Client Overview

When we partnered with this e-commerce and digital retail business, the company was growing rapidly but faced several financial challenges:

• Annual revenue of ₹28 Crores
  
• Presence across multiple online marketplaces and a D2C website
  
• 1,200+ Stock keeping unites (SKUs) with a focus on fashion and lifestyle products
  
• Team of 60+ employees in marketing, operations, and customer service
  
• Heavy reliance on paid digital marketing campaigns for customer acquisition
  

While sales were growing month-on-month, margins were under pressure, and cash flow was unstable.

The Challenge

Due to aggressive advertising spending, the company had high client acquisition costs (CAC), but lifetime value (LTV) was little established. Discounts and promotions accounted for a significant portion of sales, lowering profits even if marketing expenditures were growing traffic.

Inventory control was another issue. While huge stocks of seasonal commodities held up cash, high-demand products were often out of stock, resulting in missing revenues. Inadequate knowledge of inventory turnover and stock aging led to overstocking of slow-moving SKUs and stockouts of best-selling products.

Additionally, marketplace receivables that were delayed by 30 to 45 days increased cash flow volatility even when customer payments were made immediately. The business also had to cope with GST-related problems as a result of several returns and exchanges, which led to differences in input tax credits and delays in GST refunds.

The Solution

At Sharda Associates, we helped address the key financial bottlenecks by:

• Implementing unit economics tracking (CAC vs LTV) to optimize marketing spend
• implemented computerized inventory management systems to monitor seasonality, demand projections, and stock turnover.
  
• Reworked pricing and discounting tactics to preserve profitability without sacrificing sales volume
  
• Establish rolling cash-flow forecasting that is in line with market settlement cycles and maximizes follow-up on accounts receivable.
  
• Automated reporting and streamlined GST reconciliation procedures to guarantee prompt returns

In order to reduce cash flow pressure, we also collaborated with the management team on vendor talks, concentrating on improved terms of payment.

The Impact

• Margins improved by 18% through optimized marketing spend and pricing adjustments
  
• Inventory turnover improved by 25%, reducing overstocking and stockouts
  
• Cash flow stability improved by 30% through quicker receivables and better forecasting
  
• GST refund cycle reduced by 40%, improving working capital
  

Conclusion

We assisted the e-commerce company in scaling profitably without compromising growth by implementing financial discipline across marketing spend, inventory management, and cash flow forecasting.

Sharda Associates’ virtual CFO services can assist organize your finances and promote long-term growth if your e-commerce company is having trouble with margins, unpredictable cash flow, or inefficient inventory.