Details on Nykaa’s Business Model: Know How It Makes Money
There are very few Indians who are not accustomed to the name Nykaa. We promise this is not another blog on Nykaa’s inception or other basic details. We shall specifically talk about how Nykaa makes money. The vision behind Nykaa’s business model was to create a reliable destination for beauty and wellness products tailored specifically for the Indian market. At the time, India lacked a dedicated online marketplace for cosmetics, and most consumers relied on physical stores with limited choices and little guidance. Falguni Nayar recognized this gap and launched Nykaa as an inventory-led model to ensure quality control and authenticity.
Nykaa – Helping You Access Top-quality Fashion Products
The brand name “Nykaa” is derived from the Sanskrit word “Nayaka,” which means “the one in the spotlight.” True to its name, Nykaa made women feel confident by offering access to top-quality products from global and local brands. Starting with beauty and personal care, the company gradually expanded into wellness, grooming, and appliances and eventually launched its own line of private-label products.
By 2015, Nykaa had already gained a loyal customer base and expanded into physical retail stores, creating an omnichannel presence. The launch of Nykaa Fashion in 2018 further diversified its offerings.
The Nykaa business model stands out today due to its hybrid structure, combining inventory and marketplace operations. With a focus on customer experience, technology, and curated content, the platform continues to dominate its sector.
To understand how Nykaa makes money, we must know its strong foundation and strategic inception. What started as a niche beauty platform has evolved into a publicly listed company serving millions across India while staying true to its mission of celebrating individuality and self-expression.
Nykaa’s In-house Brands Include
Nykaa Subsidiary | Description |
Nykaa Cosmetics & Naturals | It is an in-house personal brand that offer makeup, body care, and skincare products. |
Nykaa Fashion | It provides apparel, bags, accessories, and more. |
Nykaa Man | This category of the brand offers men’s skincare, haircare, and grooming product. |
Nykaa Pro | It offers beauty and makeup professionals with the access to multiple brands |
Nykaa Network | This is an interactive beauty forum for the users to engage and share beauty tips, tricks, and recommendations. |
Overview of Nykaa’s Business Model
Nykaa’s business model is hybrid, integrating inventory-led and marketplace strategies. This approach allows the company to control product quality and customer experience while offering a wide range of products.
As a leading beauty and fashion e-commerce company in India, Nykaa has developed a unique business model that has helped it to thrive in a competitive market. The Nykaa business model has played a critical role in its evolution.
What makes the Nykaa business model stand out is its hybrid structure and its focus on building private-label brands, ensuring high margins and control over product quality. These key components—inventory model, marketplace model, and private labels—are at the heart of how the platform functions and succeeds. This section will explore these components and explain how Nykaa makes money through them.
1. Inventory Model: Control and Authenticity
One of the most important pillars of the Nykaa business model is the inventory-led model. Unlike many e-commerce companies that simply list products from third-party sellers, Nykaa takes on the responsibility of buying products directly from brands and storing them in its warehouses. This means the company controls its products directly, ensuring customers receive only genuine and authentic merchandise.
The inventory model allows Nykaa to:
a) Ensure product authenticity: Since Nykaa sources products directly from brands or authorized distributors, customers can trust that what they buy is genuine.
b) Maintain quality control: Products are stored, packed, and shipped by Nykaa, which minimizes damage and improves customer satisfaction.
3. Offer a curated experience: With control over the inventory, Nykaa can better manage product assortment and merchandising, providing a seamless and curated shopping journey.
Although managing inventory increases operational costs, it strengthens customer trust—a key asset in the beauty and personal care industry. This is a foundational aspect of how Nykaa makes money: offering reliable and premium service that earns long-term customer loyalty.
2. Marketplace Model: Scale and Diversity
While Nykaa began as an inventory-led platform, it gradually incorporated a marketplace model to scale operations without incurring massive inventory costs. In the marketplace model, third-party vendors and brands list their products on Nykaa’s platform, and Nykaa helps with sales by managing customer interaction, logistics, and marketing.
