The Indian Magnificence and Private Care (BPC) market is rising quickly and is predicted to succeed in a gross merchandise worth (GMV) of $30 billion by 2027, making up about 5% of the worldwide magnificence trade. That’s a ten% annual progress fee, the quickest amongst main economies. However this progress comes with intensified competitors, and Nykaa, as soon as the undisputed chief, is now dealing with stiff challenges from Reliance Retail’s Tira, fast commerce platforms like Blinkit and Zepto, and established e-commerce gamers like Myntra and Amazon.
In 2012, when Falguni Nayar based Nykaa, the corporate introduced premium worldwide manufacturers that weren’t simply accessible, particularly in Tier 2 and Tier 3 cities. The technique paid off — Nykaa rapidly turned the go-to platform for aspirational magnificence customers, leveraging influencer advertising and marketing, unique tie-ups, and an omnichannel presence with 200+ offline shops, and between 2006 and 2022, India’s BPC sector quadrupled to $19 billion.
However the first-mover benefit doesn’t final ceaselessly. Unique partnerships that when gave Nykaa an edge are being challenged. When Dubai-based make-up artist Huda Kattan launched Huda Magnificence in India in 2018, it was solely accessible on Nykaa. Quick ahead to 2024, and now you can discover it on Reliance Retail’s Tira and Flipkart-backed Myntra as properly.
A report by HSBC International Analysis highlights that magnificence is changing into extra aggressive as conglomerates and e-commerce giants enter the area. Redseer Technique Consultants and Peak XV Companions estimate that the worldwide BPC market will hit a staggering $660 billion by 2027, with a market cap between $2.2 and $2.7 trillion. Everybody desires a chunk of the pie.
At this time, Nykaa controls about 25-30% of the net BPC market, producing over 90% of its income from magnificence, however it faces a brand new wave of opponents who’re chipping away at its dominance by providing deeper reductions, quicker deliveries, and omnichannel experiences.
Promoting magnificence merchandise isn’t like promoting garments or devices. A client may purchase a T-shirt on a whim or decide up a telephone due to a reduction. However relating to skincare and cosmetics, they’re way more selective. Belief issues. And model loyalty isn’t absolute — somebody may swear by a MAC lipstick however refuse to make use of its basis.
Currently, a brand new problem has emerged. And it’s coming from an surprising nook.
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Blinkit, Zepto, and BigBasket — apps initially constructed for grocery supply — have began stocking magnificence and private care merchandise. Their choice is proscribed, with solely 4,000-6,000 stock-keeping items (SKUs), which makes up simply 5-8% of Nykaa’s huge stock. As an illustration, Nykaa affords 475 completely different nail polishes, whereas Blinkit lists solely 130. Equally, BigBasket carries about 60 compact powders in comparison with Nykaa’s intensive assortment.
On the floor, it might not appear to be direct competitors. However they’ve a significant benefit: velocity. Shoppers in the present day worth instantaneous gratification, and having the ability to obtain a product in 10-Quarter-hour is a compelling proposition — one which conventional e-commerce platforms can not match.
Nykaa is aware of this. And that’s why it has been aggressively engaged on slicing supply instances. Again in FY21, an order took round 4 days to reach. At this time, that’s down to simply 2.2 days throughout 19,000 pincodes. By mid-2024, one in two orders was being delivered inside 24 hours.
However velocity isn’t low-cost. The corporate’s success bills — together with prices for storing, packing, and delivery magnificence merchandise — have reached their highest ranges in two years. And regardless of these efforts, it’s nonetheless taking part in catch-up within the ultra-fast supply race.
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So, the actual query is — will shoppers follow Nykaa for its selection and belief? Or will they prioritise velocity and shift to fast commerce.
