By Falguni Nayar, Nykaa
Typically, when you launch a business concept or service, you have to see how many customers adopt it first. Early adopters are always enthusiastic, so you get a certain amount of early adopters very quickly.
But then the next phase, which is moving from early adopters (1-3% who will buy your product) to becoming widely adopted (between 3-15% of the population) is the crucial one.
Once you achieve that next phase of wider adoption, there is more conviction in the business. At that point, instead of doubting the business, you need to invest in the business ahead of that curve otherwise you will deprive it of the resources and that may cause its slowdown.
We launched Nykaa in 2012 and started commercially marketing around February 2013. We had early success in terms of getting 60 orders per day around June 2013. But when we got to that level, I realised we didn’t have an ERP so we couldn’t cope with it and we had to shrink it down to 40 orders per day.
I allowed the business to shrink because we were getting too many customer complaints. So for 1-2 months, we stopped marketing. We then restarted marketing only after August-September and by December, we were at 100 orders per day.
The journey actually began in June when we did well due to marketing, though we were actually not ready operationally. I learnt a lesson from that and then December 2013 happened. So most of 2014 was spent trying to do everything — raise money, set up warehouses, etc.
Instead of being naysayers, we decided to invest in the business in 2014-end and early 2015. There were big questions back then about this direction. I used to spend about 35% on marketing costs and our margins were not even 30%. We invested in warehouses, inventory, people, and marketing.
I didn’t listen to people’s doubts over ‘yet another warehouse?’ or ‘yet another office?’ You always have to recruit people ahead to provide for scale. So having that confidence and recruiting ahead of growth was key.
(As told to ET’s Supraja Srinivasan)