1

Research Question: To what extent did the growth strategies implemented by Nykaa

contribute to its increased market share, in India?

Title: An exploration of growth strategies.

Word Count: 3992 words

1
"Think Big, Start Small - “The One-Woman Army” Story Of Nykaa | Next Big
Brand." Next Big Brand, 15 June 2019, www.nextbigbrand.in/think-big-start-small-the-one-
woman-army-story-of-nykaa/. Accessed 16 Jan. 2022.

1
Table of Contents:

1. Introduction……………………………………………………………………………3

2. Methodology…………………………………………………………………………. 4

3. Analysis and Discussion ……………………………………………………………...6

a. Nykaa’s Timeline ……………………………………………………………..6

b. Leadership Style ………………………………………………………………7

c. Porter’s five forces ……………………………………………………………8

d. Extended Marketing Mix ……………………………………………………12

e. Kotler’s Product Levels ……………………………………………………...14

f. Ansoff Matrix ………………………………………………………………..17

g. Red Ocean vs. Blue Ocean strategy …………………………………………18

4. Financial Analysis …………………………………………………………………...21

5. Conclusion …………………………………………………………………………...24

6. Bibliography …………………………………………………………………………26

7. Appendices …………………………………………………………………………..30

2
Introduction:

The day Nykaa embarked on its journey, the beauty and wellness world changed for good.

Nykaa is an e-commerce company, started by Falguni Nayar in 20122. Apart from their

online presence, as of 2020, they have opened 76 stores across India.3 The business is a

unicorn start-up.4 The founder of Nykaa is an MBA graduate and she has spent 18 sweet

years working at Kotak Mahindra Bank as an investment banker and was promoted as the

managing director.5 Falguni Nayar was determined to start her own business because she

realised that there was potential in the beauty and wellness industry in India. She left her job

and began to turn her dreams into reality and that is how Nykaa was born.

I once heard in an interview of Falguni Nayar that she started this business for the women

who wanted to look beautiful for themselves, not for society but for themselves.6 This is what

spoke to me because as a teenage girl I want to grow into the person that I want to be and not

what society expects out of me. Through Nykaa, Falguni is helping people feel comfortable

in their own skin and the whole reason behind building this brand is what encouraged me to

conduct this research. In India, still societal norms and stereotypes impact women’s lives in a

negative manner and in this society Falguni is offering women a way to express themselves

and feel good about themselves. In an interview, Falguni mentioned that her vision behind

2
Rangaiah, Mallika. "The Success Story of Nykaa." Analytics Steps | Learn AI, Machine Learning, Business
Analytics, Startups & Other Technologies, 27 Nov. 2020, www.analyticssteps.com/blogs/success-story-nykaa.
Accessed 3 Nov. 2021.
3
"Nykaa Fashion Starts Offline Expansion, First Store to Open in Delhi's Ambience Mall." Business Today,
www.businesstoday.in/latest/corporate/story/nykaa-fashion-starts-offline-expansion-first-store-to-open-in-delhi-
ambience-mall-280582-2020-12-04. Accessed 1 May 2021.
4
Corporate Finance Institute. "Unicorn - Definition, Valuation, and Reasons for Abnormal Valuations."
Corporate Finance Institute, 28 Feb. 2020,
corporatefinanceinstitute.com/resources/knowledge/finance/unicorn/. Accessed 1 May 2021.
5
Rangaiah, Mallika. "The Success Story of Nykaa." Analytics Steps | Learn AI, Machine Learning, Business
Analytics, Startups & Other Technologies, 27 Nov. 2020, www.analyticssteps.com/blogs/success-story-nykaa.
Accessed 1 May 2021.
6
"Falguni Nayar | Women at Work." YouTube, 17 May 2018, www.youtube.com/watch?v=08OGsIq7UAM.
Accessed 4 Nov. 2020.

3
Nykaa.com is to get the best of beauty products from all around the globe available to the

Indian consumer.7 Living in India and seeing all this happen has been a motivation to

research more about Nykaa.

Through this research I aim to find out how Falguni Nayar made her journey from banking to

beauty a success story. I aim to understand the strategies the business employed to beat the

competition and turn into a company that has a valuation of more than a billion dollars in

such a short span of time.8Hence, my research question, ‘To what extent did the growth

strategies implemented by Nykaa contribute to its increased market share, in India?’

