Capstone project
Topic: Case Study on Omni-channel retail
in India
Case-in-point: Nykaa
Done by:
Taha Rupawala – K039
Raunak Shah – K045
Kunj Bhatt – K057
Fundamentals of Omni-channel retail:
Essentially, any strategy that combines the use of online platforms and offline stores to
provide a seamless shopping experience, is known as Omni-channel retail.
Omnichannel operations focus on the entire customer experience—not the customer’s
individual experiences on different channels.
Objective of Omni-channel strategy:
To create touch-points with our consumers at every point of their purchase journey by
effectively utilising multiple platforms for awareness, education and engagement; and to
create a self-sustaining content ecosystem that can support the former to create meaningful
engagement that drives conversions replicates the in-store experience online.
Benefits of Omni-channel retail:
1)
2)
3)
4)
Holistic customer experience
Higher brand loyalty
Higher average basket size
Superior data collection
Note:
Omni-channel is an eCommerce approach and must not be confused with multi-channel
marketing. Multi-channel selling is when a business provides their customers several
different sales channels, such as physical stores, online stores, and mobile apps, and the
customer gets to choose one per transaction. With omni-channel selling, customers can use
several sales channels to help them make a single purchase, from doing their research and
finding what they’re looking for, to eventually placing an order. All of these sales channels
must be integrated with each other in order to be classified as an omni-channel strategy.
The Omni-Channel Picture in India
With digitization trends sweeping the world off its feet, India is too picking up the pace. Most
of the urban Internet users are shopping online and searching for products through mixed
pathways online. According to recent market research, there are nearly 90 million online
shoppers today in India. Out of these, 70 per cent of the shoppers admit being influenced by
digital trends and channels before making an actual purchase.
Few of the brands executing omni-channel retail in India are:
1)
2)
3)
4)
5)
Nykaa
Pepperfry
Zivame
Addidas
Raymond’s
From all of them, the most successful and comprehensive strategy is that of Nykaa’s.
About Nykaa:
Nykaa is a leading multi-brand Beauty and Personal Care platform in India founded by
Falguni Nayar in 2012.
Their offline presence includes a total of 80 offline stores in 40 cities across India.
On the online front, they have a website and mobile applications that gather attention from
users, and potential buyers across their target demographics.
Their product range includes makeup, skincare, haircare, fragrances, personal care, luxury,
and wellness products for men and women. Moreover, the company manufactures beauty and
personal care sold under their owned brands such as Nykaa Cosmetics, Nykaa Naturals, and
Kay Beauty.
Elements of Nykaa’s Omni-channel strategy:
1) Content and Curation:
Content contributes 2.5% to the GMV of Nykaa, with the average order value of content
consumers being 15% higher than non-consumers
Social media content: YouTube (Nykaa Tv) and Instagram (Influencer Posts, style guides,
and make-up tutorials)
Offline content: Beauty book, Nykaa’s in-house digital magazine, focusing on ‘expert
advice’, trends and tutorials through a variety of different formats. The Beauty Book gets 7.5
million page views and four lakh unique visits per month
2) Technology platforms:
Nykaa apps and websites, hosting their entire range of products and brands, curated guides,
and e-commerce transaction functionality, to allow a user to browse, choose and purchase a
products right from her mobile phone.
3) Brick and mortar stores:
Nykaa luxe stores, spread across the country in premium locations, hosts a variety of
difference cosmetic brands under one roof, seamlessly allowing an transition from online
discovery to offline trust. Also, this includes their network of Nykaa warehouses to enable
the fulfilment of the e-commerce delivery as well as managing inventory in the physical
stores.
4) Commerce and Community:
Nykaa network, interactive beauty forum, of women, for women, by women. It is India’s
largest beauty UGC platform and crossed one million members in a year with zero promotion
Industry Background ( E-commerce Cosmetics Retail ):
Globally, the industry is strong and only getting stronger. Up from $483B in 2020 to $511B
in 2021 and with an annual compounded growth rate of 4.75% worldwide — it’s predicted to
exceed $716B by 2025. And $784.6B by 2027.
This is majorly because of the rapid expansion through digital channels and the attraction of
more customers willing to pay higher prices for higher quality.
