Reliance Retail set to start online business in cosmetics

India’s beauty and personal care business, including physical and online stores, is estimated at $14-15 billion and is expected to increase at a compound annual growth rate (CAGR) of 8 per cent across the next five year.

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Reliance Retail has been intensifying its e-commerce play brick by brick. The launch of its fashion portal Ajio in 2016 signalled its first step into India’s quickly growing e-commerce division, a move it resulted in its e-grocery venture JioMart in 2019.

A raft of additions across segments followed this. According to a report by The Economic Times, which arrived last week, the company has set its view on the online cosmetics and personal care goods section next, including brands such as Nykaa and Purplle and marketplaces like Amazon and Flipkart.

India’s beauty and personal care business, including physical and online stores, is estimated at $14-15 billion and is expected to increase at a compound annual growth rate (CAGR) of 8 percent across the next five years, according to Euromonitor. A Jefferies report fastens the amount of the online segment at 5-6 percent of the overall market, which would interpret to $800 million in revenue. Nykaa, with revenue of $250 million in FY2020, accounts for above 30 percent of the online market, says the Jefferies report. The company reportedly has 15 million registered users, 5 million monthly active users (MAUs) and performs over 1.5 million orders per month. This presents the vertical marketplace as the most significant beauty and personal care retailer in India.

Nykaa is set to begin its initial public offering later this year. Last month, the company registered its draft red herring prospectus (DRHP) with India’s Securities and Exchange Board. The company’s IPO will include a fresh offering of shares worth Rs 525 crore and a sale of 43.1 million shares by existing shareholders.

Reliance Brands also has business with various international brands such as Japan-based Muji, Armani, Burberry, Canali, Diesel, and Hugo Boss, which will benefit the company’s retail unit eyes the online cosmetics division.

Nykaa also has a related model and, of late, has begun offline stores. It runs 82 stores across 30 cities within the country. The company has a crowd of unique labels such as Nykaa Cosmetics, Nykaa Naturals. It has also collaborated with celebrities such as Katrina Kaif and Masaba Gupta to launch exclusive beauty brands. It brought several Korean makeup brands to India as well.