The Indian Beauty and Personal Care (BPC) market is growing rapidly and is expected to reach a gross merchandise value (GMV) of $30 billion by 2027, making up about 5% of the global beauty industry. That’s a 10% annual growth rate, the fastest among major economies. But this growth comes with intensified competition, and Nykaa, once the undisputed leader, is now facing stiff challenges from Reliance Retail’s Tira, quick commerce platforms like Blinkit and Zepto, and established e-commerce players like Myntra and Amazon.
But the first-mover advantage doesn’t last forever. Exclusive partnerships that once gave Nykaa an edge are being challenged. When Dubai-based makeup artist Huda Kattan launched Huda Beauty in India in 2018, it was only available on Nykaa. Fast forward to 2024, and you can now find it on Reliance Retail’s Tira and Flipkart-backed Myntra as well.
A report by HSBC Global Research highlights that beauty is becoming more competitive as conglomerates and e-commerce giants enter the space. Redseer Strategy Consultants and Peak XV Partners estimate that the global BPC market will hit a staggering $660 billion by 2027, with a market cap between $2.2 and $2.7 trillion. Everyone wants a piece of the pie.
Today, Nykaa controls about 25-30% of the online BPC market, generating over 90% of its revenue from beauty, but it faces a new wave of competitors who are chipping away at its dominance by offering deeper discounts, faster deliveries, and omnichannel experiences.
Why beauty is a tough business
Selling beauty products isn’t like selling clothes or gadgets. A consumer might buy a T-shirt on a whim or pick up a phone because of a discount. But when it comes to skincare and cosmetics, they’re far more selective. Trust matters. And brand loyalty isn’t absolute — someone might swear by a MAC lipstick but refuse to use its foundation.
Lately, a new challenge has emerged. And it’s coming from an unexpected corner.
Blinkit, Zepto, and BigBasket — apps originally built for grocery delivery — have started stocking beauty and personal care products. Their selection is limited, with only 4,000-6,000 stock-keeping units (SKUs), which makes up just 5-8% of Nykaa’s vast inventory. For instance, Nykaa offers 475 different nail polishes, while Blinkit lists only 130. Similarly, BigBasket carries about 60 compact powders compared to Nykaa’s extensive collection.
On the surface, it may not seem like direct competition. But they have a major advantage: speed. Consumers today value instant gratification, and being able to receive a product in 10-15 minutes is a compelling proposition — one that traditional e-commerce platforms cannot match.
Nykaa knows this. And that’s why it has been aggressively working on cutting delivery times. Back in FY21, an order took around four days to arrive. Today, that’s down to just 2.2 days across 19,000 pincodes. By mid-2024, one in two orders was being delivered within 24 hours.
But speed isn’t cheap. The company’s fulfillment expenses — including costs for storing, packing, and shipping beauty products — have reached their highest levels in two years. And despite these efforts, it’s still playing catch-up in the ultra-fast delivery race.
So, the real question is — will consumers stick with Nykaa for its variety and trust? Or will they prioritise speed and shift to quick commerce.
The rise of new players
Tira, Tata CliQ Palette, Shoppers Stop’s SS Beauty, and e-commerce giants like Myntra and Flipkart are aggressively expanding their beauty offerings, snapping up exclusivity deals and offering competitive pricing. Each has its own niche:
- Tira is targeting premium beauty brands and has inked exclusive partnerships with brands like Italy’s Kiko Milano and Deepika Padukone’s 82°E.
- Myntra is leveraging its dominance in fashion to push beauty products and offering deep discounts.
- Tata CliQ Palette is focusing on hyper-personalised recommendations through AI-driven tech.
- SS Beauty is bringing in luxury brands like Nars Cosmetics through exclusive deals with Shiseido Asia Pacific.
Pricing and discount wars
Nykaa’s rise was fuelled by deep discounting in its early years. Over time, it shifted to a more value-driven approach. But now, with competitors slashing prices aggressively, Nykaa is back in the discount game.
In Q1FY25, while Nykaa Beauty’s GMV grew by 28%, its net revenue rose only 23%, as it had to absorb higher discount costs. The company believes that the worst of the discounting war is over, but analysts remain cautious.
At the same time, premiumisation is driving growth. The masstige (mass + prestige) and premium segments are growing at twice the rate of the mass market. Nykaa, Tira, and SS Beauty are all betting big on this trend, knowing that customers are willing to pay more for high-quality international brands.
Tech as a differentiator
As competition intensifies, retailers are using AI and tech innovations to personalise shopping experiences.
- Nykaa has introduced cohort-based discovery, where users who frequently buy luxury products are shown more luxury brands in their home feed.
- Tata CliQ Palette offers a “Beauty ID” feature that collects data on skin type and concerns, making personalised recommendations.
- Myntra Beauty has a skin analyser tool that has boosted conversions by 20-30%.
Tech is not just about convenience; it’s about keeping customers engaged and making sure they return for future purchases.
The offline push
Even with India’s booming e-commerce industry, beauty remains an offline-driven category. Nykaa, which built its brand online, has expanded its offline footprint aggressively, adding 100 stores in just two years. However, physical retail accounts for just 8% of its overall GMV.
Tira, on the other hand, is taking an offline-first approach. Within a year, it has opened 11 premium beauty stores and is using its vast retail network to push Tira’s presence. Meanwhile, Purplle, another rising BPC player, has received ₹1,000 crore from Abu Dhabi Investment Authority to fuel its offline expansion.
While Nykaa’s offline presence is more about brand-building than revenue, its competitors see brick-and-mortar stores as a direct sales channel. This could become a critical battleground in the years to come.
Who will win India’s beauty wars?
Despite growing competition, Nykaa’s market share isn’t likely to collapse. Analysts believe that it will be tough for Nykaa to gain more share, but maintaining its 25-30% stake in online beauty seems realistic.
The challenge for Nykaa is to keep innovating while balancing profitability. Tira has the advantage of financial muscle, but it’s still figuring out its brand positioning. Myntra, with its discounting strategies and strong fashion base, is gaining ground. Meanwhile, Tata CliQ Palette and SS Beauty are carving out their own niches in the premium and luxury space.
The Indian beauty market is undergoing a transformation, and in the next few years, we’ll see whether Nykaa can hold its ground or if a new leader will emerge. But one thing is certain — the beauty industry is only getting bigger, and the battle for beauty dominance has just begun.
Sonia Boolchandani is a seasoned financial content writer. She has contributed her expertise to prominent firms, including 5Paisa, Vested Finance, and Finology, where she has crafted content that simplifies complex financial concepts for diverse audiences. Her work is driven by a passion for helping readers understand and make informed decisions in the financial world, bridging the gap between industry intricacies and reader-friendly explanations.
Disclosure: The writer and his dependents do hold the stocks discussed in this article.
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Nykaa, which built its brand online, has expanded its offline footprint aggressively, adding 100 stores in just two years. (Reuters file) 
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