FSN E–Commerce Ventures Limited IPO (Nykaa) IPO

Strengths

• Updated product portfolio: Nykaa keeps updating its product range and offering, building a diversified portfolio. This has been instrumental in expanding its customer base. Moreover, by constantly updating the offerings, this company has put itself in a favourable position to tackle challenges posed by the dynamic business environment.
• Impressive balance sheet: Nykaa’s strong balance sheet provides it with scope for expansion. It can utilise funds to finance new projects, which can diversify its revenue stream. This will have a positive impact on its key financial metrics, such as Return on Equity (ROE), Return on Sales (ROS), and more.
• Efficient inventory management: This company works on an inventory model, which ensures that it has sufficient stock to meet the demand.
• Strong social media presence: Nykaa runs social media marketing campaigns on a regular basis. This has played a vital role in boosting sales and acquiring customers.

Weaknesses 

• Implementation of technology: Nykaa has integrated technology in its backend processes. That said, it has not been able to make use of technological advantages in front end processes.
• Low spending on research and development: Nykaa doesn’t spend a sufficient amount of funds on improving its research and development infrastructure. This can directly impact this company’s performance.
• Handling customer grievances: Nykaa is still facing issues in addressing customers’ complaints efficiently. This can affect the company’s growth.
• Delivery charges: Nykaa levies delivery charges if the order value is below a certain amount which eliminates potential buyers.

Opportunities 

• Growth prospect: With improvement in the standard of living, more individuals are making a shift towards e-commerce, which presents an excellent opportunity for Nykaa.
• Improvements in AI: The company can take advantage of the developments in AI to estimate consumer demand and fulfil the requirements of niche segments.
• E-commerce business model: Nykaa’s e-commerce business model can assist this company in collaborating with local suppliers logistic companies that belong to international markets. Besides this, the social media growth of the company can enable it to gain access to a large number of potential customers with a low marketing budget.

Threats 

• Change in domestic rules: As we advance, in case any changes take place regarding domestic laws and tax liability, it could affect Nykaa’s plans.
• Growing competition: The number of competitors both online and offline is increasing. Accordingly, there’s always a possibility of losing customers.
• Drop in expenditure: If consumers’ expenditure level drops, it can affect the profitability of this company.