WHY YOU NEED TO FOCUS ON THE NYKAA STORY - Muskaan Kedia

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Now coming to the first. How did Nykaa achieve this feat? For this, we first look at the Indian Beauty and Healthcare market space. There are three channels for the distribution of these products. First, there is the organized sector - wherein both branded and unbranded products are sold through local kiranas or other small shops. Often, these products can be duplicates and of inferior quality. The second channel is the organized retail segment - here the manufacturers have tie-ups with various brick & mortar retailers and supply their goods to them. The last channel is that of E-tail. This is where Nykaa comes in.


Nykaa is the undisputed leader in the beauty and wellness products space. There were several factors that owed to the expansion of its consumer base. Nykaa was successful in identifying customer pain points and addressing those issues from the root. Key among them is the fear of receiving duplicate products, broken or used items, lack of certainty about the expiration date, and the opportunity for recourse in case of a bad product. 


On the other hand, the consumer experience for beauty and Healthcare products has been underwhelming at the best for consumers on other E-Commerce platforms like Amazon and Flipkart, where fake products flood the market.


Next we answer the competitive advantage that Nykaa has over its competitors. Nykaa being an Indian company is one that is allowed to have an inventory model of sales. India currently does not allow FDI in this model. This essentially means that Amazon and Flipkart can’t adopt this model. 


What is so unique about this model? Well, an inventory model basically means one wherein the buyer (in this Nykaa) can buy items in bulk from the manufacturers and store it in huge warehouses and sell it directly to the buyers. On the other hand, Flipkart and Amazon are allowed to be marketplaces, which means that they can’t buy in bulk. Buying in bulk means that the buyer has more bargaining power and can buy goods cheaper. This makes Nykaa competitive and enables it to sell at relatively low prices. 


Lastly, we explore the strategy that Nykaa opts for. It follows an omnichannel market approach. An omnichannel marketing strategy is one that translates to having several means of reaching out to its target market. Nykaa opts for setting up traditional brick-and-mortar stores that are in line with the Indian consumer habit of seeing for themselves what the product is before purchasing it. It further engages both celebrities and social media influencers to create awareness about skincare in general and positions its products as one that can be opted for by the customer. 


These factors considered together make Nykaa an outlier, worth your attention. It is interesting to see how Nykaa would maintain its competitive advantage in the coming times, given the fact that more homegrown competitors are coming up in this space.





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