As emerging nations grow in purchasing power and become globalized, they offer budding
promise for international companies to enter if they bring higher quality products than those
available locally along with them.
With shopping preferences differing from county-to-country, brands looking to rule on a
global scale must follow a customer-centric model that intersects both digital and physical
channels. One of the biggest brands Nykaa perfected this omnichannel strategy to become the
market leaders in the Indian market.
Currently there are 5 Nykaa Luxe stores across the country. Since its launch in 2012, Nykaa
has seen a strong growth in the beauty vertical with a current run rate of 600 crores offering
over 700 brands and 80,000 products.
Nykaa has positioned themselves perfectly with their omnichannel strategy mainly because of
the rising trend of online shopping as well as the large dependence of buyers on physical
stores such as pharmacy’s, department stores etc.
Core focus of the case study:
Analysis of Omni-channel retail in the Indian market
Nykaa, a new age beauty brand, has made its name in a hyper-competitive and price-sensitive
market like India, which already has dominant players running the Indian retail markets.
Indian retail had two major segments to it:
1. Pure offline retail: Brick and mortar shopping centres
2. E-commerce: Nascent market, dominated by Amazon and Flipkart
Despite these existing players in the market, Nykaa managed to create an extremely valuable
company while playing the omni-channel game, which meant it competed in the offline and
the online game simultaneously.
Most people think you can only win a market if you choose on niche channel and focus on
that, by looking at Nykaa’s example, we see how the offline market and online market have
synergistic effects that can create a superior value proposition compared to any individual
segment. Our focus is to understand these synergies and strategies of omni-channel retail in
India, by examining what decisions Nykaa took and how they contributed to the success of
their company.
What made Nykaa win the market?
Let’s take a look at the strategic decisions that contributed to the success of Nykaa
1) Community instead of an audience
While most brands obsessed over celebrity endorsements by putting a pedestal on high
beauty standards, Nykaa understood that the real value is not in baiting young women to
match those standards, but rather in making them create their own sense of beauty. With
Nykaa, they wanted the girls to feel understood.
Nykaa runs these channels through an in-house team of around 20 girls called the Nykaa
Army. Essentially, these are beauty enthusiasts and help add the relatable, girl-next-door vibe
which Nykaa’s customers have lapped up. These factors couple along with the company’s
150-strong customer service team and a delivery network across 70K pincodes in India, have
built Nykaa’s brand reputation.
2) Inventory-based model
Nykaa stands out from other e-commerce players because of its inventory model. Products
are bought from brands and distributors and then sold directly to the customers. Unlike a
marketplace model, where third-party sellers list products, Nykaa has a stronger hold on what
it sells, which arrests counterfeit products from making it to the platform.
Nykaa purchases products directly from manufacturers and stores it in their warehouses in
New Delhi, Mumbai and Bangalore. Products are sold either on Nykaa’s website or through
its offline store.
The inventory business model allows for high-profit margins with the responsibility of
product damages lying with the company. Businesses can also ensure product authenticity
and follow competitive pricing using the inventory model
3) Online-Offline sync
Nykaa has its offline its presence to over 20 Indian cities including Bengaluru, Jalandhar,
Ludhiana, and Bhubaneswar among others. After creating a robust system of e-commerce
through their website and their apps, Nykaa realized the potential of Omni-Channel retail.
Beauty is a category where physical trial is critical. To sell premium products or even
affordable products in categories like blush and foundations, colour matching is very
important. In order to give the customers a really holistic beauty experience, building a
physical retail distribution was critical. The brand’s omni-channel presence, including an
easy to navigate website, kiosks and pop-up stores, and dedicated offline stores also help
cement Nykaa’s position in the market.
Nykaa has stores in three formats — Luxe, On Trend and Kiosks. While Nykaa on Trend
products are limited to trending and fashionable brands, Nykaa Luxe stores feature more
premium and luxury brands such as Estee Lauder, Dior, Huda Beauty, and M.A.C Cosmetics
among others.
The main difference between the offline retail experience and the eCommerce channel is the
products that are stocked. While Nykaa can easily list hundreds of thousands of products, the
stores get a curated selection of 40-50 brands specially chosen for the location, city and
outlet. These also include brands that Nykaa believes customers will want to try before
buying.
