NYKAA Business Model | How Nykaa Earns? | Case Study

 Hello Friends , we are going to talk about NYKAA If you are a girl or if you have a girlfriend or if you have a sister, You may have heard about this NYKAA is an ecommerce store Who provides cosmetics Cream, shampoo, lipstick They provide stuff like these If you are a female, then do tell me in the comments Whether you order things from NYKAA or not If you are male then also comment if you have ever used it You must be aware that cosmetic market is a profitable market. After a lot of research You get a 30-70% discount on normal products. Means this much commission Now they are dealing with high end products. Like MAC Whose foundation cream is worth 3k So in this, they may get More commission in this But right since childhood I've hearing this that margin is high in cosmetics And they brought it online Means you don't need to go to stores You can order online. 

Brands like MAC etc If i am not pronouncing their names well I am punjabi, understand it :p When you go to their stores You can imagine the amount of money they spend on infrastructure. So if you want to spend this much money And people get free makeup from there Like come and try this lipstick It's a part of your expenses. And this was the problem they catered. So it's a nice business model. NYKAA was started by Falguni in 2012 She was an investment banker Means investment work and after that she started NYKAA and after 5 years, she reached Break even Means No profit No loss Means before that she was in loss In starting, it took 1000 to acquire one customer. Means Online marketing If you have heard about them, then it's from their online campaign .

They don't advertise much on tv. They give sponsorship in femina Means 1000 for one customer. Which is reduced to 200-300 And the cart size of this industry Means the amount people add is between 1250-1500 Which is upto US standard You can imagine the high exclusive audience. They like expensive makeup and are switching towards NYKAA> They don't have time to go to stores To buy a lipstick They can order online easily and delivery is fast They have a fast delivery system Why because they have an inventory model Means you already have all the products in bulk and they can directly send the product from their warehouse directly And delivery process is fast. If you'll visit their website. their monthly traffic is around 10M and according to their CEO 50% customers are repeated Repeat customer means Now they don't need to spend much on acquisition.

 Those 50% customers will buy things without any ads And other 50% customers. We need to show them ads via social media. Affliate They have to spend on those 50% and one more thing If you want to open an ecommerce store You should have an advantage, their advantage is They are buying directly from the brands and don't offer discounts on their own. Unless Until brands offers it. Whenever you see a discount on their site. Those discounts are from brands itself. If you receive a gift from them, it's from brand not from NYKAA> So it's an advantage, Now they have started their own product line. Every ecommerce department is doing it. Here you already had a marketplace and an audience who likes buying a lot of products. You have shown them your products. 

And they tried your products. If your product quality turned out to be good. You created a new set of audience. You want to buy your products in the inventory model. and earlier company was giving you commission BUt here profit is yours They are opening their own stores. Their idea is to open 30 stores till 2020 They may open more than 30 stores because recently they received funding and have reached break even. If you ask them about IPO She was an investment banker means she knew about IPO But according to her, unless until her profit reaches 200 crore. They won't launch IPO talking about their revenue. Their revenue in last year was 214 crore. and now have increased to 570 crore You can imagine their growth And have already reached break even meanns profit!!!! Expenses are less.

Whether salary cost or maintaince cost or in marketing. NOw that they have reached break even, profitablility is high Let's talk about financial stats They have received funding in 6 rounds. From 9 investors and they have received 69 Million dollar funding and it's a maharashtra based company that's it. If you need more info, you can check on crunchbase about their financial stats. One more thing, in starting .

They faced a lot of issues in order to convince brands. Imagine They are selling nivea to a high end product If they are shown together SO they faced issues in the starting. then after some time Brand understood their pitch They want to create a platform where every audience get their desired products. Their biggest competitor is SEPHORA What do they do They only sell high end products. NYKAA on the other side sells both type of products. and we'll target all the audience. so according to me, business model is profitable You tell me in the comments about their business model.