Methodology:

To do great justice to the research question, I am going to use a variety of different business

tools that help give greater insights into Nykaa’s business model. The research is based on

secondary data. To begin with, I am going to construct a timeline which helps me visualize

the growth of the business from its inception till date. This will help me holistically see

Nykaa’s progress over the years. It is important for all the functional areas of the business

namely: marketing, operations, finance, and human resource to work together for a business

to grow, which is why using the tools I will explore all these functions of Nykaa. After the

timeline, I will first analyse the leadership style of the CEO, Falguni Nayar, to gain insights

into the Human Resource part of the business. Then using Porter’s Five forces, which is a

framework for understanding the competitive environment of a company, I will understand

the interplay between marketing and operations to see how it gives Nykaa an edge over its

7
Saini, Shubhra. "The Business of Beauty: Falguni Nayar on Why Nykaa is a Leader in Omnichannel
Retailing." Indiaretailing.com, 18 Aug. 2017, www.indiaretailing.com/2017/08/17/beauty-and-wellness/the-
business-of-beauty-falguni-nayar-on-why-nykaa-is-a-leader-in-omnichannel-retailing. Accessed 7 May 2021.
8
Nandy, Tarush B. "Nykaa Plans IPO at $3 Billion Valuation." Mint, 6 Jan. 2021,
www.livemint.com/market/ipo/nykaa-plans-ipo-at-3-billion-valuation-11609894827761.html. Accessed
4 May 2021.

4
customers. Then I will conduct an analysis of the extended marketing mix of the company to

see what additional things the brand offers to help increase brand awareness and gain

customer loyalty. Based on the understanding from all the tools used till now, I will construct

the Kotler’s Product Levels, which shows how a product has five distinct levels that satisfy

the demand and the need for the product. Using this model, I will compare Nykaa’s product

portfolio to one of its major competitors, Purplle. After this, an Ansoff matrix, which is a tool

that shows the different methods of expansion, will be constructed to understand how Nykaa

is expanding and gaining more market share. To end the qualitative analysis, the Red Ocean

vs. Blue Ocean strategy will be explored to understand the factors that help Nykaa overcome

competition and deal with high competitive rivalry. Though there could been some

information which might not have been published by the company and might affect my

analysis and conclusion, I will use multiple resources to get gain clarity and cross check

information.

The analysis will then focus on the financial/ quantitative part of the company. I will first

focus on the revenue of the business and then dive deep into the orders the company receives

and whether they have increased over the years. Then I will calculate the current ratio to

understand the liquidity position of the business.

5
Analysis and Discussion:

Timeline of Nykaa9:

Figure 1: Nykaa’s Timeline

Nykaa’s operations began in 2012 and it currently has around 76 stores.10 The company

sells products from over 2400+ brands and has six warehouses.11 Nykaa has conducted

multiple funding rounds to raise capital for the business and they started their own line

9
Refer to Appendix 1
10
"Nykaa Fashion Starts Offline Expansion, First Store to Open in Delhi's Ambience Mall." Business Today,
www.businesstoday.in/latest/corporate/story/nykaa-fashion-starts-offline-expansion-first-store-to-open-in-delhi-
ambience-mall-280582-2020-12-04. Accessed 1 May 2021.
11
Rangaiah, Mallika. "The Success Story of Nykaa." Analytics Steps | Learn AI, Machine Learning, Business
Analytics, Startups & Other Technologies, 27 Nov. 2020, www.analyticssteps.com/blogs/success-story-nykaa.
Accessed 3 Nov. 2021.

6
of products to add additional revenue streams and recently they have acquired two

brands, Twenty dresses12 and Pipa Bella13, which has helped expand their product portfolio.

Leadership Style:

Nykaa’s CEO, Falguni Nayar has a strong growth mindset majorly influenced by

her father, who fled to India at the beginning of the India-Pakistan conflict and began to build

his empire from scratch. He has been a motivating factor for her and in an interview, she

mentions how her dad never believed in discriminating between genders so she never knew

what constraints felt like.14This can be seen in the way she has expanded her business and has

become an inspiration for people worldwide.

