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Mad About Markets: Spotlight on beauty and personal care; the rise and rise of Nykaa

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The process of discovering beauty and personal care has shifted from the local neighbourhood store to your social media feed, says Darpan Sanghvi, Founder & CEO, MyGlamm

This Diwali, it’s not just the lay consumer who is out shopping, online or offline. Investors too are on a shopping spree with multiple public offerings. The latest one on the block is Nykaa, and it has got the Street excited. Nykaa is the first of the profitable new-business companies to go public, it has created a new market in India and it is a woman-led enterprise -- that’s three rare factors coming together.
The beauty and personal care market was worth around Rs 87,000 crore in 2016. It grew to a little over Rs 1.1 lakh crore in 2020. Redseer expects this to touch nearly Rs 2 lakh crore by 2025. Within that, the segment that's seen serious traction is the online beauty and personal care segment, which has grown from Rs 1,400 crore in 2016 to Rs 9,100 crore in four years.
The online penetration has quadrupled in the same period from 2 to 8 percent but remains low compared to countries like the US and China, where it is 30-40 percent.
Platforms like Nykaa have played a huge role in the growth of the online beauty and personal care market in India. Nykaa is derived from the Sanskrit word ‘nayaka,’ meaning actress or one in the spotlight.
Nykaa is a one-stop online shop for thousands of genuine makeup, skincare, haircare brands. It started offline operations, with the first store launched in 2015, gradually expanding to its own brands, a fashion label and the fast-growing men's grooming market.
Through the years, Nykaa has cultivated an ever-growing online community for beauty buffs.
The Mad about Markets team caught up with Falguni Nayar, Executive Chairperson, MD and CEO, FSN E-Commerce Ventures. CNBC-TV18 also spoke to Darpan Sanghvi, Founder and CEO, MyGlamm.
Talking about how she ventured into the beauty and personal care market, Nayar said, "To my mind, the problem was of a nascent industry trying to cater to a large and geographically diverse country with a very varied set of products on a physical basis. I had noticed Amazon doing well in the US, and I felt that e-commerce was a way to build this market."
“We believed in the inventory-led model, because that brings authenticity and trust to this category. Within the inventory-led model, that serves almost 95 percent of PIN codes in the country, we grew very quickly… we did industry-defining stuff. Nykaa created the industry in many ways,” Nayar said.
“Another thing we observed was that beauty needs education. And so from day one, I focussed on content and education, using social media, blogs, YouTube; and every format that was available, including community platforms, to influence customers and answer their questions,” she said.
Physical stores also had a role to play, giving customers more confidence to consume the beauty products.
“We did a lot of education and all that has led to the creation of the market. This is being observed and endorsed by global brands who now want to come into the country with us,” said Nayar.
She said when she entered the scene, many foreign brands, like Lancome, were leaving the country. The fashion segment faced a similar situation, where the market was not good enough even for Louis Vuitton. All that changed when we started building the market, and today, the best global brands are coming into India.
However, the last year was all about the pandemic, when digital purchases went on an overdrive. When asked if this pandemic-led push was sustainable in the long run, or if makeup is still a touch-and-feel sort of product, MyGlamm’s Sanghvi said he did not think that the pandemic changed consumer behaviour. “It certainly accelerated, but it did not create a fundamental shift in consumer behaviour when it came to purchasing beauty online,” he said.
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If you look at India, it is the only country in the world where more women have the internet on their phone than they have beauty and personal care products. That’s incredible and shows the kind of growth in front of us, Sanghvi said.
The process of discovering beauty and personal care has shifted from your local neighbourhood store to your social media feed. If you combine these macros or indicators -- more women are having internet on their phones, they are on social media, and that is becoming the primary place where they are discovering beauty and personal care -- you started seeing women making purchases online. This started well before the pandemic, Sanghvi said.
Moreover, when buying online, availability became extremely easy -- you could get any brand that's available online in the smallest of cities. “So it was like I have internet. I'm on social media. I'm discovering beauty and personal care whether it's through influencers or through content, and I have access to every product because I can order it and it will get delivered to my PIN code,” he said.
That has already set the ball rolling for the D2C (direct-to-consumer) sort of digital play and explosion for beauty and personal care. The pandemic definitely accelerated their adoption... but did not change behaviour, the behaviour changed much before that, Sanghvi asserted.
 For the full interesting conversation, watch the video