Beauty etailer Nykaa counts on private label to increase FY18’s revenue
Online cosmetics and beauty store Nykaa is positive that private brands would help themtriple their revenue in the FY 2017-18.The company dabbled in the private label business in late 2015 by introducing a range of nail paints. And since then, the sales of their own brands accounts for nearly 10% of their total revenue.
While Nykaa gets to keep 10-20% profit margins by selling established brands, its own range of products gets them 40-60% profit margins. The feasibility factor coupled with high profit margins has worked for the firm to sustain its growth.
“We are on track to register Rs250 crore revenue for this year (FY2016-17), 10% (of which) will be from private label… In next year (FY2017-18) we are looking at Rs750 crore turnover, 20% of that should be from private label,”affirmedNykaa’s founder Falguni Nayar.
Competing with online marketplaces
Founded by Falguni Nayar in 2012, the Mumbai-based e-cosmetics store isfairly popularamongst all the niche ecommerce players and has managed to survive amidstFlipkart,Amazonand other ecommerce biggies.
Many fashion and beauty niche etailers like FreeCultr, Fashionara and Zovihad to shut shopas they were unable to fight withFlipkart’s dominanceorAmazon’s deep pockets. But Nykaa believes that with over 450 brands in their kitty, big marketplaces don’t worry them.
“Even though they may be offering beauty products, that cannot match the range of high-end brands that Nykaa offers,”statedNayar.
The beauty etailerraisedRs. 82 crore in September 2016 from Marico’s chairman Harsh Mariwala and Hero MotoCorp’s Sunil Munjal. And Max Venturesacquired2% stake for an undisclosed sum in December 2016. Nykaa plans to use these funds to expand its product offering in non-beauty categories like lingerie, invest in warehouses and open more offline stores.
Private label, a profitability tool
In the last few years, the popularity of private labels has picked up exponentially. Right fromFlipkart to Amazon, all are busy building their own brands to create a differentiating factor, build customer loyalty and increase their revenue.Online groceryfirms andfashion etailerstoo are focusing on promoting their own brands.