Online beauty firm Nykaa.com, founded by former investment banker Falguni Nayar, will soon raise a second tranche of funds of $10 million. A part of the funds will be spent on new destination stores while the rest will be used for marketing and promoting the website. Nayar believes that while e-commerce will continue to be the bigger revenue-driver for the next three to four years, the omni-channel will be the way forward.
“We already have one 350 sq ft store in Delhi’s domestic airport, T3 and will be looking to open another three to four destination stores of about 1,000 sq ft each by the end of 2016,” she said.
Omni-channel, a way to connect with customers in every possible manner, is gaining momentum, and niche e-commerce firms are using these physical formats to showcase their products and hope to convert these offline buyers into online buyers.
While brick and mortar retailers like Kishore Biyani are looking at partnering with e-commerce companies, Nayar says that for inventory led online businesses, getting into physical retail is the best way forward. Once you understand the retail business, through e-commerce, it is nice to enter omni-channel,” she said.
Once the destination stores come up, Nayar will be competing with stores of chains like Shoppers Stop and Lifestyle, which already have a fair part of their business coming from the beauty segment. Nykaa, which has 50,000 unique visitors every month, 80% of whom are women, expects its online presence to help grow the physical retail business.
Nykaa has over 18,000 stock-keeping units and works on a complete inventory-led model. Nayar buys from brands and stocks the goods in two warehouses, in Mumbai and Delhi. “Marketplace is not good for beauty products — there are a lot of fake products and you need to give customers products that have not crossed the expiry date,” she explained.
Also, the inventory-led model helps fetch higher margins, up to 30%, compared with a maximum of 10% in a marketplace model. Nykaa will also soon launch private label products like body mist, shower gels and nail paints.
Among those online players that also have an offline presence are furniture retailer Pepperfry and Fab Furnish. Lenskart and Healthcart too have opened stores. Omni-channel, a way to connect with customers in every possible manner, is gaining momentum, and niche e-commerce firms are using these physical formats to showcase their products, and hope to convert these offline buyers into online buyers.