Nykaa Business Model & Growth Strategy

Nykaa is an Indian E-Commerce platform company under FSN E-Commerce Ventures Ltd. Oh, and it also happens to be the first Indian woman-led unicorn startup; impressive right? Discover the business model & growth strategy in this blog and uncover mind-blowing insights!

Nykaa Business Model & Growth Strategy
Do not index
Do not index
CTA Headline
CTA Description
CTA Button Link

Nykaa? What’s that?

Led by a woman, Nykaa is an Indian bricks-and-clicks company under FSN E-Commerce Ventures Ltd. Launched in 2012, It is an e-commerce platform offering a range of beauty and wellness products. Oh, and it also happens to be the first Indian woman-led unicorn startup; impressive right? Falguni Nayar, the founder and CEO noticed the gap in the market and started this venture in her late 40s, after working in the investment banking industry for nearly 3 decades.
Today it claims to offer the largest assortment of international beauty brands as well as its own in-house and celebrated Indian cosmetics and fashion labels. The name “Nykaa” is derived from the Sanskrit word nayaka, meaning actress or "one in the spotlight" effortlessly blending with the company’s message.
“Nykaa is all about celebrating the star in each woman, and being her confidante and companion as she embarks on her own journey to discover her unique identity and personal style.”

TL; DR of Nykaa’s Business Model

Here’s an exhaustive list of the things that we are going to delve into to understand how a company valued at over $12 million runs their business.
Grab a cup of joe, because you’re going to be here for a long time!
If you are interested to uncover business models of D2C brands you can check out Zepto Business Model & other blogs here.

The core insights the business is built around

Consumer Insight: Customers in the Beauty and Personal Care (BPC) sector faced significant issues with accessibility, authenticity, and accountability in their online shopping experiences. The market was ripe for a platform that could provide genuine, reputable products tailored to Indian consumers while ensuring transparency and reliability in their offerings.
Key Problems Identified:
  1. Lack of Accessibility to Renowned Brands:
    1. Customers struggled to find reputable western brands and products specifically designed for Indian skin tones and hair types.
  1. Prevalence of Duplicate Products:
    1. Major e-commerce platforms like Amazon and Myntra were plagued by counterfeit products, undermining consumer trust.
  1. Transparency and Elaboration Issues:
    1. There was a significant lack of detailed information about product ingredients and production processes, making informed purchasing decisions difficult.
Consumer Pain Points:
  1. Expired and Tampered Products:
    1. Platforms like Amazon were reported to deliver expired products or products with tampered expiry dates, eroding consumer confidence.
  1. Lack of Accountability:
    1. There was no reliable mechanism for addressing consumer grievances, such as skin allergies caused by products, leading to a lack of trust in existing e-commerce solutions.
      Nykaa combined a robust online presence with a deep understanding of customer needs to address these pain points effectively.
Strategy Implemented:
Compliance with Government Regulations with Inventory Model:
The inventory-based method of e-commerce involves the company buying products in bulk from the brand and authorized sellers and storing them in warehouses, allowing better control over quality and authenticity.
  • Given that foreign direct investment (FDI) is not allowed in inventory-driven e-commerce models in India, Nykaa leveraged this regulatory advantage to establish a first-mover position in the market. This differentiated Nykaa from competitors like Amazon and Flipkart, which could not adopt the same model and hence use the marketplace driven model.
  • By adopting this, Nykaa could ensure higher profit margins while guaranteeing the authenticity of the products sold. This model also allowed better control over product quality and supply chain.
notion image
Outcome: By focusing on these core insights and strategic implementations, Falguni Nayar built a trusted platform that met the unique needs of Indian consumers, ensuring access to genuine products, transparency in product information, and accountability for consumer grievances.
GrowthX is an invite-only club for ambitious founder & growth leaders.
Our members are top founders, product & marketing leaders from 2,400+ internet companies like Google, Canva, CRED & Netflix.
The GrowthX Membership is built on 3 core pillars:
First, learning experience
Learn the science of revenue-led growth with frameworks actionable the next Monday morning.
Second, curated community
access to a safe space for you to soundboard anything that is stressing you at work.
Third, professional outcomes
Over 35% of members are founders & are able to hire growth teams to scale revenue for their companies while operators are able to get into breakout leadership roles.

Nykaa’s moat to build a business

Nykaa's competitive edge lies in its omnichannel approach, combining online and offline retail for a seamless shopping experience. It offers expert guidance and authentic products, building trust, especially among first-time buyers. Nykaa's strong community network and engaging content drive customer loyalty and market insights.
Ten years after the company was launched, Nykaa featured in the prestigious annual TIME100 Most Influential Companies List 2022 which should tell you that it is definitely doing something right.
Starting off with its omnichannel retail presence in APAC, Nykaa combines online and offline retail to provide a seamless shopping experience. This ensures customers can shop conveniently online or visit physical stores for a touch-and-feel experience.
Next comes Nykaa’s extensive product portfolio, making it a one-stop shop for customers. Long gone are the days where you’d have to ask people flying out of the country to buy you a GAP hoodie or a CIDER sundress or even a Beauty of Joseon sunscreen.
With over 1 million community members on Nykaa Network and 40,000 active participants, Nykaa leverages user-generated content and feedback for market research and product development, fostering a sense of belonging and trust among users.
Nykaa’s in-house brands in both beauty and apparel provide a competitive edge over other players as it offers affordable and high-quality products aligning with consumer needs of the Asian audience, thereby strengthening their position in the market.
For example, Dot&Key, a skincare brand under Nykaa was able to generate gross merchandise value of over INR 5 billion+ in FY2024.
Dot and Key Skincare positions itself as a trendy and accessible brand catering to the skincare and haircare needs of Indian Gen Z and Millennials, offering affordable yet effective solutions with a strong emphasis on aesthetically pleasing packaging.
notion image
Lastly, Nykaa has become synonymous to the term ‘authenticity’, amplified by the company’s motto to facilitate distribution via the brand itself or the authorized sellers and resellers. To ensure that the products being received are 100% authentic, they require a Trademark Certificate from Brand Owners and a Brand Authorization Letter from distributors to confirm the authenticity. This ensures that products delivered are not fakes or of inferior quality improving trust and customer satisfaction.
notion image