The rise of latest gamers
Tira, Tata CliQ Palette, Buyers Cease’s SS Magnificence, and e-commerce giants like Myntra and Flipkart are aggressively increasing their magnificence choices, snapping up exclusivity offers and providing aggressive pricing. Every has its personal area of interest:
- Tira is focusing on premium magnificence manufacturers and has inked unique partnerships with manufacturers like Italy’s Kiko Milano and Deepika Padukone’s 82°E.
- Myntra is leveraging its dominance in style to push magnificence merchandise and providing deep reductions.
- Tata CliQ Palette is specializing in hyper-personalised suggestions by AI-driven tech.
- SS Magnificence is bringing in luxurious manufacturers like Nars Cosmetics by unique offers with Shiseido Asia Pacific.
Pricing and low cost wars
Nykaa’s rise was fuelled by deep discounting in its early years. Over time, it shifted to a extra value-driven strategy. However now, with opponents slashing costs aggressively, Nykaa is again within the low cost sport.
In Q1FY25, whereas Nykaa Magnificence’s GMV grew by 28%, its web income rose solely 23%, because it needed to take in increased low cost prices. The corporate believes that the worst of the discounting battle is over, however analysts stay cautious.
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On the identical time, premiumisation is driving progress. The masstige (mass + status) and premium segments are rising at twice the speed of the mass market. Nykaa, Tira, and SS Magnificence are all betting massive on this development, realizing that prospects are keen to pay extra for high-quality worldwide manufacturers.
Tech as a differentiator
As competitors intensifies, retailers are utilizing AI and tech improvements to personalise buying experiences.
- Nykaa has launched cohort-based discovery, the place customers who often purchase luxurious merchandise are proven extra luxurious manufacturers of their dwelling feed.
- Tata CliQ Palette affords a “Magnificence ID” characteristic that collects information on pores and skin sort and considerations, making personalised suggestions.
- Myntra Magnificence has a pores and skin analyser software that has boosted conversions by 20-30%.
Tech isn’t just about comfort; it’s about preserving prospects engaged and ensuring they return for future purchases.
The offline push
Even with India’s booming e-commerce trade, magnificence stays an offline-driven class. Nykaa, which constructed its model on-line, has expanded its offline footprint aggressively, including 100 shops in simply two years. Nevertheless, bodily retail accounts for simply 8% of its general GMV.
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Tira, alternatively, is taking an offline-first strategy. Inside a yr, it has opened 11 premium magnificence shops and is utilizing its huge retail community to push Tira’s presence. In the meantime, Purplle, one other rising BPC participant, has obtained ₹1,000 crore from Abu Dhabi Funding Authority to gasoline its offline enlargement.
Whereas Nykaa’s offline presence is extra about brand-building than income, its opponents see brick-and-mortar shops as a direct gross sales channel. This might change into a crucial battleground within the years to come back.
Who will win India’s magnificence wars?
Regardless of rising competitors, Nykaa’s market share isn’t more likely to collapse. Analysts imagine that will probably be robust for Nykaa to realize extra share, however sustaining its 25-30% stake in on-line magnificence appears lifelike.
The problem for Nykaa is to maintain innovating whereas balancing profitability. Tira has the benefit of monetary muscle, however it’s nonetheless determining its model positioning. Myntra, with its discounting methods and robust style base, is gaining floor. In the meantime, Tata CliQ Palette and SS Magnificence are carving out their very own niches within the premium and luxurious area.
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The Indian magnificence market is present process a change, and within the subsequent few years, we’ll see whether or not Nykaa can maintain its floor or if a brand new chief will emerge. However one factor is for certain — the wonder trade is simply getting larger, and the battle for magnificence dominance has simply begun.
Sonia Boolchandani is a seasoned monetary content material author. She has contributed her experience to distinguished corporations, together with 5Paisa, Vested Finance, and Finology, the place she has crafted content material that simplifies complicated monetary ideas for various audiences. Her work is pushed by a ardour for serving to readers perceive and make knowledgeable selections within the monetary world, bridging the hole between trade intricacies and reader-friendly explanations.
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