Online cosmetic and wellness retailer, Nykaa, has raised around $9.5 Mn in funding from various investors that included family offices of Marico Industries chairman, Harsh Mariwala, Atul Nishar (Hexaware Technologies founder and chairman), Dalip Pathak (former India and Europe head of Warburg Pincus) and Michael Carlos (ex- president of Swiss fragrance maker Givaudan).
While the details of the investment are not shared, the report said Nykaa has sold around 20% of stake. Last year, it had raised around $3.4 Mn from other family offices and high networth individuals where it said to have diluted more than 10% stake.
TVS Shriram Growth Fund (private equity arm of TVS Group) and Techpro Ventures led this series B round of funding. Earlier, it was reported that TVS will acquire a minority stake in Nykaa.com by investing more than $3Mn.
The funds raised in this round of funding will be used to market expansion, marketing and hiring talent.
Nykaa was started in 2012 by Falguni Nayar, former MD at Kotak Mahindra Capital investment banking, with her husband Sanjay Nayar, CEO at KKR India. It is an online portal for makeup, skincare, hair care, fragrances, bath and body and luxury products for women and men. Nykaa is inspired by French brand and chain of cosmetic stores, Sephora that was later acquired by French conglomerate Louis Vuitton and Moet Hennessy.
Following the similar lines, the online portal announced to launch private label products and in-house products starting with nail Enamel collection and bath & body products. Nykaa operates in a hybrid model of online and physical retail store. It opened a store in the Terminal 3 of Delhi International Airport. It plans to open a few more stores in Delhi, Mumbai and Bangalore, focusing on locations with higher footfall like malls.
Till date, Nykaa has sold 1.25 Mn products at a gross margin of 25- 40% with the average ticket size being INR 1400. It has over 350 brands on board and over 4 Mn visitors on its site every month. Today, Nykaa ships to more than 900 cities across the country, serving more than 170,000 customers. The company is witnessing 5x growth year-on-year basis. This fiscal, it aims to touch gross merchandise value (GMV) of over $15Mn, and turn positive EBITDA (earnings before interest, tax, depreciation and amortization) in next 18-20 months.
In India, Nykaa competes directly with Purplle.com and other larger ecommerce players like Myntra, Amazon, Flipkart, Snapdeal and more, players who are getting into this space like Healthkart and Bigbasket.
The country’s ecommerce market is estimated to expand to over $100 Bn by 2020 from $ 3.5 Bn in 2014, noted an IBEF report. Another report by International Beauty Mart (IBM) stated that in 2014 the retail beauty and cosmetics market in India stood at $950 Mn expected to touch $2.68 Bn by 2020. Over the last five years, cosmetics products have seen a growth of 60%.
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