Overview of the Indian Cosmetics Market

notion image

India Cosmetics Products Market Analysis

The India Cosmetics Products Market is expected to register a CAGR of 10.91% by 2030. The upward growth in India's Beauty and Personal Care (BPC) sector is driven by several insightful macro factors.
Emergence of Pure-Play Beauty and Personal Care Companies
In India, the BPC sector is thriving by leveraging localization, trend adoption, and omnichannel innovation. Offline channels remain significant, with market leaders like Nykaa showcasing successful pure-play BPC strategies.
Nykaa strategically plans GTM strategies for its in-house as well as global brands using consumer insights and market research. There are new drops of cosmetics, global brand launches fortnightly which solidify this. This agility allows them to target niche use-cases and expand their addressable market efficiently. They have 50+ dedicated innovation team members and have managed to launch 100+ products FY24.
notion image
Increasing Purchasing Power
The increasing purchasing power is fueling the beauty market's growth in India. If you refer to these data points, you’ll be able to be connect the dots of this ongoing growth of Beauty and Personal care products.
notion image

Reasons for Growth:

  1. Rising Incomes and Consumption: Increased income leads to greater private spending, with BPC products benefiting significantly as fundamental needs.
  1. Upward Mobility and Middle-Class Growth: A growing middle class, with exposure to quality products, shows a higher propensity to purchase branded items through organized channels.
  1. Urbanization and Brand Creation: Urban areas, with higher income individuals, particularly millennials and Gen Z, offer dense target audiences for new brands.
  1. Women Shoppers' Influence: Educated and financially empowered women play crucial roles in household decisions, significantly driving BPC market growth.
    1. notion image
Need for Personalization
Consumers increasingly demand clean, inclusive, and personalized products, willing to pay premiums for what works for them. This trend is evident in the high growth of masstige (mass produced prestige brands) and premium categories. Brands are investing in new product development, and market research to offer niche products to a specific audience.
notion image
notion image
Here’s the search volume for keywords for these product categories in India indicating a rising demand for personalized products:
Search Volume
vitamin C
glycolic acid
hyaluronic acid
snail mucin
the ordinary
chemical peel
body mist
korean skincare
spf 50
notion image
Rise of Social Media
Consumers are increasingly learning about and purchasing BPC products across multiple channels. People are now investing consciously in cosmetics in their daily routines, heavily influenced by social media. Platforms like Instagram have become a hot spot for discovering new products and brands usually by scrolling through ads and promo campaigns.
notion image
Such a macro perspective of the market helps to create strategies and grow the business. If you want to learn how to design for new users to experience the core value of your product & hit “AHA” moment, you should check out GrowthX!
GrowthX is an invite-only club for ambitious founder & growth leaders.
Our members are top founders, product & marketing leaders from 2,400+ internet companies like Google, Canva, CRED & Netflix.
The GrowthX Membership is built on 3 core pillars:
First, learning experience
Learn the science of revenue-led growth with frameworks actionable the next Monday morning.
Second, curated community
access to a safe space for you to soundboard anything that is stressing you at work.
Third, professional outcomes
Over 35% of members are founders & are able to hire growth teams to scale revenue for their companies while operators are able to get into breakout leadership roles.
Join the top 1% of growth talent today!

Competitive Landscape

The competitor landscape for Nykaa in the cosmetics market is quite dynamic, with several established global and local players. Here's a look at the key global and domestic competitors:
Global Competitors:
L'Oréal SA excels with its global presence, extensive product range, and innovation through high R&D investment.
The Estée Lauder Companies Inc. is known for luxury brands like MAC and Clinique, supported by a strong global retail network.
Unilever PLC has a vast distribution network and high brand loyalty with products like Dove and Lakme.
Sephora is a powerhouse in the beauty industry, their physical stores offer an immersive experience, featuring interactive displays and knowledgeable beauty advisors who provide personalized recommendations.
notion image
Indian Competitors:
Sugar Cosmetics, by Vellvette Lifestyle, is popular for trendy, affordable makeup and strong social media marketing.
Tira, by Reliance Industries Limited, aims to leverage its extensive retail network, financial resources, and advanced technology to offer a premium shopping experience with a wide range of products.
Purplle.com is a fast-growing online BPC retailer. It has a user-friendly platform and leverages data analytics to provide personalized recommendations, enhancing the shopping experience.
Biotique distinguishes itself with a strong focus on Ayurvedic and natural beauty products, emphasizing organic ingredients and eco-friendly practices.
notion image

Nykaa’s Revenue

You must be curious about how Nykaa makes money. Nykaa’s revenue streams are broadly divided into three categories: Beauty and Personal Care, Fashion and Others (eB2B services, Nykaa Man, LBB & Nudge).
notion image

Market Share of Nykaa

To understand the propensity to consume, we take a look at how much customers are spending on BPC products across the world.
Per Capita Spend of Consumers on BPC products across the world.
notion image
notion image
The charts indicate that there is a significant headroom for e-commerce penetration in India compared to China.
As seen here, USA remains an ever-expanding market for pure-play categories as well as FMCG brands. A huge millennial working population, higher per capita income and focus of physical activities has led a rise in demand for cosmetics and personal care products to look more presentable.
Here are some key takeaways from the success stories of leading brands like L’Oréal, which can serve as a blueprint for up-and-coming companies like Nykaa aiming to make a mark in the beauty industry.
1. Embrace Innovation and Premiumization
L’Oréal’s continuous innovation in skincare and fine fragrances, such as the Libre by Yves Saint Laurent and Paradoxe by Prada, highlights the importance of offering products that not only meet but exceed consumer expectations.
2. Focus on Skincare and Dermatological Expertise
The L'Oréal Dermatological Beauty Division emphasized scientific expertise engaging with nearly 2,150 dermatologists at the American Academy of Dermatology’s annual meeting, as well as through the success of CeraVe and the acquisition of Skinbetter Science. This focus on dermatologically recommended products has strengthened consumer trust and expanded market reach.
  1. Enhance Consumer Engagement and Education
L’Oréal’s engagement with dermatologists and skincare experts to endorse and promote their products is a testament to the value of professional credibility.
Let’s take a look at Nykaa’s market share and target audience:
Overall, the India BPC Market is estimated to grow to $30 billion by 2027 wherein the market is categorized as
  • Online BPC: $10 billion
Online BPC markets are generally marketplaces and ecommerce platforms.
  • Organized Offline BPC: $9 billion
Organized Offline BPC market includes brand outlets, kiosks and immersive experience stores
  • Unorganized Offline BPC: $11 billion
Unorganized offline BPC market are usually departmental stores, drugstore, supermarkets
Overall, India Fashion Market: $147 billion
  • Online Fashion: $49 billion
Nykaa is estimated to account for 30% + of the online BPC market in India and competes with other online marketplaces like Amazon, Flipkart and Myntra.
notion image

Nykaa’s Revenue Model

Let’s try to understand how is Nykaa making money and staying profitable in the market. If you’ve managed to not doze off until now, you might recall us defining the revenue streams of Nykaa.