This model brings several advantages to the Nykaa business model:
a) Expand Product Range: By allowing multiple sellers to list products, Nykaa offers various products across categories like beauty, wellness, grooming, and fashion.
b) Reduces Capital Investment: Since Nykaa doesn’t need to purchase and store these items, it can scale faster with less financial risk.
c) Diversified Revenue Streams: Nykaa earns commissions on each sale and charges fees for promotional placements and advertisements.
In this way, the marketplace model complements the inventory model. It gives Nykaa flexibility to grow while still offering an excellent user experience. This dual strategy forms the backbone of how Nykaa makes money, providing scalability and trust.
3. Private Labels: High Margins and Brand Loyalty
Another strategic pillar in the Nykaa business model is developing and promoting private-label brands. These are in-house product lines that Nykaa owns and markets under names like Nykaa Cosmetics, Nykaa Naturals, and Kay Beauty (in collaboration with Bollywood actress Katrina Kaif). Private labels offer some of the highest profit margins in retail and play a crucial role in customer retention.
The benefits of private labels for Nykaa include:
a) Better Margins: Since Nykaa controls manufacturing and branding, its profit per unit is significantly higher than that of third-party brands.
b) Exclusive Offerings: Private label products are only available on Nykaa’s platforms, which draws repeat customers.
c) Brand Identity: These products allow Nykaa to shape its image as a trend-setting, quality-driven company.
By investing in marketing and influencer collaborations, Nykaa has made its private labels aspirational. These labels are key contributors to how Nykaa makes money, especially as consumers increasingly trust and prefer Nykaa-branded items.
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Source – Startup Talky
The Synergy Between Models
The real strength of the Nykaa business model lies in how these approaches—inventory, marketplace, and private labels—work together. Nykaa starts by building customer trust through its inventory-led operations, then scales its offerings through the marketplace model, and finally drives profitability through private labels. This synergy allows for both rapid growth and sustainable margins.
Additionally, Nykaa’s business model is enhanced by its omnichannel presence. This includes over 150 physical stores across India and content-driven engagement through Nykaa’s YouTube, blog, and mobile app. These marketing and content channels act as extensions of the platform, educating consumers and influencing purchase decisions.
Revenue Streams: How does Nykaa Make Money?
Nykaa’s revenue generation is multifaceted, encompassing various streams contributing to its financial growth.
1. Product Sales
Nykaa’s primary revenue source is the sale of beauty, wellness, and fashion products through its online platform and physical stores. The company offers a wide array of products from both international and domestic brands.
Revenue from Product Sales (INR Crore)
Fiscal year |
Revenue (INR crore) |
FY20 |
1778 |
FY21 |
2452 |
FY22 |
3774 |
FY23 |
5144 |
FY24 |
6386 |
Source: Entrackr
The consistent growth in product sales shows the effectiveness of the Nykaa business model in meeting consumer demands and preferences.
2. Private Label Products
Nykaa has developed its range of products under brands like Nykaa Cosmetics, Nykaa Naturals, and Kay Beauty. These private labels offer higher profit margins and exclusive products to customers. A significant component of Nykaa’s business is its private-label products.
Advantages:
a) Higher Margins: Owning the brand allows for better control over pricing and profitability.
b) Brand Loyalty: Exclusive products foster customer retention.
In FY24, Nykaa’s owned beauty brands grew by 39%, with Dot & Key achieving a GMV run rate of approximately ₹600 crore. The success of private labels shows how Nykaa makes money by capitalizing on brand ownership and customer loyalty.
3. Nykaa Fashion
Launched in 2018, Nykaa Fashion extends the company’s offerings to apparel, accessories, and footwear. It operates on a marketplace model, partnering with various brands to provide a curated shopping experience.
Revenue contribution:
Fiscal year |
Revenue in fashion (INR crore) |
FY 2022 |
377 |
FY 2023 |
1000 |
FY 2024 |
4000 |
4. B2B services
Nykaa’s B2B platform, Superstore by Nykaa, caters to small retailers by supplying beauty and wellness products in bulk. This vertical has shown significant growth, contributing to the company’s overall revenue.