Falguni considers running a business to be similar to riding a rollercoaster. There will be ups

and downs, and anyone who does not enjoy rollercoasters should avoid being an

entrepreneur.15 This view demonstrates that Falguni is aware of the difficulties that come

with running a business, but she accepts them and navigates her way through them. This

enables her to be a situational leader since she understands how to handle difficult situations

and be there for her people. She can be autocratic in nature when they are in a time crunch

and require immediate results and democratic when creativity and innovation is required.

One of Nykaa’s core values is teamwork, so Falguni considers this as she leads the business.

12
"Twenty Dresses by Nykaa Fashion Online: Buy Designer Dresses, Gowns & Tops from 20Dresses."
Designer Women's Clothing - Shop for Women's Fashion Clothing Online | Nykaa Fashion,
www.nykaafashion.com/designers/twenty-
dresses/c/4240?utm_content=ads&utm_source=GooglePaid&utm_medium=Search&utm_campaign=DSA_Nyk
aaFashion&gclid=CjwKCAjwuvmHBhAxEiwAWAYjOpweeYMBYZLwoPdd-
HLHtk7_JlfoZOdAqcF_gCWq1TgkBjN7U3EdRoCTQEQAvD_BwE. Accessed 27 July 2021.
13
"Pipa Bella Jewellery Online - Buy Pipa Bella Necklace, Earrings at Best Prices | Nykaa Fashion." Designer
Women's Clothing - Shop for Women's Fashion Clothing Online | Nykaa Fashion,
www.nykaafashion.com/designers/pipa-bella/c/3771?p=3. Accessed 27 July 2021.
14
"Falguni Nayar, CEO, Nykaa - Mover & Shaker of Beauty & Lifestyle Retail - E18 S1 of Conversations."
YouTube, 4 June 2020, www.youtube.com/watch?v=fhdDt3vD1eo. Accessed 20 Aug. 2021.
15
"Falguni Nayar | Women at Work." YouTube, 17 May 2018,
www.youtube.com/watch?v=08OGsIq7UAM&t=303s. Accessed 20 Aug. 2021.

7
The corporate culture encourages innovation and teamwork because that is paramount in

keeping a competitive edge in a dynamic industry, where trends keep changing.

For the first few years of the business, till they approximately reached 3000 orders a day, she

used to go through every order.16 This was because she was so excited to see her business

take off. Another thing we can see from this is her paternalistic attitude towards her business.

Overall, her work ethic and her adaptability are what keeps the business afloat.

Porter’s five forces17:

Figure 2: Porter’s 5 forces

16
"Falguni Nayar | Women at Work." YouTube, 17 May 2018,
www.youtube.com/watch?v=08OGsIq7UAM&t=303s. Accessed 20 Aug. 2021.
17
"Porter's 5 Forces." Investopedia, www.investopedia.com/terms/p/porter.asp. Accessed 20 July 2021.

8
Competitive Rivalry:

Nykaa competes with Amazon, Purplle, Plum, MyGlamm, Myntra, and others in the beauty

and wellness sector, but it is still a market leader.18 Because of the large number of rivals,

Nykaa's competitive rivalry may be categorised as high, yet the company's business strategy

and the people behind it continue to capture more market and grow their brand value.

Nykaa can compete with Amazon because it focuses on the beauty and wellness market,

whereas Amazon sells a wide range of products, including toys, books, and

electronics.19Nykaa has an advantage over this Fortune 500 business because of its

specialisation and segmentation offering it a Unique Selling Point. Because Amazon is a

global platform and dominates the e-commerce industry in retail and easy delivery, they

might pose a threat to Nykaa if they began to focus more on this niche.

Amazon intends to sell products from Shein on its platform.20 A firm that was banned in

India at the start of the pandemic may reappear on Amazon with its items. Shein was

formerly a well-known site for affordable fashion, and if it expands to India, it may pose a

threat to Nykaa.

Even though Nykaa faces tough competition, they are able to compete due to strategic

planning and their heavy focus on marketing. Therefore the competitive rivalry is high but

18
"Attention Required! | Cloudflare." Just a Moment.., www.owler.com/company/nykaa. Accessed
19 July 2021.
19
王俊伟. "Walmart, Amazon and Apple Top the 2021 FORTUNE 500 List." Global Edition, 3 June 2021,
www.chinadaily.com.cn/a/202106/03/WS60b880c6a31024ad0bac36c6.html. Accessed 20 July 2021.
20
"Please Wait..." Please Wait... | Cloudflare, in.fashionnetwork.com/news/Shein-could-re-launch-in-india-
with-amazon,1319553.html. Accessed 20 July 2021.

