‘Execution mode’: Firm behind Nykaa targets ‘underpenetrated’ GCC beauty market
FSN E-Commerce Ventures is the parent company of Indian beauty, fashion and lifestyle e-commerce firm Nykaa.
In October this year, the firm announced a strategic alliance between its subsidiary FSN International and Middle Eastern company Apparel Group to tap into the Gulf markets to undertake an omnichannel, multi branded beauty retail business.
According to FSN International, it owns a 55% stake in this joint venture against Apparel Group’s 45%.
“We intend to build a strong business on the lines of Nykaa in India in the six countries of Gulf Corporation Council (GCC) namely UAE, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar. We are very excited first and foremost with the market opportunity that GCC presents,” said Vikas Gupta CEO of Nykaa Distribution and Nykaa International.
Speaking during the firm’s second quarter (Q2) earnings call, Gupta expressed the firm’s excitement of expanding into the GCC region.
“It is one of the most value-dense markets in the world when it comes to beauty. With the significant young population that is witnessing strong winds of positive change in terms of women’s right and women empowerment.
“The e-commerce segment is underpenetrated, but growing rapidly, ahead of the total market. We view this opportunity positively and believe we can build a strong sustainable business there with the Nykaa playbook and Nykaa energy.”
In addition to its e-commerce platform, the firm owns several beauty brands including Nykaa Cosmetics, Kay Beauty, Wanderlust, Dot & Key, and Earth Rhythm, which will benefit from this expansion.
The companies are eager to set up shop in the region and believes its first brick-and-mortar stores could be up and running by next year.
“I would think that the first stores can be operational within definitely next 12 months and e-commerce website may take little longer or may be similar time,” said Falguni Nayar FSN E-Commerce Ventures executive chairperson, managing director and CEO.
“Yes, we are in the execution mode. We will continue to build that business in our same prudent style that Nykaa has always done, and our partners also aligned with that plan, so everything will be more organically almost being treated like a start-up in the GCC country that it is trying to execute an omnichannel beauty multi-brand retailer strategy in the region.”
The company has been focusing on international expansion recently. In October, it opened its first exclusive brand outlet in Mauritius and launched its brans across e-commerce marketplaces in the UAE and the US.
In the latest quarter, the firm’s gross merchandise value (GMV) recording 45% year-on-year growth. Revenue grew by 39%, reaching INR12.3bn (USD151.6m).
“This is truly a commendable performance from our team and testament to the investment we have built into deeper technology and capacity,” said Nayar.
Nayar specified that Beauty GMV increased by 39% year-on-year. “Our online and offline presence in beauty has delivered strong growth momentum while gaining from efficiencies across the value chain.”