Can Nykaa rival Purplle capitalise on beauty boom?

With the Nykaa public issue becoming a huge success, competitor Manish Taneja, founder of Purplle.com, is frequently being asked if he is planning to take the IPO route any time soon. “We will continue to be private for a reasonable period of time,” he says. However, he believes the market is clearly prioritising high-growth companies over historically slow growth, less profit-making ones. “There are hardly any legacy companies one can invest in, which will grow over 40% in the next five-six years. It’s the new-age companies that have the potential to grow at that pace. Hence investors are lapping them up as they feel that growth is important for their portfolio,” says Taneja.

The beauty and personal care marketplace, claims its founder, has been growing by almost 100% year-on-year, much higher than the overall online beauty retail industry, which is growing at 35%. In October this year, Purplle touched an annualised GMV (gross merchandise value) of ₹1,200 crore and the agenda is to grab more market share. The company recently raised a fresh round of funding of $75 million from Kedaara, Sequoia Capital and Blume Ventures. Both Sequoia and Blume have doubled their investment in this round of funding. They first invested in the platform earlier this year along with Verlinvest, when the trio put in $45 million.

Like its competitor, Nykaa, close to 40% of Purplle’s revenue comes from its private brands such as Stay Quirky, Good Vibes and NY Bae. The company acquired feminine hygiene brand, Carmesi, in December last year, and Taneja says it would be continuously on the look-out for differentiated brands. “We will buy differentiated brands, whose capabilities we don’t have. We are also looking at acquiring a high-quality beauty and fashion content platform, as reaching out to consumers at lower costs will be important."

Close to a third of Purplle’s revenue comes from the eastern part of the country and Taneja’s ambition is to become the most-favoured brand of middle-class Indians. He is amazed at the kind of beauty products consumers in Tier II and III cities have started buying. “Not only are they buying all-time favourites such as lipsticks and nail paints, they are also lapping up eye-shadows, make-up fixing sprays and make-up brush sets. They are also buying high efficacy, transparent skincare brands, which tell you the exact percentage of ingredients used.” While most legacy companies have reported a dip in sales in the last quarter due to high inflation rates and job cuts, Taneja claims that Purplle in the month of October itself has grown upwards of 50%.

Meanwhile, Nykaa made a dazzling debut at the stock market on Wednesday, with its share price rising 96% over its IPO price of ₹1,125. It has now joined 54 listed companies which are in the ₹1-trillion market cap club. Its valuation is higher than the likes of Godrej Consumer and Britannia, it is the 55th most highly valued Indian company. The Nykaa success story is definitely reason enough for the likes of Purplle.com to carve out an aggressive growth strategy. Moreover, with India’s online beauty and personal care market penetration being in the region of just 8%, there is ample scope for growth.