1. Beauty and Personal Care (BPC)

BPC stands for Beauty and Personal Care. It encompasses products and services aimed at enhancing personal hygiene, grooming, and appearance, including skincare, haircare, cosmetics, and fragrances.
  • Gross Merchandise Value: ₹83,409 million
  • Percentage of Total Revenue: 67%
The BPC segment is Nykaa’s primary revenue driver, accounting for a substantial 67% of its total gross merchandise value. This category includes a wide range of products such as skincare, makeup, haircare, and wellness items.
notion image
There has been a 25% growth over the previous financial year indicating a steady rise in existing and new customers.
notion image
Online sales are the biggest channel of distribution in this segment accounting for 54% of the total channel mix, indicating the strong foothold Nykaa has over the e-commerce space.
Nykaa has 187 retail outlets of which 106 stores in non-metro cities and 81 stores in metro cities.
The stores are categorized as:
  1. Nykaa on Trend (79)
  1. Nykaa Kiosks (41)
  1. Nykaa Luxe (67).
The YoY growth has been attributed to following factors by Nykaa:
The company has significantly expanded its user base by effectively attracting new customers while maintaining strong performance metrics throughout the acquisition process. Basically, they’ve cracked the code on acquiring and retaining customers for a long-time.
They have 7.4 million unique visitors to their ecommerce platform, over 50% of their total 12.6 million visits. Keywords including “nykaa” garnered 3.2 million organic visits via desktop and mobile. The biggest channels being direct and organic search, indicating strong brand awareness; a success attributed to a robust inbound marketing strategy.
Like smelling good? So do Nykaa’s customers. Emerging categories like fragrances and bath & body care are growing faster than the overall platform, highlighting Nykaa’s ability to tap into new market trends.
The company's portfolio of existing global brands has seen accelerated performance, and the steady addition of new, popular global brands has strengthened its market position.
Additionally, Nykaa’s own brands have shown strong performance, contributing significantly to revenue. We will discuss them later in this article, hold tight.

2. Fashion

  • GMV: ₹32,699 million
  • Percentage of Total Revenue: 26%
The fashion segment represents 26% of Nykaa’s total revenue. This includes apparel, accessories, and footwear.
notion image
There has been a 27% growth over the previous financial year indicating a steady rise in customers both existing and new.
Here’s, the breakdown of the channels of distribution to reach customers across different touchpoints:
notion image
According to Nykaa, following factors contributed to the YoY growth:
Significant growth in popular categories such as women's western wear, Indian ethnic wear, lingerie, and activewear indicates that Nykaa Fashion has effectively tapped into diverse consumer preferences and lifestyle needs.
Nykaa Fashion's expansion into high-growth categories such as western wear and activewear, with a wide array of global, luxe, and niche Indian brands, shows strategic foresight in meeting evolving consumer demands and staying ahead of market trends.
How has Nykaa managed to streamline processes and achieve operational efficiencies?
Enhancements in operational efficiencies have led to improved unit economics, meaning the company is optimizing costs while increasing revenue, resulting in better profitability and sustainability.
  • Gross margins have improved due to increase in advertising income on Nykaa’s platforms. They launched an ad tech platform last quarter, shifting from Nykaa brand managers handling ads to a self-serve model where brands are responsible for creative design, offers, and banner duration of display ads. Nykaa ADTECH uses machine learning (ML) for ad selection and following are the functionalities for brands to optimize their ad-spends:
  1. Self Service for Brand Partners: This allows brands to manage their own ads on the platform.
  1. Content Management: This refers to the creation and management of ad content.
  1. Audience & Keyword Targeting: Here, advertisers can choose the specific audience they want to reach with their ads, based on demographics and interests. They can also target keywords that are relevant to their products or services.
  1. Budget Management & Bidding: Advertisers can set a budget for their ad campaigns and bid on keywords.
  1. Reporting & Insights: This section provides advertisers with data on the performance of their ad campaigns, such as impressions, clicks, and conversions.
  • Nykaa operates on an inventory-based model of e-commerce, which helps in scale-based efficiency, segmentation of markets by geographic regions and efficient packaging solutions.
notion image
  1. Nykaa’s warehouse management system helps in streamlining operations and reducing delivery time. In the system, AI/ML powered forecasting is used to predict demand for products. This allows Nykaa to optimize warehouse allocation and allocate orders to warehouses based on distance and customer cohorts. This helps them achieve faster delivery.
  1. The system also uses advanced logic-driven processes to optimize picking and put away logic. This means that items are stored and retrieved from the warehouse in a way that minimizes wasted time and movement.
  1. Finally, the system uses a smart courier allocation engine to select the most efficient courier for each shipment. This takes into account factors such as rate cards, performance metrics, and shipment types.
Here’s a glimpse of how Nykaa processes orders:
Video preview
  • Cost optimization of sales and distribution was possible due to higher productivity of business development executives.

3. Nykaa’s Brand Portfolio

Apart from being an ecommerce platform, Nykaa offers one of the most celebrated assortments of in-house brands that have significantly contributed towards its success. This portfolio includes its own brands as well as acquisitions undertaken by the company.
House of brands
  • Nykaa House of Brands – Nykaa Naturals, Nykaa Cosmetics, Kay Beauty
  • Nykaa Fashion – Nykd by Nykaa, 20 Dresses, RSVP, Gajra Gang, Likha, KICA
Some notable acquisitions by Nykaa:
Year of Acquisition
Pipa Bella
Dot & Key
Beauty and Personal Care
Earth Rhythm
Beauty and Personal Care
Iluminar Media Limited (LBB)
Digital Content Platform
Currently, these brands have a gross merchandise value of over 1 billion rupees (gasp), here’s the brand portfolio across categories.
notion image