9
the competition can be tackled if the business continues to invest in marketing and innovates

based on the changing needs and wants.

Threat of new entry:

Nykaa has low risk of new entrants due to high start-up costs. Setting up an e-commerce

platform isn't difficult, but competing with current competitors is, which is why Nykaa isn't

particularly vulnerable to new entrants. One risk is that it will be difficult for Nykaa to

compete if established companies introduce items that appeal to the same needs and wants

that Nykaa intends to fulfil. Nykaa took five years to break even21, demonstrating that the

expenses of starting a business at this scale are considerable, and that new businesses would

face competition from established companies that may benefit from economies of scale. The

already established big brands can use pricing strategies, like price penetration and loss

leader, in order to drive out the new competition. Hence, it could be concluded that the threat

of new entry for Nykaa is low.

Threat of substitution:

Nykaa focuses on establishing customer loyalty by providing other services such as cosmetics

guidance, masterclasses, and blogs, thus the danger of substitution is moderate.22 This keeps

customers interested in Nykaa, making it their go-to destination for all things beauty. This

way, it's more than simply a store as it also engages its customers. However, the danger of

substitution is not low because, except for Nykaa's own product line, most of the items Nykaa

21
"Nykaa Business Model | How Nykaa Earns? (Detailed Case Study)." Lapaas Digital Marketing Company
and Institute, 15 Oct. 2020, lapaas.com/nykaa-business-model-detailed-case-study/. Accessed 28 July 2021.
22
NykaaFrontendTeam. Buy Cosmetics Products & Beauty Products Online in India at Best Price | Nykaa,
www.nykaa.com. Accessed 28 July 2021.

10
offers are available elsewhere. Nykaa claims to sell items from over 2400 companies23,

therefore if clients choose to buy straight from the brands or order from other e-commerce

platforms, Nykaa's sales revenue may decline. The reason the threat of substitution isn’t high

is because Nykaa offers fast delivery and the products are delivered right at your doorstep,

which eliminates the time spent in going to stores and shopping. This has been convenient

due to the pandemic as online shopping has increased. Overall, if Nykaa continues to keep its

audience engaged and finds innovative methods to maintain customer loyalty, they will be

able to maintain the threat of substitution at a moderate level.

Power of Suppliers:

The power of suppliers is high since without them, Nykaa's product selection would be

reduced to only a few items. As previously mentioned, Nykaa sells items from over 2400

companies and earns a commission on each sale. However, if the suppliers decide not to

supply the product, Nykaa's sales revenue would suffer significantly. Because Nykaa's

volume of sales is high, and Nykaa has a client base of over 15 million registered users.24

These businesses get access to a huge customer base through their platform, which is why

they may not choose to reduce their supply. A challenge that Nykaa might face is that some

exclusive brands may not be ready to sell their products on a platform that also provides

products at a very low price, because they may be afraid that it will damage their brand

image. This could impact Nykaa’s product portfolio, which is why it is paramount that Nykaa

maintains the distinction and quality between products and the way they are being presented.

23
Rangaiah, Mallika. "The Success Story of Nykaa." Analytics Steps | Learn AI, Machine Learning, Business
Analytics, Startups & Other Technologies, 27 Nov. 2020, www.analyticssteps.com/blogs/success-story-nykaa.
Accessed 3 Nov. 2021.
24
"Topic: Nykaa." Statista, 28 June 2021, www.statista.com/topics/8128/nykaa/. Accessed 9 Oct. 2021.

11
Power of customers:

The power of customers can be categorized as high because they have multiple different

platforms to choose from. Nykaa sells products from different brands, so the customers have

the option of purchasing the goods through multiple platforms. However, Nykaa works to

reduce the power of customers to leave Nykaa by building customer loyalty. On their

website, the company has introduced Nykaa Network25, which allows customers to post

content about the products and their beauty secrets. This increases engagement and gives the

people a platform to share their voice. This helps the brand retain their customers. The brand

also offers an easy return policy to customers, that makes shopping more flexible, and allows

for more people to get comfortable with online shopping.26 Convenient return policies make

Nykaa a more obvious choice for shopping, which can help maintain its customer base.

