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Company Overview:
Nice One Beauty Digital Marketing Company (formerly: Product Sea Trading Company) is a Closed Joint Stock Company (formerly: Limited Liability Company) registered in Riyadh, The Group is engaged in the retail business of perfumes, cosmetics, soap and incense. Following several rounds of capital increases and equity restructuring, the company converted to a joint-stock system in May 2024, with its registered capital increasing to SAR 1.155 billion. The business has expanded from wholesale distribution of perfumes to a full-range beauty portfolio, with cosmetics accounting for over 60% and perfumes over 25%—covering over 500 brands and featuring 12 proprietary brands.
Shareholding Structure
Controlling Shareholders: Founders Omar AlOlayan (28.11% post-IPO) and Abdulrahman AlOlayan (23.83%) maintain control.
Strategic Investors: The Namara Group holds shares through platforms like Wajhat AlHamra (4.27%) and Darb AlNomu (4.71%), enhancing supply chain resources.
Public Float: The IPO issued 30% of shares (34.65 million), with 10% allocated to retail investors and 90% to institutional placements.
Business Model
Digital Platform: The company's app and website offer a seamless customer experience, supported by advanced technology and efficient logistics.
Product Sourcing: Nice One sources 82% of its products from local suppliers, ensuring competitive pricing and maintaining profit margins.
Marketing Strategy: The company employs a strong marketing strategy, leveraging social media influencers and digital campaigns to drive customer engagement and sales.
Supply Chain Infrastructure: Nice One owns or leases warehouses and operates a refrigerated transportation fleet to ensure efficient inventory management and delivery.
Industry analysis：
High Spending on Beauty and Personal Care
The BPC market in Saudi Arabia has experienced significant growth in recent years, driven by increasing disposable income, changing consumer preferences, and a growing focus on personal grooming and appearance. For instance, the market has seen a rise in demand for natural and organic products, influenced by cultural preferences for authenticity and sustainability.
In 2023, the BPC market was valued at SAR 51 billion, and it is projected to grow to SAR 75 billion by 2028, indicating a CAGR of 8%. Saudi Arabia is among the highest spenders globally in the Beauty and Personal Care (BPC) sector. In 2023, BPC accounted for 11% of retail expenditure in the country, which is significantly higher than major economies like the United States (3%), the United Kingdom (3%), and France (3%).
Key Drivers of Growth
- Young Population and Growing Income: The growth of young, digitally savvy consumers entering the workforce has boosted the demand for beauty products. This cohort is highly experimental and aspirational, driving the demand for premium beauty products.
- Changing Cultural Norms: As Saudi Arabia undergoes a cultural transformation, consumer attitudes toward beauty and personal care are changing. The relaxation of social norms has further accelerated this growth.
- Improving Access to Brands: Online retailers are enhancing consumer access to brands and products, reducing barriers to entry for new market entrants. This democratization empowers consumers with multiple choices and helps create a highly competitive and dynamic market landscape.
Market Landscape: Online and Premiumization as Dual Drivers
Market Growth: The Saudi beauty and personal care market is projected to reach SAR 75 billion by 2028E (CAGR of 8% from 2023 to 2028), with fragrances (38%) and cosmetics (24%) leading the growth.
Channel Migration: Online penetration is expected to accelerate (from 18% in 2023 to 23% by 2028E), with vertical e-commerce platforms (such as Nice One) capturing a larger share than generalist platforms.
Online Beauty and Personal Care Penetration Benchmarks for 2023G
Comparison of Competitive Products: Nice One’s Moat
Nice One demonstrates significant competitive advantages over its main competitors, Al Nahdi and Noon, across several key dimensions. These advantages will likely contribute to its market leadership and potential for sustained growth.
Nice One's extensive SKU coverage, with over 500 brands and 12 proprietary brands, provides a diverse product range that caters to various consumer preferences. This breadth of offerings, combined with its strong logistics efficiency, including same-day delivery in Riyadh, significantly enhances customer satisfaction and loyalty. In contrast, competitors like Al Nahdi and Noon, which primarily focus on international brands and have weaker proprietary capabilities, may struggle to differentiate their product offerings and face longer average delivery times of 2-3 days, potentially leading to lower customer retention.
Furthermore, Nice One's strong user engagement, with over 8 million app downloads and more than 1 million monthly active users, underscores its robust digital presence and direct customer relationships. This contrasts sharply with competitors that rely heavily on third-party platform traffic, which may limit their ability to build direct customer loyalty and gather valuable consumer data. Nice One's AI-driven personalized recommendations also provide a superior digital experience, enhancing customer engagement and conversion rates. At the same time, competitors rely on basic CRM systems that may not offer the same level of personalization or data-driven insights.
In conclusion, Nice One's competitive advantages in product diversity, logistics efficiency, user engagement, and digital capabilities position it favorably in the market. These factors will likely drive continued market share growth and operational efficiency, making Nice One a notable player in the beauty and personal care e-commerce sector.
Valuation：
Financial Highlights:
Revenue Growth: Nice One’s revenue has grown steadily from SAR 449.2 million in 2021 to SAR 782.4 million in 2023, with a CAGR of 24%. In 2024Q3, revenue reached SAR 696.48 million, indicating continued growth momentum.
Gross Margin: The gross margin has shown a recovery trend, increasing from 28.74% in 2022 to 28.4% in 2024Q3, reflecting improved operational efficiency.
Net Profit Margin: The net profit margin has also improved significantly, reaching 9.45% in 2024Q3, up from 3.0% in 2021.
Key Drivers:
- Order Volume Growth: The company has achieved a three-year CAGR of 24% in order volume, reaching 2.7 million orders in 2023.
- Stable Average Order Value: The average order value has remained stable at approximately SAR 290, contributing to revenue stability.
- High Customer Retention: The customer churn rate was 26.4% in 2023, indicating strong customer loyalty and repeat business.
Nice One’s strong financial performance and key drivers suggest a positive outlook for the company. The improving gross and net profit margins, along with stable order volumes and customer retention, indicate that the company is well-positioned for continued growth. strong financial performance reflecting its strong growth prospects and profitability.
Risks and Mitigation
Investors should consider the potential risks associated with the investment, including operational, market, and financial risks. The company's management has implemented measures to mitigate these risks, such as diversifying its supplier base, investing in technology, and expanding its sales channels.
Conclusion
Nice One Beauty Digital Marketing Company presents a compelling investment opportunity in the Saudi beauty e-commerce market. The company's strong market position, proven business model, and growth prospects make it an attractive choice for investors. However, potential investors should carefully consider the associated risks and the company's ability to execute its strategic initiatives. Overall, Nice One is well-positioned to deliver strong returns to investors in the long term.
Disclaimer:
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Performance data provided is accurate and sourced from reliable platforms, including Argaam, Markwideresearch.
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