4. Others

Nykaa Man, Super Store by Nykaa, Little Black Book and Nudge
  • GMV: ₹8,353 million
  • Percentage of Total Revenue: 7%
Super Store by Nykaa
  • GMV: ₹5,973 million
Super Store by Nykaa is a B2B (business-to-business) platform launched by Nykaa, a leading Indian e-commerce company specializing in beauty and wellness products.
The Super Store is designed to serve small and medium-sized retailers by providing them access to a wide range of beauty and personal care products at competitive wholesale prices.
notion image


Nykaa, after successfully launching and operating in India, noticed the market opportunity of a $30 million market in the middle east with a per capita spend of $500+ on beauty and product care categories.
That’s why they decided to launch its premier international omnichannel retail joint venture “Nysaa” in the Gulf Cooperation Council (GCC) with Apparel Group based in Dubai, UAE. It started off by launching an ecommerce platform in Jan 2024 to opening its first store in Abu Dhabi in March 2024 with 171 global brands. They are committed to being Arabic-first and their brand is anchored in the spirit of Gen Z.
They plan to open 51 Nysaa stores across the GCC entering the foreign markets and overtaking the Middle Eastern market.

Breakdown of their growth model

Nykaa plans to achieve market expansion in the coming years through the following interventions and metrics:
  1. Growing Category Width
  1. Increasing Category Depth
      • Metrics impacted: Frequency of Purchase (FOP), Average Basket Size (ABS)
  1. Premiumize Assortment
      • Metrics impacted: Average Selling Price (ASP), Average Order Value (AOV)
  1. Events & Experiences, Retail
      • Metrics impacted: Customer Acquisition, Annual Consumption Value (ACV)
Achieving this won’t be cakewalk and the company has to strategically align its resources in order to fulfil these goals. A Growth Strategy would be ideal to fulfil this company vision and streamline processes.

Ideal Customer Profile for Nykaa

Before defining the ICP for Nykaa, let's take a look at its practical use cases:
1. Shop beauty, fashion & wellness: Browse & buy makeup, skincare, clothes & more. 2. Get beauty advice: Consult experts & learn via tutorials. 3. Earn rewards: Get discounts & perks with the loyalty program. 4. Try makeup virtually: See how products look on you before buying.
This gives us an idea as to how the primary user base of Nykaa seeks value in and categories these customers into different segments.
GrowthX is an invite-only club for structured learning, curated community & orbit changing outcomes whose members come together and solve practical problems in order to transform their role and career.
Our members are top founders, product & marketing leaders from 2,400+ internet companies like Google, Canva, CRED & Netflix.
With a GrowthX membership, you will be able to deep dive and access to 5,000+ case studies built by GrowthX members over the past 3 years.
A member who was a part of GX17 cohort worked on the onboarding project for Nykaa and their insights make it evident that the motivations for choosing Nykaa are uniform across all user segments. Nevertheless, the range of products and the average order value exhibits variations based on individual income levels, age and lifestyles.
20 - 30 years
25-35 years
Male and Female
Relationship Status
Single or Married
≥ 10 LPA
10-35 LPA
Tier I / II cities
Tier I / II cities
Interests & Spending Pattern
Impulse Buyer, Open to trying new products, Price Sensitive
Conscious Buyer, Brand Loyal
Preferred Apps
Social Media - Instagram, X & YouTube OTT- Netflix, Prime Video, Hotstar & Jio Cinema Communication - WhatsApp & Emails
Social Media - Instagram, LinkedIn & YouTube OTT - Prime, Netflix & Hotstar Communication - WhatsApp & Emails
Online Purchases
Clothes & Grooming
Clothes, Groceries & Grooming
Major Expenses
Food & Grooming
Food, Travel & Rent
Engagement with Nykaa
Purchase influenced by
Reviews, Ads & Influencers
Influencers & past purchases
To buy good quality products at an affordable price point
To have one stop place for all needs - Makeup, Apparel, Footwear & Accessories
Pain Points
Buy quality products at affordable range
Access to all brands for fashion, skincare, hair care and cosmetics at one place
We can define the Use Cases of Nykaa on the basis of their ICPs,
Functional Goal
Access to quality and affordable make up and apparel at one place
Access to all range of products in the fashion, skin care, hair care and make up verticals
Personal Goal
Get access to make up and clothes which makes one feel beautiful
Get access to all range of products that enable users to care for themselves
Financial Goal
Getting discounts on branded make up and clothes
Affordable range
Social Goal
Being able to look good and confident in their circle
Being able to look good and confident in their circle
Total Addressable Market
Total Population of India
141 Crore
Urban Population
48 Crore
Population in Tier 1 and Tier 2
21.9 Crore
% of population between 15-35
7.2 Crore
Service Addressable Market
SAM - Acquirable percentage of TAM
Family income > 6 LPA
2.2 Crore
% of population shopping online
1.8 Cr

Nykaa’s Growth Strategy

Following detailed market and Ideal Customer Profile (ICP) research, we're in a position to come up with a Growth Strategy for Nykaa. This strategy is designed to spur the company's growth and expand its market share. The strategy is built on four primary levers, each of which plays a crucial role in the company's growth trajectory:
  1. Acquisition: This includes identifying and attracting potential customers to Nykaa's platform. The process incorporates strategies like SEO optimization, content marketing, affiliate marketing, social media marketing, and strategic partnerships.
  1. Onboarding: Once customers are acquired, the next step is to ensure they have a smooth and enjoyable onboarding experience. This element of the strategy includes a user-friendly website and app interface, and a streamlined registration process.
  1. Engagement & Retention: The goal here is to keep the customers coming back, thereby reducing churn rate. This involves understanding customer experience, defining engagement frameworks, segmenting active users, and devising effective retention strategies.
  1. Monetization: Ultimately, the strategy aims to generate revenue from its user base. The monetization strategy is built around factors such as retention, deeper engagement, and willingness to pay. Various techniques, such as membership programs, discounts, and retargeting strategies, are used to monetize the platform.
By focusing on these four levers, Nykaa can grow and help the company achieve its business objectives.


