

The blog covers several topics, including celebrity lifestyle, wellness techniques, and in-house product reviews.

SEO and Email marketing

Nykaa applies SEO for an iconic display of brand content on the web, attracting people interested in anything fashion. As a beauty powerhouse, it focuses on implementing niche keywords in its listicles, articles, and blogs. This boosts the brand on search engine result pages, improving brand visibility and organic traffic.

The outcome? Nykaa gains over 10 million monthly web traffic. Email marketing is another tool generating more clicks, engagement, conversions, and sales. The brand uses promotional emails to keep active customers in the loop about the latest product deals.

Buyers can get updates about new products that are available in-store, and can instantly place an order online. Nykaa also uses these emails to keeps its audience in the loop of current fashion trends.

Social media marketing

Nykaa utilizes social media marketing as a functional tool to enable viral brand awareness and customer growth. The firm’s Facebook page, with over 3.4 million followers, dedicates fresh content to personal care and wellness tips. But it’s not all about getting rid of wrinkles to have a perfect dimple.

The beauty unicorn engages audience with trendy subjects like the latest blockbuster movie on Netflix, for example. This grows a lasting customer relationship as the audience interacts with Nykaa beyond its niche.

The brand’s Instagram channel, MyNykaa, serves as a powerful engagement and business growth channel. It feeds its 2 million followers with free valuable content like manicure techniques and lipstick application tips.

Partnership and Event marketing

Nykaa business model thrives on brand partnership and event marketing. For instance, the Nykaa beauty Femina awards is an iconic event graced by stunning media personalities.

This red carpet event awards the best brands and celebrities who have made meaningful contributions to the beauty industry. Katrina Kaif, a Bollywood star, bagged the 2020 entrepreneur beauty award. Several other public figures like Kartik Aryan and Ananya Panday were also in the spotlight.

Partnerships helps brands leverage each other’s audience and market. Nykaa collaborated with BookMyShow, a Mumbai-based entertainment company. This birthed Nykaaland, India’s first-ever beauty festival.

Nykaaland redefines entertainment beyond the living room. It explores a new genre, spreading captivating and conversational experiences in a new light.

Nykaaland March 2020 maiden edition hosted over 40 native and international cosmetic powerhouses.

Influencer marketing

Data shows that 41% of consumers discover new brand products via influencers. Working with its niche influencers, Nykaa employs this strategy to promote brand awareness. This includes TV stars and fashion content creators.

For instance, Nykaa featured the actress Jahnvi Kapoor in its ad film “Pink It Up." The brand nurtures long-term relationships with its influencers, indirectly building customer trust and engagement. But the glamour doesn’t end with mega superstars.

Nykaa also tones it down to micro and macro-influencers. To promote its Clay it Cool mask product launch, Nykaa also collaborated with trendsetters who had 100-500k followers.

The ROI from this grassroots influencer marketing strategy was incredible. Nykaa had about three million reach within 48 hours from influencers with just 100k followings.

Omnichannel Customer Experience

Nykaa business model also employs the omnichannel strategy. It integrates digital touchpoints into traditional marketing. This provides customers with various options for easy buying. Customers can place orders on its online stores or shop in its physical outlets.

Nykaa has three brick-and-mortar store formats. This includes Nykaa On Trend, Nykaa beauty kiosks, and Nykaa Luxe. Each one serves different consumer needs. Nykaa Luxe showcases classy international brands like Dior and Givenchy.

Nykaa beauty features in-house cosmetic collections. While Nykaa On Trend focuses on the fashion craze, curating beauty merchandise based on popularity. Designing an omnichannel customer experience helps Nykaa personalize its services, providing a memorable buying experience.

Customer-Centric Services

Nykaa business model centers on merchandise that enhances customers’ living. However, it also provides high-quality services for a satisfactory customer experience. For instance, buyers receive a free birthday gift card and voucher in their birth month.

Furthermore, Nykaa partnered with Adobe to redesign its customer experience management. This advanced the brand’s digital services, enabling it to serve a diverse consumer segment. Nykaa’s customer acquisition and engagement also improved via Adobe cloud solutions.

Nykaa Brand Growth

Building a profitable business model involves deploying a functional and effective sales channel. For Nykaa, big sales start with payment. The company has multiple payment methods for a smooth purchase.

For instance, the Nykaa wallet supports in-app funding and one-tap payment. Buyers also get cashback offers on special deals. Other payment means include Paytm wallet, debit and credit card, and net banking.

Nykaa’s retail outlets are also available for people that prefer in-store shopping. But the cosmetic powerhouse doesn’t stop at selling. It also flips sides to buying, though this involves companies.

Nykaa has purchased huge stakes in several personal care businesses. It acquired 18.5 and 60 percent stakes in Earth Rhythm and Nudge Wellness, respectively. These acquisitions help the beauty e-retailer gain more grounds in the cosmetic industry.

Competitor analysis: Is Nykaa Business Model Pushing the Brand Ahead of Rival Companies?

The Indian BPC marketplace houses several renowned beauty brands. Nykaa, with a 28.6% market share, has its tent vastly erected in the fashion space. Regardless, it has competitors with incredible products and business success.

But just how successful are they compared to Nykaa? Let’s take a simple review of their 2020 revenue to see who wears the crown:

  • Nykaa: $307 million
  • Sugar cosmetics: $15.9 million
  • Purplle: $17 million
  • Myntra: $306 million

Nykaa takes the win, though by a fraction, thanks to its incredible business model. Also, its brand message and powerful marketing promote it as the go-to place for beautification.

Key Takeaway for Entrepreneurs: Lessons from Nykaa Business Model to Boost Startup Growth

Nykaa business model serves the BPC giant for several purposes, including business acquisition and sales growth. For entrepreneurs, the focus is finding a competitive edge and aiding startup development in the desired industry.

Here are some lessons from the Nykaa business model to capture value in a strategic market position:

Define business process

Nykaa has a well-structured process for its business operation, from marketing to delivery. Understand and focus on the activities that would be the heartbeat of your business.

Establish a specific audience

Identify your customers, researching their demographics, buyers’ persona, and common challenges. This would help you build a solution to their difficulties. For instance, Nykaa focuses on transforming women into beauty pageants in everyday life.

Seek valuable business partnership

Scout for key partners to advance your product/service, improving customer experience. For example, Nykaa partnered with Adobe to improve buyer satisfaction via cloud solutions.

Build an irresistible value proposition

Understanding customer value can help position your brand as the first choice in a competitive market. To do this effectively, identify what customers need, and build and propose a product solution.

Craft a demand creation strategy

What would potential buyers do after connecting with your brand? Build an actionable plan that converts leads into paying clients. For instance, Nykaa has a “shop now" option on its Facebook page. This redirect leads to its online store.

A business model is undeniably integral to brand success and profitability. But there’s more to building a strong presence on the noisy modern-day internet.

Ready to drive organic traffic to your business without spending a cent on ads? Take our beginner-friendly SEO 101 lesson.


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