Though the customers have high power, the brand is focusing on improving customer loyalty,

which till a great extent, helps maintain revenue flows.

Nykaa’s Extended Marketing Mix:

People:

Nykaa’s growth can be credited to its workforce planning. The company thrives by using

division of labour and task culture, which allows its employees to specialize, and hence

increase productivity. They have divided their business into separate segments including but

not limited to: Distribution, Retain, Fashion, Brands, Global Business, Skin Category etc.

25
"Where All Your Beauty Questions & Beauty Concerns Get Answered | Nykaa Network." Buy Cosmetics
Products & Beauty Products Online in India at Best Price | Nykaa, www.nykaa.com/nykaa-network/home.
Accessed 3 Nov. 2021.
26
---. "Cancellation Policy." Buy Cosmetics Products & Beauty Products Online in India at Best Price | Nykaa,
www.nykaa.com/cancellation-policy. Accessed 3 Nov. 2021.

12
Such specific segmentation allows the workforce to focus on certain segments of the market,

creating space for efficiency and results.

Process:

One thing that differentiates Nykaa from its competitors is its fast delivery. Nykaa has an

inventory model so the time between placing the order and it getting dispatched is reduced,

which enables faster delivery, and a pleasant consumer experience.27 The payment process

for the online store is simple and quick, and the multiple payment options given by Nykaa,

i.e., COD, debit/credit card etc make it convenient for different consumers with different

preferences.

Physical Evidence:

Nykaa has around 76 stores and they all maintain a similar look, which makes it easy to

identify the shops. It also helps increase brand awareness as people start to associate certain

colors with the brand. The luxe, Nykaa’s luxury brand, has a different appearance.28 Nykaa

displays its products in a mesmerizing way by using color coordination for nail paints and

segregation by products.29 This makes it easy for the customers to see options of a certain

kind of product from different brands at different prices. Apart from that, Nykaa has created

an app, which is colorful and attractive, whilst remaining user-friendly. The company has

made shopping convenient.

27
"How Nykaa Works - Nykaa Business Model and Revenue Insights." On Demand Mobile Application
Development Company - Elluminati Inc, 29 Jan. 2021, www.elluminatiinc.com/how-nykaa-works-nykaa-
business-model-revenue-insights/. Accessed 3 Nov. 2021.
28
Refer to Appendix 2
29
Refer to Appendix 3

13
Kotler’s Product Levels:

Figure 3: Kotler’s Product Levels

Nykaa's product portfolio can satisfy the Core Benefit and Generic product levels in the same

way that Purplle30, a competitor, can. However, one differentiating factor is Nykaa’s clothing

line. Nykaa's product portfolio includes a wide range of beauty and wellness goods, making it

a one-stop shop for all a customer's needs in this market. This not only serves to establish

30
Notitle, www.purplle.com. Accessed 6 Nov. 2021.

14
customer loyalty, but it also helps Nykaa spread its risks by providing a varied product

selection. When it comes to providing products on the internet, easy delivery and many

payment choices are a must, and both Nykaa and Purplle deliver on these counts.

What differentiates Nykaa from its competition is its expected product. Nykaa offers

products from 2400+ brands, whereas Purplle offers products from only around 1000+

brands.31 The product selection is substantially broader, and this appeals to a broader

audience. Nykaa and Purplle sell products from well-known companies, so there is existing

customer awareness, and they serve as a platform to make purchasing easier, but Nykaa has a

competitive advantage over its competitors due to the vast selection of product versions it

sells.

Nykaa provides beauty tips through its website and other social media channels such as

YouTube and Instagram, making it much more than just a location to buy cosmetics.32 This

improves engagement and is in line with Nykaa's product offerings and helps achieve the

augmented product level. Despite the fact that Nykaa's competitors also provide beauty tips,

Nykaa does so on a larger scale. It provides services such as masterclasses with celebrities,

which captures customers' attention and leads to purchases after they witness the items in

action.