To make things simpler, we’ll stick to ICP1 and analyze Nykaa’s acquisition strategy. There are mainly 5 channels of acquisition through which Nykaa reaches this customer profile.
  1. Search engine optimization
  1. Content marketing
  1. Affiliate marketing
  1. Social Media
  1. Brand Collaborations and Partnerships
Search Engine Optimization: A strong SEO strategy is the key to acquire new customers and retarget existing ones by leveraging technology to reach the right audience and prompt them to make purchases. A quick internet search about Nykaa would solidify the success of Nykaa’s SEO channels.
notion image
Content Marketing: As a BPC and Fashion focused company, Nykaa utilizes content marketing by posting blogs, magazines and advisories for its customers to make informed decisions regarding their purchases. This in turn improves their user engagement rates and enables repeat purchases.
notion image
Affiliate Marketing: Social media has enabled ecommerce companies like Nykaa to use strategies like affiliate marketing to promote products by partnering with affiliates, usually micro celebrities to acquire new customers.
The Nykaa Affiliate Program (NAP) is a strong network of 5500+ creators spread across India. Creators with 5K and above followership are eligible to Sign Up on NAP and generate unique Affiliate Links, which can be integrated in your organic content. NAPpers earn 8% commission on every purchase made through their link.
notion image
Social Media Marketing: The most effective way to reaching out and engaging with customers on various social media platforms which enhances the brand personality and makes the company “humane”. Influencers and celebrities collaborate with Nykaa to produce engaging and informative content which eventually acts an acquisition channel.
notion image
Partnership and Collaborations: Nykaa managed to get the renowned Fenty Beauty into the Indian market which led to 30x jump in brand search and became the biggest beauty launch on Nykaa. This is just one instance on how powerful partnerships with global brands to acquire customers.

Onboarding Strategies

In this section, we’ll discuss how a customer initially discovers and registers on the Nykaa app/website.
  • When you search for “Nykaa”, the website ranks 1st with a straightforward messaging regarding its core business role as an online marketplace to buy beauty products.
  • When you type “buy makeup online”, and “buy skincare online” it ranks 1st again, indicating a strong keyword research and optimization strategy.
notion image
Going back to our member’s assignment, we derive a lot of insights about what goes through a user’s mind when they initially decide to explore the app.
notion image
  • Listing: When you search for “shopping”, Nykaa ranks 12th overall competing with other ecommerce platforms.
  • The app description is short and crisp. The app currently has a 4.5/5 rating with 141k rating indicating consumer trust and credibility.
  • Preview of the app communicates the value proposition and is tailored for a first-time user. The preview shows offers and variety in the hopes of prompting an action from the user.
  • When you install the app, you have the option to sign up or skip the process. The onboarding page showcases various offers and services like easy return policy.
  • Nykaa has a smooth onboarding process which eventually reduces the bounce rate and adds a “spark effect”.
  • The home page shows various product categories and brands along with sales and offers and aesthetic creatives and endorsees. This helps in easy and intuitive navigation.
  • When one taps on a product, it displays relevant information about its ingredients, shade ranges, price and discounts, reviews and similar products. There’s also an option to try a product virtually which excites a user. This helps in making an informed decision making.
  • Moving to the checkout process, Nykaa ensures that most information like location and contact details are auto filled to speed up the process and reduce churn.
  • A good feature is the quick access to wish list, if ever one forgets to add a product. The overall tone is personalized for a first-time user and tries to incentive the purchase with discounts.