Key highlights:
a) Retailer Network: Serves over 1.95 lakh transacting retailers across 1,000+ cities.
b) GMV Growth: Witnessed an 84% year-on-year growth in FY24.
c) Profitability: Improved contribution margin from -27.4% in FY23 to -18.2% in FY24.
The B2B segment shows how Nykaa makes money by tapping into wholesale distribution and expanding its market presence.
5. Advertising and Promotional Services
Nykaa offers brand advertising opportunities through sponsored listings, banners, and promotional campaigns. This advertising revenue adds to Nykaa’s income streams.
Benefits:
a) Revenue Generation: Provides an additional income stream.
b) Brand Visibility: Helps partner brands reach a wider audience.
This aspect of the Nykaa business model uses the platform’s high traffic to generate advertising revenue, showcasing another way Nykaa makes money.
6. Subscription Services
Nykaa offers subscription-based services, providing customers with benefits like exclusive discounts, early access to sales, and personalized recommendations. These subscriptions generate recurring revenue.
Advantages:
a) Customer Retention: Encourages repeat purchases.
b) Predictable Revenue: Provides a steady income stream.
While specific figures are not disclosed, subscription services are an integral part of the Nykaa business model. They offer customer engagement and show how Nykaa makes money through recurring revenue.
Financial Performance
Nykaa’s financial trajectory shows its growth and profitability.
Key Financial Metrics (INR Crore):
Fiscal year | Revenue | Net profit |
FY20 | 1778 | -230 |
FY21 | 2452 | 616 |
FY22 | 3772 | 413 |
FY23 | 5144 | 248 |
FY24 | 6386 | 437 |
The consistent revenue growth and profitability show the effectiveness of the Nykaa business model and provide a clear picture of how Nykaa makes money across various segments.
In summary, the Nykaa business model is a multifaceted approach that combines product sales, private label products, fashion, B2B services, advertising, and subscription services. Each component plays a crucial role in the company’s revenue generation, showing the diverse ways in which Nykaa makes money.
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Source – Apptunix
Strategic Initiatives
Nykaa has strategically expanded its operations through a robust omnichannel presence, international ventures, and significant technology investments. These initiatives are crucial to the Nykaa business model, showcasing how Nykaa makes money by improving customer experience, entering new markets, and using technological advancements.
Omnichannel presence: Merging digital and physical shopping
One of Nykaa’s key differentiators is its seamless omnichannel strategy, which merges the ease of digital purchase with in-store experiences. While e-commerce continues generating high sales volume, Nykaa has also invested in physical retail infrastructure to engage customers holistically. As of 2024, the company operates over 145 physical outlets across India, including Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks.
Nykaa Luxe stores offer high-end beauty and fashion products from premium and luxury brands, often in upscale malls and shopping districts. Nykaa On Trend stores, on the other hand, are designed to highlight the most popular and trending items across the platform. At the same time, Nykaa Kiosks serve as quick-access points in busy public areas like airports and shopping hubs.
These physical touchpoints enable customers to test and experience products firsthand—an essential aspect of beauty items like foundations, perfumes, and skincare. Trained beauty advisors at these stores guide customers, offer personalized consultations, and help them find products best suited to their needs. This interaction adds credibility and trust to the shopping process, leading to higher conversion rates and better customer retention.
The success of this integration shows the strength of the Nykaa business model, which focuses on serving consumers wherever they are. This omnichannel strategy plays a crucial role in how Nykaa makes money. It drives sales across multiple touchpoints, improves customer loyalty, and maximizes lifetime value.
International expansion: Capturing global market potential
To diversify revenue streams and reduce dependency on the Indian market, Nykaa has started international expansion, with a focus on the Gulf Cooperation Council (GCC) countries. The GCC region, consisting of the UAE, Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain, offers lucrative opportunities for beauty and personal care brands due to its high per capita beauty spending and strong preference for premium products.