The "Nykaa TV" not only educates people about the products, but it also establishes the

company as a more trustworthy platform, which increases loyalty and helps it stand out from

31
"Purplle.com: Buy Cosmetic Products & Beauty Products Online In India." Purplle.com,
www.purplle.com/pr/about-us. Accessed 6 Nov. 2021.
32
"Nykaa BeautyBook | A Blog About Women's Beauty, Makeup, Fashion and Fitness." Buy Cosmetics
Products & Beauty Products Online in India at Best Price | Nykaa, www.nykaa.com/beauty-blog/. Accessed
6 Nov. 2021.

15
competitors.33 Working with experts in their domains for masterclasses adds an element of

"ethos," or legitimacy, which boosts their brand image as a more trustworthy company.

Nykaa offers clothing in a variety of categories to add to the augmented product. It offers

items in categories such as Athleisure, maternity wear, and so on, in addition to the basic t-

shirts and bottoms that satisfy the core benefit.34 The broader product range, once again,

appeals to a variety of needs, resulting in increased revenue. Nykaa also has its own clothing

line, which provides more alternatives and larger gross profit margins because it is their own

brand.35 The products are available from a variety of companies at various price points, which

leads us to the potential product.

The Nykaa Luxe brand, which solely sells premium goods, is one of Nykaa's potential

products.36 It focuses on providing more advanced versions of items that may be targeted in

the core benefit. These items are from well-known labels such as Dior, Givenchy, and others,

which justifies their high price range.37 These extra varieties added in the Nykaa product

portfolio, with the additional services have contributed to Nykaa’s growth and have played a

role in helping the brand differentiate itself from its competitors.

33
"Nykaa TV." Buy Cosmetics Products & Beauty Products Online in India at Best Price | Nykaa,
www.nykaa.com/nykaatv/. Accessed 6 Nov. 2021.
34
"Designer Women's Clothing - Shop for Women's Fashion Clothing Online | Nykaa Fashion." Designer
Women's Clothing - Shop for Women's Fashion Clothing Online | Nykaa Fashion,
www.nykaafashion.com/lp/women?pageType=nf-
women&pageVariation=1&transaction_id=9c658f90d0416635ea6af5a581c04a53&intcmp=nf-women-
dweb,leads-ins,2,women. Accessed 6 Nov. 2021.
35
"Nykd by Nykaa - Buy Latest Nykd by Nykaa Designs Online | Nykaa Fashion." Designer Women's Clothing
- Shop for Women's Fashion Clothing Online | Nykaa Fashion,
www.nykaafashion.com/catalogsearch/result/?q=nykd%20by%20nykaa&searchType=Manual&internalSearchT
erm=nykd+by+nykaa. Accessed 7 Nov. 2021.
36
NykaaFrontendTeam. "Luxury Cosmetic Products India | Buy Luxury Cosmetic Products India Online in
India at Best Price | Nykaa." Buy Cosmetics Products & Beauty Products Online in India at Best Price | Nykaa,
www.nykaa.com/luxe/c/194. Accessed 7 Nov. 2021.
37
---. "DIOR Sauvage Eau De Parfum." Buy Cosmetics Products & Beauty Products Online in India at Best
Price | Nykaa, 8 Jan. 2022, www.nykaa.com/dior-sauvage-eau-de-
parfum/p/769257?productId=950918&skuId=769257&pps=1. Accessed 7 Nov. 2021.

16
Ansoff Matrix:

Using the Ansoff matrix we can see the strategies that Nykaa is employing to expand and

gain a competitive edge.

Products

Existing New

Markets Existing Market Penetration Product Development

(Combo offers)38 (Acquisitions of Pipa Bella and

20 dresses)39

New Market Development Diversification

(Expanded to Nepal)40 (Nykaa Fashion)41

Figure 4: Ansoff Matrix

Nykaa’s growth is credited to their strategic planning. As it can be seen in the matrix above,

the company has used all four methods to expand and reach a wider customer base to increase

their sales revenue.