Engagement and Retention

To understand how Nykaa chalks out its engagement strategies, we’ll first define what customers are experiencing while using their app.
Let’s first define what makes a customer an “active user”.
Primary Action
Active status on Nykaa is achieved with consistent monthly purchases over three consecutive quarters.
Secondary Actions
Other actions aid in understanding an active user:
  1. Product Exploration: Regular browsing of Nykaa's range of beauty, fashion and lifestyle products.
  1. Cart Interaction: Users add products to their cart, showing intent to purchase and interest in specific products.
  1. Wishlist Participation: Engaged users convert wish-listed items into purchases.
  1. Active Reviewing: Members provide feedback on bought items, showing product usage and willingness to participate in the Nykaa campaigns.
  1. Following Nykaa’s Content: Users engage with Nykaa's content/campaigns on the app and other platforms, showing commitment to staying updated about new arrivals, offers, and features.
Natural Frequency of a Nykaa User
User Type
Products Purchase Frequency
Browsing Natural Frequency
Once every 2 months
Once a month
1-2 products per month
1-2 times per week
5-10 products per month
Multiple times a week
RFM Analysis:
RFM means Recency, Frequency, and Monetary value. These are key traits of a customer. RFM metrics are crucial because frequency and monetary value impact a customer's lifetime value, and recency influences retention, which is a way to measure engagement.
This is a theoretical segmentation based on ICPs.
In Danger
User Type
Power User
Core User
Core User
Casual User
Last Week
Last Month
Last 2-4 months
Over 6 months
2+ times a month
Once a Month
Once every 2-4 months
Once in 6 months
Moderate to Low
Breadth and Depth
1. Explores multiple product categories 2. Engages with new launches and brand campaigns
1. Regularly browses the app 2. Explores new collections 3. Uses loyalty programs
1. Explores different product categories 2. Occasionally engages with brand campaigns
1. Limited to one category
Best Engagement Framework for Nykaa
We’ll take a look at the North Star Metric and how these frameworks are prioritized in the case of Nykaa.
To give you a quick context there are three types of metrics: Frequency, Depth and Breadth.
Frequency is the easiest to understand; how often are people interacting with your platform or taking an action.
Breadth is the variety of products purchased across categories.
And lastly, Depth, which is the levels of engagement, in terms of variety and quantity of products per category or brand.
The key consumer insight as to why consumers choose Nykaa over other competitors is because of its authentic and good quality products. So, for them, breadth and depth would be the most important framework to define engagement strategies.
- Breadth drives repeat purchases as your platform becomes a one-stop shop for all consumer needs. - Breadth in product categories supports sustainable growth as it can expand its catalog to meet evolving customer needs without significantly altering its business model. - Breadth also ensure a larger basket size and enable cross-selling and upselling.
- Depth provides insights into customer preferences and behavior. This can be used to create personalized product recommendations. -By understanding customer interactions in depth, Nykaa can make more informed decisions about new product launches and expansions.
Engagement Strategy:
Product Hook:
The Hook Model is a framework that focuses on creating products that become a regular part of users' lives. The goal is to make customers use the product out of habit, forming a natural and lasting connection with it. This means designing the product so that people visit the app or website regularly without even thinking about it.
A hook model for Nykaa to engage core and power users of ICP1 would look like this:
Product Hook 1: Explore Your Beauty Universe
1. Goal -
Encourage users to explore new categories based on their past browsing or purchase history.
2. Problem statement -
  • Users are sticking to one brand or one category of product due to lack of awareness or unwillingness to try something new.
3. Current alternative - Try and Buy products recommended by family and friends
4. Solution -
  • Send personalized notifications or emails with a call to action such as "Discover New Arrivals in Skincare" or "Unveil the Latest in Makeup Trends".
  • Include interactive quizzes or polls to help users find new categories that match their preferences and needs.
  • Use surprise elements such as exclusive discounts, early access to new products, or limited time offers on popular items from various categories.
  • Send "Nyk-nacs" a sample size pack of new products from categories different from what user orders but with similar needs. This will help users to try out new products and is a hook to push them to buy the breadth of the offering.
  • Success Metrics -
  1. Increase in the AOV of orders from Core Users
  1. Increase in the number of categories of products purchased by Core users ---> enabling to move to power user
  1. Reduction in churn among core users
  1. Positive User feedback
Campaign for this product hook:
To encourage buyers to try new products available on the app.
Target Segment
Core and Casual users.
Send a notification: "New in Skincare: Discover the Latest Serums and Masks!” User finds a surprise 10% off coupon for exploring a new category or a pop-up that says, "You’ve unlocked early access to our new makeup line!
Campaign Pitch/Content
Discover Your Beauty Universe! 🌟 New arrivals in Skincare, Makeup, and more. Explore now and enjoy exclusive discounts! Click to unveil the latest trends and products just for you.
Push Notification and Email
Once a month
After their 2nd to 3rd purchase
Success Metric
Increase in the AOV of orders from core users Reduction in churn among casual users
Other metrics to track
CTC of email AOV of casual and core buyers
notion image
Product Hook 2: Match my style
  1. Goal:
To create a community effect among the Power and core users to share and know about their aesthetic. This will enable users to share their wardrobe with apparel available on Nykaa Fashion to showcase product breath. This will enable core users to buy more across product categories and also get advice on what brands caters to their body type.
  1. Problem Statement -
Core users only buy limited set of top selling products.
  1. Current Alternative -
User needs to read through customer reviews in the listing page to know about user experience with the product and its benefits.
  1. Solution - Match my style
  • User engagement: Users can share their favorite looks tagging the product listings. New buyers/ Buyers checking the product listings can see these curated looks posted by real users.
  • Consumer Trust: Users can trust the product since they see many regular users who have posted how they style these products.
  • Nudge users through push notifications - Have access to trendy looks.
  1. Success metrics:
  • Number of users posting their looks
  • Increase in the number of core users purchasing other categories
  • Increase in AOV
  • Increase in user engagement on the website/app
Campaign for this product hook:
Encourage users to try new products by exploring user-generated looks from Nykaa Fashion's product range.
Target Segment
Core and Power Users
Access to a curated collection of user-generated looks featuring Nykaa Fashion's products. Exclusive discounts and personalized recommendations for users who purchase the featured products.
Campaign Pitch/Content
"New Looks, New You! Discover Curated Looks from Our Community Today!”
Email Social Media (Instagram, Facebook, Twitter) Website Mobile App
Email: Bi-weekly Social Media: Daily Website Banner: Rotating every week In-App Notification: Once a week
Once a week
Success Metric
Increase in the number of users exploring user-generated looks. Conversion rate of users trying the looks and purchasing the featured products.
Other metrics to track
Engagement rate on user-generated look pages. Number of products added to cart from user-generated look pages. Customer feedback and reviews on featured products.
Customer retention refers to the company’s efforts to retain existing customers over a long period of time and enable repeat purchases, fostering a sustainable relationship.
Retention Curve: This "Customer State Machine" diagram from Nykaa depicts a journey map for customer engagement, conceptualized like a Snakes & Ladders game. It illustrates various customer states and the actions that propel them forward, helping them progress to more engaged and loyal states.
States and Actions:
notion image
  1. State A: Initial state where a customer begins their journey.
  • Key Actions: Encourages repeat engagement shortly after the first interaction.
2. State B: A more engaged state with increased interaction.
  • Key Actions: Encourages customers using the web platform to install the mobile app for better engagement. Notifications ensure customers have notifications enabled to receive timely updates and promotions.
  1. State C: Customers begin to adopt more features and use cases of the platform.
  • Key Actions: Utilizes discount coupons, indicating a readiness to make purchases.
  1. State D: Customers start purchasing premium products and showing cross-category interest.
  • Key Actions: Buying higher-end products, indicating a move towards premiumization. Making purchases across different product categories, showing diversified interest.
  1. State E: Customers demonstrate strong engagement and loyalty.
  • Key Actions: Expanding purchase categories to include fragrance, which often indicates higher commitment. Interacting with live content or streams provided by Nykaa.
  1. State F: Highly loyal and engaged customers who contribute back to the platform.
  • Key Actions: Engaging with multiple product categories like fashion and beauty, showing deep integration with the platform. Actively participating in the community by leaving multiple reviews, which helps other customers and reflects strong loyalty.
Which ICPs drive the best retention?
Consistent buying pattern- selected number of SKUs Frequency - once in 2 -3 months AOV more than 1000
Purchases all beauty and fashion needs from the brand. Frequency - once in a month. AOV more than 2000
They are very loyal to a particular set of products
They are loyal to the brand overall
Habituated with using the products as it suits their skin and gives good results. Hence the customers have high retention.
They are loyal to the brand and strongly trust the brand for all their beauty and personal needs. Potential buyers for all new launches and sub products. High retention for overall brand.
What channels drive the best retention?
  • Word of Mouth is the channel with the highest retention rate. Users landing on the website is highest through direct search (74%).
Top Reasons for User Churn
Voluntary Churn:
  1. Lack of Efficacy: Users perceive the product as ineffective in delivering promised results.
  1. Ineffective Onboarding: Negative first-order experience, including website issues and logistical problems.
  1. Delayed Results: Users expect immediate skin benefits and are dissatisfied with the time it takes to see results.
  1. Shift in Preferences: Users explore other brands due to changes in personal preferences or beauty routines.
  1. Competitive Campaigns: Users are attracted by promotional campaigns and offers from competitors.
Involuntary Churn:
  1. Payment Issues: Users face difficulties during the payment process.
  1. Allergic Reactions: Users experience adverse reactions or allergies to products.
  1. Reputation Damage: Negative feedback, comments, or reviews on social media platforms affect brand reputation.
Negative Actions Indicating Potential Churn:
  • Social Media Engagement Decline: Unfollowing on Instagram, Less Views on YouTube.
  • Communication Opt-Out: Unsubscribing from newsletters, offer emails, and WhatsApp communications.
  • Purchase Behavior Changes: Decrease in purchase frequency or order value, focusing on select products.
  • Negative Reviews: Negative product reviews on website or other platforms.
  • App Store Feedback: Negative reviews on app stores indicating dissatisfaction.
  • Inactivity: No activity on app or website for over 2 months post-purchase.
Our 8-week immersion program at GrowthX is an excellent way to address and predict churn proactively. To become a member, you can simply click this.
Retention Strategy:
  1. By Nykaa:
Loyalty Program (Nykaa Prive)
Nykaa’s loyalty program, Nykaa Prive, is designed to keep customers coming back for more. Members earn points on every purchase, which can be redeemed for discounts on future buys. Prive members also get access to exclusive sales, early product launches, and special gifts, making them feel valued and giving them plenty of reasons to stick with Nykaa.
These are the tiers of their loyalty program, and the membership starts when you cross a threshold of INR 2000 and with every purchase you get upgraded to the next tier ultimately reaching platinum membership (purchases over INR 10000)
notion image
How is this loyalty program helping Nykaa retain customers?
  1. Incentivizing Repeat Purchases:
Points Accumulation: Customers earn points with every purchase, encouraging them to return to Nykaa to accumulate more points.
Discount Redemption: Points can be redeemed for discounts on future purchases, providing tangible benefits for continued patronage.
2. Fostering a Sense of Value and Exclusivity:
Exclusive Benefits: Prive members gain access to exclusive sales, early product launches, and special gifts, enhancing their overall shopping experience.
Tiered Membership: The tiered structure, with increasing benefits as customers progress, incentivizes continued engagement and spending.
3. Building Customer Loyalty and Engagement:
Personalized Rewards: Tailored rewards and perks based on membership tier and purchase history make customers feel appreciated and valued.
Community Engagement: Being part of an exclusive program fosters a sense of belonging and community among members, strengthening their connection to the brand.
4. Increasing Customer Lifetime Value:
Higher Spending Thresholds: The tiered system encourages customers to spend more to reach higher membership tiers, thereby increasing their lifetime value to the company.
Long-Term Engagement: By offering ongoing incentives and rewards, Nykaa Prive encourages customers to maintain their relationship with the brand over time, maximizing their lifetime value.
ii. By GrowthX
Campaign - Re-Engagement Campaign: "Discover Your Perfect Skincare Routine!”
To re-engage users who have reduced their order frequency by understanding their skincare needs and recommending personalized products and routines.
  • Questionnaire Engagement:
    • Users are prompted to complete a brief questionnaire to understand their skin type, concerns, and preferences.
    • Personalized product recommendations and skincare routines are generated based on questionnaire responses.
  • Exclusive Offer:
    • Users receive a discount coupon code "SKIN100" offering Rs. 100 off their order.
    • Offer validity: 3 days from receipt.
  • Multi-Channel Nudging:
    • WhatsApp: Users receive a direct message with a link to the questionnaire and offer details.
    • Instagram: Instagram stories or posts highlight the offer with a swipe-up link to the questionnaire.
    • Website/App: Pop-up banners or notifications prompt users to participate in the questionnaire and claim their discount.
Call to Action:
"Unlock Your Radiant Skin! Take our quick questionnaire to receive personalized skincare recommendations + Rs.100 off with code SKIN100. Offer valid for 3 days only!"
  1. Personalized Recommendations: Tailored skincare solutions based on individual needs.
  1. Exclusive Discount: Incentive to make a purchase within the offer window.
  1. Convenient Engagement: Easy access via WhatsApp, Instagram, or website/app visit.
Key Metrics:
  1. Questionnaire Completion Rate: Measure user engagement with the questionnaire.
  1. Coupon Redemption Rate: Track how many users utilize the discount code.
  1. Order Frequency Increase: Monitor if users return to make a purchase after receiving the offer.
Segmentation of user
Casual Users, Core Users who have been active for over 2 months
"Discover More of What You Love!” Take this quiz and get a personalized skincare recommendations! After the user fills the questionnaire user gets info on the product suggestion and offer code "SKIN100"
Rs.100 discount, offer valid for 3 days.
Bi-weekly through push notifications, monthly through emails.
Success Metric
Increase AOV and Basket Size, higher engagement rates