In 2023–2024, Nykaa expanded into the region through a series of subsidiaries and partnerships:
a) Nysaa Distribution FZE (Dubai): This unit acts as Nykaa’s primary logistics and distribution hub for the Middle East, allowing smoother market entry and faster delivery timelines.
b) Nysaa Cosmetics Trading LLC (Qatar): This subsidiary enables local product distribution in Qatar, a market that values clean, cruelty-free beauty brands.
c) Nysaa Cosmetics SPC (Oman): Established in 2024, this arm supports retail and online expansion in Oman.
This clearly reflects the evolving Nykaa business model, which is no longer limited to domestic e-commerce but is building a regional beauty and fashion ecosystem. Nykaa aims to replicate its successful inventory-led strategy in these markets, offering a mix of curated global brands and in-house private labels to appeal to a wide audience.
Localization also plays a crucial role in the strategy. Nykaa ensures compliance with regional beauty standards, customs regulations, and marketing preferences. The packaging, communication style, and featured influencers or beauty ambassadors are tailored to resonate with local consumers.
Technology Investments: Building a Smart Retail Ecosystem
Technology has always been at the core of Nykaa’s operations. From its inception, the brand positioned itself as a digital-first beauty platform. Today, the company’s technology investments have expanded to power customer-facing features and backend systems.
In FY23, Nykaa increased its tech and IT spending by 56%, reaching ₹98.3 crore. These investments enhance everything from personalization algorithms to logistics and inventory management.
Enhancing Customer Experience
Nykaa uses data and artificial intelligence to offer tailored product suggestions, personalized content, and customized beauty regimens. Some key customer-focused innovations include:
a) Virtual try-on Tools: Augmented reality (AR) features enable customers to digitally try makeup, such as lipsticks and eyeshadows. This reduces uncertainty and improves conversion rates.
b) Skin Analyzers: Tools integrated into the app help users determine their skin type and identify suitable products.
c) Personalized Recommendations: Based on browsing history, previous purchases, and user preferences, Nykaa offers curated suggestions through email, push notifications, and in-app recommendations.
These tech-driven services not only improve user satisfaction but also increase engagement, time spent on the platform, and basket size. These are the factors that are crucial to how Nykaa makes money.
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Strengthening Backend Operations
Nykaa uses advanced inventory management systems on the backend to reduce stockouts and optimize warehousing. Technologies like Electronic Data Interchange (EDI) and predictive analytics help synchronize demand and supply efficiently. Route optimization algorithms also reduce delivery times and logistics costs.
In 2023, the company also explored blockchain solutions for enhancing supply chain transparency. It is useful for its high-end skincare and wellness categories, where authenticity and provenance are critical.
These backend efficiencies help with cost reduction and scalability, making the Nykaa business model stronger and capable of sustaining high growth.
Strategic Tech Acquisitions
To support its tech ecosystem, Nykaa has made strategic acquisitions:
a) Little Black Book (LBB): Strengthened its content-commerce play, helping customers discover local and emerging brands.
b) Dot & Key Skincare: Enhanced Nykaa’s private label portfolio and brought tech capabilities around R&D and customer feedback loops.
c) Earth Rhythm (Investment): Provided access to eco-friendly, tech-formulated products and a loyal D2C customer base.
These moves help Nykaa stay ahead in a competitive space by creating a unified ecosystem of content, commerce, and technology. They show how Nykaa makes money from selling products and creating long-term value through innovation, partnerships, and community building.
Source – Kloud Portal
Conclusion
Nykaa’s growth journey shows strategic foresight, market adaptability, and a strong consumer-centric approach. By diversifying its operations, the company has set itself apart in a highly competitive beauty and fashion space.
On the technology front, investments in AI-driven personalization, AR tools, and supply chain innovation have allowed Nykaa to offer a seamless shopping experience while reducing operational costs. Acquisitions and strategic partnerships also enable the company to improve its capabilities, accelerate innovation, and increase customer retention.
Altogether, these strategic pillars show a robust and scalable Nykaa business model. An inspiring business model that balances product innovation, customer experience, and operational excellence. They also show how Nykaa makes money through online and offline retail, international reach, private label strength, and digital innovation. As the brand evolves, its ability to anticipate consumer needs and invest in the right growth drivers will be key to sustaining long-term success in the beauty and lifestyle retail landscape.