Red Ocean vs. Blue Ocean strategy:

38
---. Buy Cosmetics Products & Beauty Products Online in India at Best Price | Nykaa, www.nykaa.com.
Accessed 12 Oct. 2021.
39
"Nykaa Fashion Acquires Pipa Bella to Strengthen Jewellery Category." The Economic Times, 12 Apr. 2021,
economictimes.indiatimes.com/tech/startups/nykaa-fashion-acquires-pipa-bella-to-strengthen-jewellery-
category/articleshow/82034659.cms. Accessed 12 Oct. 2021.
40
NykaaFrontendTeam. "Shipping Policy." Buy Cosmetics Products & Beauty Products Online in India at Best
Price | Nykaa, www.nykaa.com/shipping-policy. Accessed 12 Oct. 2021.
41
Sharma, Yanogya. "Nykaa Acquires 20Dresses to Enhance Private Label Play." Entrackr, 10 Oct. 2021,
entrackr.com/2019/03/nykaa-acquire-20dresses/. Accessed 12 Oct. 2021.

17
 Figure 5: Nykaa’s competition shown in the red ocean

Nykaa entered the industry in 2012, as shown in the timeline above. They did, however, enter

an already existing market in which competitors had already secured their positions and were

working to further capture the market. Nykaa was compelled to adopt the Red Ocean strategy

in order to increase market share by outperforming competition. The concept of a "Blue

Ocean" symbolises a completely new market that does not currently exist; consequently, blue

represents tranquilly and peace. However, red denotes competition, and in order to compete

with brands such as Amazon, Myntra, Purplle, and MyGlamm, Nykaa had to employ the red

ocean strategy. Nykaa launched an e-commerce platform while maintaining their physical

stores to capitalise on existing demand and draw clients to their brand. Because they also

operate online, an e-commerce platform got them to the same level as their competitors;

however, having physical stores gave them a competitive advantage that allowed them to use

the physical evidence aspect of the extended marketing mix to create a memorable experience

for their customers. Nykaa has employed people who are knowledgeable about the products

18
and can guide customers and provide advice as needed in physical stores. This adds to the

ethos, credibility, factor of the business.

Nykaa’s social media presence is highly responsible for its growth and in achieving an edge

over their competition. Below the line promotion strategies have worked in their favor as they

now have over 2.2 million followers on one of their Instagram accounts42, which enables

customers to get to know the people behind the brand, building more of an emotional

connection in the form of loyalty.

Graph 1: Nykaa’s Instagram following

Potential customers can engage with the brand, which increases brand awareness. The

company includes professionals, celebrities, and the general population to use the products

from different companies and present it on their platforms. This allows potential customers to

see the outcome of specific products, which can subsequently lead to sales. Nykaa also

provides beauty tips; these lessons are taught by well-known vloggers and celebrities.43 The

42
Refer to Appendix 4
43
"Nykaa BeautyBook | A Blog About Women's Beauty, Makeup, Fashion and Fitness." Buy Cosmetics
Products & Beauty Products Online in India at Best Price | Nykaa, www.nykaa.com/beauty-blog/. Accessed
3 Nov. 2021.

19
beauty advice is available in Hindi too44, which helps the company reach a wider audience. In

the Indian market, a lot of the consumers are unaware of product usage. Nykaa caters not

only to the luxury market and customers who are familiar with the goods, but also to all

economic categories who want to feel confident in their skin. As a result, online product

demonstrations enable clients to learn how to utilise them and understand the potential

outcomes. This gives them the assurance they need before making a purchase. Since Nykaa

sells from varied price ranges and brands, they use their platform to showcase all the

products, catering to different needs.

As seen in Porter’s 5 forces, the competitive rivalry for Nykaa is high. However, the

implementation of red ocean strategies allows Nykaa to capture more market, create brand

awareness, and focus on consumer acquisition, overall contributing to its increased market

share and growth.

44
"Nykaa TV." Buy Cosmetics Products & Beauty Products Online in India at Best Price | Nykaa,
www.nykaa.com/nykaatv/category/hindi-videos. Accessed 3 Nov. 2021.

20
Financial Analysis:

Revenue45:

Graph 2: Revenue

Nykaa’s revenue suggests constant growth in volume of sales over the years, even midst the

pandemic. The revenue has been taken starting Financial Year 2017 due to the unavailability

of the data of the previous years. According to the given values, Nykaa’s revenue has

increased by 769.1%. This is due to the expansion in their product portfolio and their suave

marketing that works to create brand awareness and add value.

45
"Nykaa: Revenue 2020." Statista, 26 Nov. 2020, www.statista.com/statistics/1053514/nykaa-revenue/.
Accessed 4 Nov. 2021.