A monetization strategy is a way for companies to generate revenue from its user base by providing additional value according to the usage, willingness to pay and profitability.
What seems to be the monetization strategy for Nykaa?
1. Retention → The company claims to have a larger share of existing customers and consistently adding new customer over the years indicates that the product is ready for monetization from a retention perspective.
notion image
2. Deeper engagement
~80% revenues are from core & power user segments
Natural Frequency of Active Users
User Type
Beauty and Personal Care Products Purchase Frequency
Average Order Value per Month
Once every 2 months
INR 500-1000
3-4 products per month
INR 1000-5000
10-15 products per month
INR 5000+
3. Willingness to Pay
Nykaa is an ecommerce platform and an omnichannel retail chain and users pay for its core value proposition - diverse range of authentic products across various cosmetics and fashion verticals.
After speaking to few Nykaa users across ICPs, we have some consumer insights regarding their willingness to pay for subscription or a membership offered by Nykaa.
How much would you pay for the product?
  • Core users are willing to pay ~ 1500-1800 for a yearly membership.
  • Power users are willing to pay ~ 2500-3000 for a yearly membership
Would you pay for this just once?
  • 70% users opted for once in a year
  • 30% users opted in to try shorter/monthly plans
Would you pay for it on a recurring basis?
  • Users prefer weighing the benefits before deciding on a recurring subscription.
What would make you pay more? (in order)
  1. Early delivery
  1. Exclusive Discounts on new launches
  1. Free product samples
  1. Recurring subscription for products
Based on the above 3 tests, Nykaa is ready for monetization.
Substitute Pricing
What core problem does Nykaa solve?
Nykaa addresses the core problem of limited access to diverse and authentic cosmetics and fashion products in India. It provides a wide range of high-quality, international, and niche beauty items, ensuring authenticity and personalized recommendations for different skin tones and preferences.
Additionally, it educates consumers through tutorials and beauty tips, enhancing their overall shopping experience and empowering them to choose products that suit their unique needs.
What are the other ways to fulfil the same use case?
Users can solve the problem by visiting other e-commerce marketplaces, offline stores or visiting malls.
Other competitor apps such as Tira, Sephora and Purplle.com
What are users buying into?
  • Easy and faster access to genuine quality products delivered to the doorstep.
  • Access to a diverse product portfolio addressing niche user problems
  • Time and effort saved in making offline purchases
Substitute way
UI Flexibility to use
Core users
ICP 1&2
Who to Charge?
Nykaa has come up with its own version of its RFM model which we discussed in the Engagement Section, and defines practical characteristics for all them.
notion image
For monetization, we are first prioritizing the steady repeat customers, loyalists and advocates who have a high recency and a high frequency along with a higher AOV.
What to charge for?
Since Nykaa is a transaction-based platform, the following value can be monetized:
i. Output (Bundling, Bag discount per order)
ii. Access (Exclusive access to products)
iii. Time (Membership for exclusive rewards)
What is the perceived value of Nykaa?
For building perceived value, Nykaa saves money (discounts, free shipping, free COD), saves time (delivery within 2-3 days of order) and saves effort (doorstep delivery)
Perceived Value Currency
Who values it?
Putting behind paywall through
Discounts (Money)
All users
Membership/ Minimum Order Value
Bag discount (Money)
All Users
Min Order Value
Shipping (Time)
Power + core
Gifts and Free Products (Dopamine)
Exclusive access to New Launches (Dopamine)
How much to charge?
Perceived Value (Money, Time, Efficiency, Dopamine):
Buying products from Nykaa vs. Buying from a bricks and mortar store
  • Saves effort and 30-40 minutes per order by eliminating travel to the store.
  • Offers a minimum 15-20% cost saving through frequent online discounts.
  • Enhances satisfaction with inclusive shades and colors for all skin/hair types.
  • Core users are willing to pay ~ 1500-1800 for a yearly membership for exclusive discounts, sample products and early delivery.
  • Power users are willing to pay ~ 2500-3000 for a yearly membership for exclusive discounts, early delivery and sample products.
How to show pricing?
Membership-based pricing for Potential Loyalists: Using a combination of middle option, decoy, and social proofing effects to influence purchase.
notion image

