According to a report in business daily, Reliance Retail enters the online cosmetics market and also wants to establish a chain of offline stores to sell personal care and cosmetics products. Experts believe the initiative has the potential to disrupt the personal care and cosmetics market.
Reliance Retail has been steadily expanding its e-commerce business. It made its initial foray into India’s rapidly growing e-commerce market with the launch of its fashion portal Ajio in 2016, which is followed up with the debut of its e-grocery venture JioMart in 2019.
This was followed by a slew of acquisitions in a variety of industries. According to an article published last week by The Economic Times, the corporation is now focusing on the online cosmetics and personal care products industry, which includes companies like Nykaa and Purplle as well as marketplaces like Amazon and Flipkart.
According to Euromonitor, India’s whole beauty and personal care sector, which includes both physical stores and online platforms, is worth $14-15 billion and is expected to increase at an annual pace of 8% over the next five years.
According to a Jefferies analysis, the internet component is worth 5-6 per cent of the whole market, or $800 million in revenue.
According to the Jefferies estimate, Nykaa accounts for more than 30% of the online market, with revenue of $250 million in FY2020.
The company boasts 15 million registered users, 5 million monthly active users (MAUs), and processes over 1.5 million orders per month, according to reports.
The vertical marketplace is now India’s leading retailer of beauty and personal care products.
Nykaa is planning an initial public offering (IPO) later this year. The Securities and Exchange Board of India received the company’s draft red herring prospectus (DRHP) last month. The IPO would consist of a fresh offering of Rs 525 crore in shares and a sale of 43.1 million shares by existing shareholders.
According to the Economic Times, Reliance Retail enters the online cosmetics market and also wants to establish a chain of offline stores to sell personal care and cosmetics products. On the site, the company intends to sell both international brands and its own private labels.
Reliance Brands also has partnerships with a number of foreign brands, including Muji, Armani, Diesel, Burberry, Hugo Boss, and Canali all of which will benefit the company’s retail division as it pursues the online cosmetics market.
Nykaa, too, follows a similar concept and has recently opened physical locations. It currently has 82 locations in more than 30 cities around the country.
Nykaa Cosmetics and Nykaa Naturals are two of the company’s private labels, and it has partnered with celebrities like Katrina Kaif and Masaba Gupta to establish exclusive cosmetic products. It has also brought a number of Korean cosmetics companies to the United States.
Despite the fact that Nykaa has established a strong brand identification and carved out a position in the online cosmetics sector, experts believe Reliance Retail’s entry would upset the market.
“Reliance Retail’s foray into this market needs to be taken seriously, given their wider understanding of the retail ecosystem, financial muscle and also partnerships,” said Abneesh Roy, executive vice president, Edelweiss Securities. “Reliance also will quickly learn from the incumbents and hence they need to be focussed on efficiency and offering consumers a better experience to maintain their edge,” he added.
Although the industry is currently modest, Roy believes it will grow and eventually accommodate three to four significant companies.
With brands like Glow & Lovely, Lakme, TRESemme, and Pond’s, Hindustan Unilever, in addition to the present companies and Reliance Retail, could emerge as a big player in the segment, according to Roy.
