Problem
NYKAA - India's answer to mecca
Nykaa E-Retail Pvt. Ltd. (Nykaa), is India's leading cosmetics retailer and utilizes an online sales platform to sell an extensive selection of items for beauty, fashion, and health. It was founded in 2012 by Falguni Nayar; in the beginning the company would receive around 60 online orders a day. The company procures a wide range of beauty and cosmetics products, from manufacturers and inventories them in designated warehouses.
Nykaa's direct-to-consumer (D2C) approach tapped into the demand of young Indian women beauty needs and only took four years to become India's leading eCommerce and beallty retail platform. As the organization grew it faced challenges such as the website crashing and not being able to keep up with the demand, however Nykaa addressed these issues. 17he Company experimented with opening a handful of brick-and-mortar stores to allow customers to experience the products. The company also offers comprehensive content which includes product reviews, beauty how-to videos, expert written articles, and even a e-beauty magazine.
The most recent challenge was the COVID-19 pandemic, which initially had a negative impact on the organization's bottom line, the company witnessed a fall of up to 70% of sales in April 2020. However, Nykaa's silver lining came about due to India's accelerated adopti9n of online shopping due to the public mobility restrictions, and consumers' desire for safety and c
At the beginning of 2021 Nykaa procured most of its funding from the founders and private investors. Coming out covid restrictions, Nykaa plans to triple its brick-and-mortar stores and significantly build its offline presence in the country by targeting 100 cities. Adding to the retail outlets it already operates in 40 cities. Falguni Nayar, believes that Indian consumers want to buy touch and feel products. Further. The company has been linked with some possible acquisitions which diversify their offerings to the Indian consumer and transition the company from cosmetic retailer to a lifestyle and fashion brand.
1. Using the information presented in the case above, determine the applicable stage of the organization's life cycle. Cite evidence from the case to support your decision.
2.
a. To begin the expansion of physical stores and acquisitions. Nykaa needs to secure funding. Select either debt or equity financing as the most appropriate option and provide a rationale for your choice. Additionally, identify a suitable source of funds.
b. Describe two primary business risks that the organization is presently confronting and explain how these risks impact the type of financing that the organization can obtain.