What is the market opportunity for Nykaa

E-commerce in beauty has quadrupled in the past decade and its share now exceeds 20 percent. The coming years will be a transformational journey, filled with opportunities and new challenges. Its high profitability will continue to attract new founders and investors to the space.
So, what’s Nykaa’s business plan for the next 5 years? Well, Nykaa plans to expand their e-commerce and retail presence in beauty and fashion being their main focus. But they are trying to enter new product categories to increase their market share and enhance brand visibility.
The intersection of beauty and wellness will continue to prosper, with the combined opportunity of about $2 trillion globally for brands and investors. Wellness-inspired products have been embraced by customers’ greater self-care and mindfulness in their post pandemic daily routines.
notion image
Nykaa has taken initiatives expand their category breadth into health and wellness and offer an array of products like health and beauty supplements, ayurveda and health foods like teas, juices etc. Apart from this they are offering wellness and skincare equipment and appliances for personal care needs.
Buying beauty products consciously to express their authentic selves rather than adhering to specific cultural ideals, Gen Z is challenging norms and demanding transparency and authenticity from brands that goes beyond products.
Other notable categories that they have entered are mom and baby needs, as well as home and kitchenware, although the assortment is small, it indicates Nykaa’s mission to become a one-stop shop for all consumer needs.
For established players to scale successfully, they must focus on omnichannel expansion and internationalization. Category expansion works best to align with company’s long-term goal protects the brand’s unique value proposition.
As seen in recent years, conglomerates and financial investors will pursue deals to invest in promising brands.
Notable examples being Dot&Key acquired by FSN E-Ventures Ltd, Nykaa’s parent company. The recent acquisition represents a strategic step towards bolstering its portfolio with brands that embody innovation and sustainable growth principles.
Dot & Key's commitment to delivering differentiated quality products, characterized by their unique packaging and customer-centric approach, perfectly complements Nykaa's strategic vision for expanding its presence in the skincare market.
By leveraging Dot & Key's strengths in product innovation, customer engagement, and prudent resource management, Nykaa aims to capitalize on emerging market trends and further solidify its position as a leading player in the beauty industry.
This acquisition not only enhances Nykaa's offerings but also signifies a synergistic partnership poised for continued success through collaborative innovation and strategic alignment.
Criteria for M&A targets will shift towards such brands with an innovative product pipeline and an effort to grow and sustainably and remain profitable.

What might kill their growth in the future?

Here's a breakdown of what could potentially hinder Nykaa's growth:
  • Competition Heating Up:
With the beauty market booming, competition is fierce. Tira Beauty, launched by Reliance Retail, integrates both online and offline channels. With over 17,225 stores across various retail formats, Reliance leverages its extensive retail network to reach a broad customer base.
Tira stores feature innovative technology like beauty vending machines, AI-powered fragrance finders, and smart mirrors for makeup trials. These tech interventions enhance the shopping experience, setting Tira apart from traditional beauty retailers like Nykaa.
Reliance Retail has acquired the Indian franchise operations of Sephora from Arvind Fashions. This acquisition involves Reliance Beauty & Personal Care Limited taking over Sephora's existing 26 stores in 13 cities across India. The agreement grants Reliance Retail exclusive rights to expand and enhance Sephora's presence throughout India across multiple channels.
  • Challenges for Nykaa in Capturing Offline GT/MT
FMCG brands like Hindustan Unilever, Procter & Gamble, and L'Oréal dominate the offline market with extensive distribution networks. Their products are ubiquitous in both general and modern trade stores. FMCG brands often engage in aggressive pricing strategies and promotions that are hard to match by smaller or newer entrants like Nykaa.
Managing inventory across multiple offline stores requires sophisticated logistics and inventory management systems, which can be a steep learning curve for a company primarily rooted in e-commerce.
  • Quick Commerce
The emergence of quick commerce platforms has seen a new trend in the market with faster deliveries and a diverse product portfolio. This speed would be difficult to compete with and may drive away business from the online marketplaces.
Zepto, a grocery delivery app is offering beauty and personal care products at lightning speeds. Apart from this, it has introduced categories like fashion and jewelry. Nykaa has to work out a way to integrate a quick commerce channel to satisfy this instant gratification need of customers.

Written by