Born in 1963, Falguni Nayar has created new records of success in Indian startups and serves as an inspiration to many novices and seasoned entrepreneurs alike. Starting her company Nykaa at the age of 49, she has become India’s richest self-made woman billionaire with a net worth of 7.5 billion dollars in just a decade. On 10th November 2021, Nayar’s FSN E-Commerce Ventures Ltd created history when its IPO (Initial Public Offering) oversubscribed nearly 82.5 times and earned ₹5,352-crore. On the same day, the company’s market capitalization reached the ₹1 lakh crore mark.
About Falguni Nayar
Falguni Nayar was born & brought up in Mumbai, Maharashtra, to a Gujarati family. Her father owned a small bearings company. She married Sanjay Nayar in 1987, whom she met at business school. She has raised twins, Adwaita and Anchit and the family together owns 52% of the company.
Nayar graduated from Sydenham College of Commerce and Economics, Mumbai, and completed her MBA in Finance from IIM-Ahmedabad. In 1993, she joined Kotak Mahindra Group, where she worked for 19 years and helped Kotak to set up its overseas subsidiaries in London and New York. She left her job at the peak of her career when she was a Managing Director of Kotak Mahindra Capital Co. and Head of its Institutional Equities Business in 2012.
The Birth of Nykaa
In April 2012, Falguni Nayar founded Nykaa with $2 million, a company that is worth $2.3 billion in 2021. She started with three more employees in her father’s old office in Mumbai’s Lower Parel. By October 2012, the website went live and was fully operational by January 2013.
Nykaa, the brand name inspired by a Sanskrit word meaning actress, or ‘one in the spotlight’, is an e-commerce portal that deals with a range of beauty and wellness products. With the years passing by, Nykaa has ventured into selling apparel and accessories and has also expanded its market to retail spaces, proudly presenting its brand of cosmetics and fashion.
Nykaa presently houses over 2,000 brands and more than two lakh products and was also the first site to sell MAC cosmetics online and the only retailer that sells international brands like e.l.f, Charlotte Tilbury, Tonymoly, Becca, Sigma, Limecrime, Dermalogica, and Murad. In 2020, Nykaa was the first multi-brand e-commerce store for men’s grooming named Nykaa Man.
How Did Nykaa Become One of the Most Successful Startups in India?
Today, Nykaa is among the very few profitable e-retailers in India, reporting a net profit of 61.96 crores in the fiscal ended 31st March. The company became a unicorn in 2019 after just five rounds of funding and was listed at $13 million on 10th November 2021.
In its early years, Nykaa was fully funded by Falguni Nayar and her husband Sanjay Nayar, who is the chairman of private equity major KKR & Co. It was in 2014 that they invited investors to invest in their company to improve customer experience. During the earlier days, investors were limited to families from India only with a high net worth, restricting foreign investment in multi-brand retail companies.
“The company was run on family funds for two years as I did not wish to raise money. I wanted to make the metrics happen. By the time I approached investors, we had good momentum. We had access as my husband and I were both bankers.” said Falguni Nayar in a 2017 interview to The Economic Times.
From the very beginning, they had a clear vision of how they would develop the brand. “At the time, the debate used to be about the art of retailing and own brands. But most importantly, the decision to not go discounting products unless incentives came from the brands; that is different,” says her husband, Sanjay Nayar.
Nykaa gets a good commission from the luxury brands that are sold by them. They are an inventory-based model that buys directly from the manufacturer and stores the products at their warehouses which are located in Mumbai, New Delhi, Kolkata, Pune, Haryana, and Bangalore, making its services fast and immune from price variations.
New brands are often interested in joining Nykaa, thanks to its big customer base providing almost 15 million customers since day one. Also, Nykaa provides complete end-to-end marketing for the brand, including digital ads, influencer marketing, educational content creation, etc. Nykaa focuses a lot on content creation and education and makes full use of social media to market its products.
One of the biggest reasons for the initial success of Nykaa could be that Nayar sensed the lack of proper and professional beauty and personal care market thus wanted to focus on one type of product, i.e., beauty and wellness, setting the startup apart from other e-commerce sites like Amazon, Flipkart, Snapdeal, etc. which have already established themselves in the market. Moreover, it was a sector that was not much explored before, especially in the online arena, thus giving plenty of room for the brand to grow without tough competition. It was able to curate so many brands under one roof, some of which were only available on Nykaa.
The idea of transforming Nykaa into an omnichannel brand and also increasing its offline presence through opening physical stores also turned out to be a success. “So if you buy using our app, we are also able to target you and let you know about special offers or certain products that are available in a nearby store. And the other way around. If you’re shopping in our stores, we are able to add you to our online database and ask you to replenish online if that’s more convenient. So the two can co-exist in a very synergistic way.” says Anchit Nayar, CEO of Nykaa Beauty E-Commerce.
Falguni Nayar has always been very passionate about her project as she is her ‘third baby’ and has been very concerned about her customer base and has always closely analyzed Nykaa’s customer responses since day one.
In an interview with Forbes India, she told the reporter, Naini Thaker, “See, I am simply looking at the funnel chart, where we track unique customer visits. Converting them to paying customers is an art… it is not a simple button that you can press, and customers aa jaate hai (people will come to you). The upper funnel consists of customers who visit the website but may or may not have an intention to buy; the middle funnel consists of repeat visitors but not paying customers; the bottom funnel is where they may have added to their cart but are waiting for an opportunity to buy. “Since day one, I have simply been looking at the statistics; that is the secret sauce.”
It takes an immense amount of courage, a powerful vision, and consistent hard work to do what Falguni Nayar has done. It is not easy to leave a high position— a secure job that one has been doing all their life to start afresh and build it into a multi-billion dollar company in just a decade. She left Kotak on 31st March 2012, and immediately from 1st April, she started the process of building her company. Her experience has helped her draw a lot of lessons about entrepreneurship and leadership. Nykaa was successful in creating a brand that resonated with young women. This shows her dedication to this brand.
Written by: Aashna