The real magic of Omni-channel retail is in ultimate flexibility. Customers can buy
something from our store and then they don’t have to come back to buy it again
4) Visionary technology
Beyond beauty, Nykaa is stepping into a bigger vertical — fashion. Today, it has over 350
Indian and international brands across high street, designer labels and accessories. Fashion is
a much bigger market than cosmetics. For every single woman who buys a beauty product
online, there are ten who buy fashion products.
Nykaa is primarily a tech company and everything it does has to be at the cutting edge of
technology. At the moment, it’s working to find the right partner who can add value to
customers through such technology. Nykaa is planning to use Augmented reality and Virtual
Reality as tools to provide customers with a superior experience while purchasing fashion
wear online.
Conclusion:
From everything found and researched as to why Nykaa was so successful in what it did and
how it did the conclusion can be drawn and brought down to a few points and they are as
follows –
1 - Nykaa started small but had a crystal-clear vision:
 Unlike most new-age startups who start their operations giving massive discounts on
their products and services in order to find as many customers as early as possible,
Nykaa took on a different approach.
 Nykaa started slowly but steadily, and did not rely on cheap pricing to attract new
customers. Their vision was clear – to provide quality products at fair prices.
 The leadership team also made sure that their marketing budget did not go
overboard and remained true to the essence of their brand.
 This profitability over growth approach helped Nykaa turn profitable from an early
stage – something which still remains a distant dream for most new-age startups.
 With a steady stream of cash-flow coming in, Nykaa earned the freedom to take risks
and get bolder & better.
2 - Nykaa defined its core target audience brilliantly:
 From day one, Nykaa was easily able to cut through the clutter and communicate
directly with its customers. And this was only possible because of its clearly defined
core target audience.


Nykaa focussed on catering to middle to upper middle class girls and women who
wanted to feel confident and look groomed – whether in a party or at the office.
This consciously created niche helped Nykaa build a strong rapport with its target
customers and gave them an opportunity to adapt to their customer’s demands.
3 - Nykaa’s entry to Retail Market at the right time:
 After becoming an established e-commerce player within a few years of its launch,
Nykaa felt the need to expand further. In line with its goal of becoming the biggest
beauty & wellness brand of the country, Nykaa launched its first offline store in
2015.
 With the opening of its first store, Nykaa provided an opportunity to its customers to
check out a wide-range of products in person and created a successful omni-channel
presence.
 Retail stores also ensured more and more people got to know about Nykaa,
increasing the brand’s visibility across age groups and across cities
4 – Built a community:
 This helped Nykaa to reach their target audience in an even better way because the
company understood that the people who use beauty products want to feel and look
good and Nykaa helped them create a sense of creating their own beauty with its
help of Nykaa army.
5 – The sync between its offline and online stores:
 This provided Nykaa to be extremely flexible which is found to be pretty rare in the
retail segment where managing inventory and making inventory available is a tough
task.
 The issue of inventory and pricing of inventory was fixed by Nykaa by having an
inventory based model and this helped them solidify their brand image and helped
garner more reputation in beauty product segment which significantly boosted their
sales and had exponential growths.
 We know, the market for most of the products and services switched from offline
market to online market. There are ample opportunities for many entrepreneurs to
reach their customers directly and offer the products at reasonable prices by
eliminating the intermediary expenses. These opportunities are cashed by the Nykaa
and entered into the E-retail business in 2012 by offering various brands' products on
one platform. It ensures that customers always prefer a brand that ensures quality and
satisfaction to the maximum level. Due to COVID-19, many businesses ended up
with huge losses, but Nykaa showed around 20%-70% growth of the business as
usual. The analysis, therefore, offered in-depth data on Nykaa's business strategies
and how these strategies helped them be successful. Presently, not many companies
provide multi-brand luxury products on their websites, which allow being dominant in
the market.
 Over the recent times Nykaa has launched a range of new products that also
incorporate celebrity endorsements. Alongside this, they have also incorporated
various fresh collections to include in their personal brand. The platform has a wide
range of grand plans ahead to mark the beauty and fashion industry and has been
focusing on escorting quality products and services to the users at suitable rates. The
platform shows a great degree of promise towards expanding and gaining an even
further dominant position in the future.