India’s Nykaa is often called “the Sephora of India.” The e-commerce company aggregates international brands across price points, like Kiehl’s, Clinique, and Guerlain, as well as its own private label brands, and ships online orders across the country. The company has also expanded offline and has 32 physical stores, so customers can experience beauty in person. Nykaa has raised nearly $100 million over seven rounds, according to Crunchbase.
Falguni Nayar, a managing director at Kotak Mahindra bank, founded Nykaa in 2012. Falguni observed that despite India’s growing middle class, not every woman had an easy way to access global cosmetics brands affordably — especially in smaller Indian cities. Former Chief Operating Officer, and now CEO of Retail Adwaita Nayar (daughter of Falguni Nayar) has helped lead the company’s evolution. Now, Nayar is building a completely new vertical — an e-commerce fashion brand, Nykaa Fashion.
“When we started the business, it was never to go into fashion,” Adwaita Nayar shares. “More recently, we realized our customer base was incredibly special. We had captured ten million extremely forward-thinking women who became our loyal beauty customers.” But the size of India’s fashion industry eclipses that of its beauty industry. According to Nykaa, their devoted clientele tends to “buy 5x the fashion than they buy beauty.”
“Taking on fashion, which is so big, felt like a good space to create our next engine of growth,” Nayar explains. IBEF reported that the Indian cosmetics industry would grow 25% to $20b in value by 2025; the same report claimed the cosmetics industry was valued at only $6.5b in 2018. In comparison, BCG valued India’s entire fashion market at $70b in 2016 and expected just online fashion, a subset, to grow 4x to $12-14 billion by 2020.
Online fashion shoppers are expected to be increasingly female and to come from Tier 2 cities, which have smaller populations than major metros like Mumbai and Delhi. This is Nykaa’s sweet spot. It’s opened stores in locations like Jaipur, Kanpur, Bhopal, and Kochi. For shoppers, there are few other options in these areas.
“The thing about Nykaa is that they’ve brought this whole luxury makeup option to India and made it extremely accessible,” said Disha Chandgothia, a customer. “I used to live in Kolkata before moving to Bangalore and we didn’t even have a Sephora there. So that option, of buying stuff I’d otherwise have to ask relatives to get, has made it convenient for me.”
Nykaa’s foundation to start its fashion vertical include its strengths of community, curation, marketing, and logistics. Its fashion team is 35 strong: individuals focus on fashion but often work under senior management who oversee both beauty and fashion in marketing, technology, and analytics. “We are leveraging so much of our Nykaa learnings and team,” Nayar points out.
She also reflects on what Nykaa did well when it came to beauty. “We created inspirational content to create a desire to consume beauty. A lot of people say we created [a] demand for beauty.” Much of that translates to her vision for fashion. “We want to create a demand for fashion and for style and for trends,” Nayar says. The key to fulfilling that vision? “Convenience has to be at the heart of it. It has to be quick delivery.”
Nayar has a good instinct for the problem. As one potential customer, 21-year-old Anusha Govindaraj, shared, “I’m skeptical about buying fashion from online sites because I don’t know if it’ll look good on me unless I try it on.”
Usually, Amazon is the brand that comes to mind when one thinks of convenience. And Amazon is betting big on both India and fashion. However, Nykaa doesn’t consider Flipkart-owned Jabong or Myntra, or even Amazon, as its competitors. For one thing, the company is avoiding a discounting strategy. Nayar wants Nykaa Fashion to shift the conversation “from price to style.”
Some of Nayar’s personal recommendations include coordinated sets and androgynous clothes, which are only just hitting India. For Nayar, fashion can be personal — she developed her own style based on discovering what she looked good in, over several years. “I think you just pick it up subliminally.”
But not everyone has had access to a range of looks, and Nykaa Fashion hopes to change exactly that. Nayar emphasizes, “I think Indian women don’t know where to go to be inspired, in terms of how to dress... Currently, the fashion conversation is very discount driven.” Her thesis is that many women are looking for a point of view. It’s not enough to follow fashionable Bollywood stars either, because what they wear is often out-of-reach. And when Bollywood actors such as Anoushka Sharma or Deepika Padukone launch their brands with Myntra and Wal-mart, respectively — all now part of the same company after Wal-mart bought a 77% stake in Flipkart — these brands offer low-price-point fashion lines, not aspirational ones.
Nykaa, on the other hand, is helping its customers discover emerging Indian designers — like The Jodi Life, The Burnt Soul, and Khara Kapas. It’s reminiscent of Rent the Runway’s initial strategy. “They just make such beautiful clothing with such interesting fabric,” Nayar gushes. Companies like The Jodi Life work with 100% natural Indian textiles and are bringing back artisanal practices like hand-block printing. These new companies tout ethical manufacturing (“cruelty-free”), social responsibility (donating to charity), and their role in preserving heritage. Nykaa will also include established international brands like Forever 21, Gap, and Vera Moda.
“We can be a place where you can discover emerging Indian designers an international audience would be really interested in, both the NRIs [non-resident Indians], and the people who are not Indian.” Already, without any marketing, Nayar says that a significant portion of Nykaa fashion sales come from international customers.
“The whole Nykaa experience has been a dream,” Nayar reflects. “Once you start entrepreneurship, you get so hooked. I feel really lucky to have found Nykaa and you can pour your heart and soul into and it doesn’t feel like work.” She’s worked on everything from operations to tech and product to marketing with a short hiatus at Harvard Business School for her MBA. Soon after graduating, Nayar helped expand Nykaa’s physical footprint and launched several stores. “I traveled around the country, which I had never experienced in the digital side.”
Now, fashion is a new challenge. “I’m learning about an extremely challenging vertical….It’s going to be a fun one to crack,” she adds. After all, cosmetics don’t have sizing complications or as many returns in India. What makes fashion difficult is also what makes it exciting: its reach. “Fashion is a massive market. Everyone is a fashion consumer. Not everyone is a beauty consumer,” Nayar shares.
Next, she plans to customize the website based on a customer’s location. “International folks won’t want to go to us for the same brands… [non-resident Indians] are interested in getting their supply for pujas and weddings.” Similar to Nykaa beauty, Nykaa Fashion also wants to build private label brands.
And it doesn’t end here. “If we’re successful in fashion, we can have a vision that’s broader than beauty…Beauty, fashion, and home.” Yet Nayar stays humble, refusing to take success for granted. “What we achieved in beauty is not a small feat. We will have to prove ourselves in fashion.” She adds, “We don’t want to count our achievements before they happen.”
Snigdha Sur is Founder & CEO of The Juggernaut. She loves reading novels and always has a pen on hand.
What did you think of this story? Click a mango to give us feedback.
The Juggernaut tells untold, smart South Asian stories and news you won't find anywhere else.
It’s like your other email briefings. But browner. Join thousands and get the newsletter that curates the best global news on South Asia(ns) every Sunday. We also send updates on events, giveaways, our original reporting, and more. Unsubscribe anytime.