21
Orders:

Graph 3: Order volume

Nykaa’s fashion vertical is relatively new compared to beauty and personal care. It was

launched in 2018, whereas the company began its operation in 2012. The number of orders in

Fashion have increased by around 50% from FY 2019 to FY 2021. Coming to the beauty and

personal care segment, the orders have increased by around 55.5%, however, the growth from

FY 2020 to FY2021, has not been remarkable. Due to the pandemic, people reduced their

spending significantly, which may also be a reason for not a major increase in their orders.

22
Ratio Analysis:

Graph 5 & 6: Current Ratios46

46
---. "Investor Relations." Buy Cosmetics Products & Beauty Products Online in India at Best Price | Nykaa,
www.nykaa.com/investor-relations. Accessed 5 Nov. 2021.

23
The company is slowly moving towards a desirable number. 1.1 is a decent current ratio as

the value of current assets is greater than the current liability, but a safe ratio for Nykaa

should be at least around 1.2. The E-retail segment seems to be approaching that number

soon, however, the fashion segment still has a long way to go. Nykaa’s current ratio shows

potential as with every Financial Year, the position has improved.

Conclusion:

Over the past 9 years, Nykaa has grown tremendously. As seen through the analysis of

Porter’s 5 forces, Nykaa can grow and gain power over its competition and the customers by

continuously adding more variety of products to their product portfolio. This caters to a wider

range of demand, hence increasing the company’s profitability.

The success of Nykaa is truly reflected in Kotler's product model. The company can satisfy

the highest levels, augmented and potential, which differentiates it from its competitors.

Other brands in the industry are not able to reach that level. This gives Nykaa an edge over

the competition, which helps the company increase its market share and revenue.

Nykaa has used all four methods of expansion in the Ansoff Matrix, which has helped it reach

more segments of the market, hence expanding its operations to cater to different needs under

the beauty, wellness, and fashion industry.

With the financial analysis, I have realized that because Nykaa was expanding extremely fast

their costs and liabilities were high, reducing their profit margins. However, with every year

they are improving their financial position and the liquidity of the business. These initial

24
investments were required to boost the growth of the business and now all the expenses are

paying off.

Through my analysis I have understood the different strategies that have helped Nykaa grow

and gain higher market share. However, this analysis is subject to limitations. Nykaa has just

launched their IPO and has turned into a public limited company, which isn’t discussed in the

essay as it is an extremely recent event. Within a few days of the launch, the founder Falguni

Nayar has become India’s richest self-made woman billionaire. Most of the resources used in

the essay are from reliable resources as I have taken information from the CEO’s interviews,

their website, and the official financial statements released by the company. However, some

resources that are published by the general audience may be subjective. To improve this

analysis, it would have been better if I could get an interview with a person who is a member

of the team that’s responsible for the growth of the company. According to this research,

Nykaa has grown tremendously, however their future growth is subject to how they are able

to plan and sustain their growth and plan their strategies.

25
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Appendices:

Appendix 1: Making the timeline

30
 Image 1: Construction of timeline on draw.io

Appendix 2:

Image 1: Nykaa Luxe (Luxury Store setup)

31
 Image 2: Nykaa Stores

Appendix 3:

Image 3: Product Segregation and display

32
Appendix 4: Social Media Presence

Image 4: Screenshots of Nykaa’s Instagram accounts

Followers (Millions)

Nykaa Fashion 1.2

Nykaa Beauty (Beauty, 1.5

cosmetic, and personal care)

MyNykaa (Beauty and 2.2

Economy website)

Table 1: Nykaa’s Instagram Followers on three of their accounts

Appendix 5: Finance/ Quantitative Analysis

Revenue:

Nykaa’s Revenue
in Indian Rupees
(billion)

Financial Year 2017 2.14

Financial Year 2018 5.70

Financial Year 2019 12.00

Financial Year 2020 18.60

Table 1: Nykaa’s revenue for Financial Year 2017-2020

33
Volume of Orders:

Orders (Fashion) in Orders (Beauty and

Lakhs Personal Care) in
Lakhs

Financial Year 2019 4 110

Financial Year 2020 11 170

Financial Year 2021 24 171

Table 2: Nykaa’s Volume of Orders between 2019-2021

Ratios:

Table 3&4: Current Ratios for Financial Year 2019- 2021

34