Can Nykaa’s house-of-brands strategy be its next growth driver?
BENGALURU : Shortly before Nykaa listed on the bourses in November 2021, founder and chief executive Falguni Nayar expressed her intention to make the beauty and fashion marketplace a “house of brands", rather than just a multi-brand retailer. Nearly three years later, Nykaa continues to be driven by this proposition for both the beauty and the fashion segments, investing and carefully building out its strategy hoping that it will compound over time. The progress is interesting.
The e-commerce firm, during its fourth-quarter earnings call last month, said it is seeing good traction for a few brands, including Dot & Key, Nykaa Cosmetics, and Nykd by Nykaa. The beauty segment’s gross merchandise value rose nearly 40% in 2023-24. On the other hand, Nykaa Fashion’s house of brands, which includes Twenty Dresses and Gajra Gang, grew at a more modest 25%.
“We’re feeling very excited about this portfolio of brands and we do feel that we want to lean into some of the ones that have already hit scale and really accelerate over the next couple of quarters," Adwaita Nayar, CEO of Nykaa Fashion, said during the investors’ call in May. Building a house of brands is a good way to widen margins and create a diversified revenue pool, said a seasoned e-commerce executive, requesting anonymity. “For Nykaa, it supplements its marketplace business by creating an entire ecosystem of beauty and fashion products." However, building a successful house of brands is far from easy.
Nykaa, owned by Fsn E-Commerce Ventures Ltd, started as a marketplace for beauty and personal care products in 2012. It launched its first set of cosmetics under the Nykaa Cosmetics brand three years later. Another three years later, in 2018, it expanded into fashion,
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