You are currently viewing Mamaearth & Nykaa: Making inroads into MNC strongholds

Mamaearth & Nykaa: Making inroads into MNC strongholds


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  • Mamaearth and Nykaa are trailblazers in the Indian beauty market dominated by multinational corporations.
  • The duo has used local knowledge and understanding to capitalise on the Indian customer.
  • Reluctance of non-Indian companies to go deeper in India left the door open for others to take their spot.
  • As internet penetration increases, these companies become even more ubiquitous

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Key Takeaways

  • Mamaearth and Nykaa are trailblazers in the Indian beauty market dominated by multinational corporations.
  • The duo has used local knowledge and understanding to capitalise on the Indian customer.
  • Reluctance of non-Indian companies to go deeper in India left the door open for others to take their spot.
  • As internet penetration increases, these companies become even more ubiquitous

Mamaearth and Nykaa have something in common, besides having women founders. Both these Indian brands have managed to make inroads into the stronghold of large multinational companies. The achievements of the D2C giants aren’t skin deep. They are shaking up the beauty and personal care (BPC) space, while consistently displaying scale and profits.

What unites these two ventures is the sheer commitment and resilience of its co-founders along with capturing new internet users and beauty beginners. As someone who has interacted with the Alaghs and the Nayars, I have had the opportunity to witness their growth story from close quarters.

The new look Mamaearth and Nykaa are giving the beauty industry has turned heads in the markets. The factors creating a sense of euphoria include:

  1. Mamaearth’s public listing and its plans to take our indigenous ingredients global.
  2. Nykaa Q2 results show a 50% YoY growth in net profit and a 25% growth in gross merchandise value.
  3. Nykaa’s sustained efforts to diversify its portfolio. From beauty, it has expanded to fashion and electronic-B2B segments.
  4. Mamaearth and Nykaa’s emphasis is on building a house of brands to attract a wide demographic of consumers.

While Indian beauty brands have existed for several decades, Mamaearth and Nykaa have helped attract meaningful attention to locally made products. At the same time, these brands have also carved out shelf space for themselves at stores across the country, ones that were typically reserved for MNCs.

The online beauty market in India is estimated to be ~$1.3 billion (~Rs 10,812 crore), where Nykaa holds a lion’s share of 38%. Mamaearth has a market share of 5.4% of this market, according to Redseer. But to classify these two large companies as just internet-based firms is unfair. The two have made deep inroads into offline retail, dragging them into the larger beauty market, which is expected to break through the $15 billion mark in the next couple of years. This would mean that these two companies are just beginning to scratch the surface of their potential.

And Nykaa and Mamaearth have managed to hold their own and add the tricolour to a market that is increasingly dominated by the West.

The strategy

Experts will release large reports on how Nykaa and Mamaearth scaled and gained market share through careful endorsement deals with celebrities and influencers and digital marketing arrangements with Google, YouTube, and Instagram. But let’s take a step back and understand the market that they were trying to win over.

These companies have been growing steadily but really managed to make headway when the consumer interest changed. Call it the Jio effect or India’s maturing consumers, the market started to fracture into niches.

Young Indian customers embraced ‘Hallyu’, or the seemingly unstoppable whirlwind that is Korean pop culture, and discovered rich content overseas, especially around beauty. It meant Indian customers, especially women — Nykaa’s customer base is over 60% female — started to understand that their skin and cosmetic needs could not be met by a one-size-fits-all solution.

This was an opportunity that both these companies leapt at.

Engaging content→ Pulls in new customers→ Customers learn about their needs and become informed customers→ Customers look for products that fit their needs → Products meet their needs→ Use content for discovery once again.

This is a flywheel that both of these companies adopted. Now, this flywheel isn’t unique. Zerodha, for instance, has championed this flywheel to become one of India’s largest discount brokers.

How does this help them break the stronghold, you ask. Let’s go back to how young Indian consumers are discovering their unique needs. You see, this is a trend that has started to echo across the world. And companies in the West are beginning to wake up to it. But for them to reach these first-time Indian customers, they need to be able to understand their behaviour. While a large part of this new customer base is a 20-something woman from a large city and is internet-native, a significant number is in tier 2 and 3 cities.

For these women, product discovery is on the internet, transactions are still largely offline. A large western brand needs to build its online presence and then use that data to build offline stores. For many, since India is not the home market, they’re slower to act, and prefer to stay on platforms — Amazon, Flipkart, Nykaa — than to build their own pipelines. This phenomenon gives these two companies (and others like them) the opportunity to erode the stranglehold that large beauty brands have on Indian consumers.

As the two companies build and go deeper, the further they will be able to chip away at competition. The further the two companies establish themselves as options in the minds of customers, the less they have to spend later to keep them loyal. And that’s where all beauty businesses battle each other — customer loyalty. The trick isn’t to get them to buy one product, but to get them to keep buying that product and more from your library.

And that’s where the house of brands theory rolls in.

Honasa, Mamaearth’s parent company, for instance, acquired BBlunt salons and Dr Sheths, while Nykaa acquired a slew of brands, including Pipa Bella, Dot & Key, 20Dresses, and Earth Rhythm, among others. Nykaa, in particular, has become a house of brands, with 26 private labels. Honasa has built its own set over the years.

This will ultimately decrease customer acquisition cost over the years and increase margins. Everyone loves larger margins.

What does this mean for India?

At a time when making in India for the world has gained prominence, companies such as Nykaa and Mamaearth will lead the way in building recognisable global products.

The public listing and quarterly results might have brought renewed attention to the companies, but these companies are more than their stock price.

As Falguni says, “Stock prices are known to have their ups and downs. What is important is creating an inherent value for the business.”

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