A Case Study on the Accounting System of Skycandle

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Acknowledgements

The completion of this project gives us immense pleasure. We had help and guidance of many people available at every step which ultimately led us to complete the project successfully. We would like to thank Dr.Soma Dey for giving us the opportunity to carry out this research and compile the case. We would also like to thank Mr. Gaurav Garg (Founder and Managing Director, Skycandle), Mr. L. Vishal (COO, Skycandle), Mr. Akash Kumar (CTO, Skycandle) and all the employees who were a part of our research for providing us with the valuable information about the organization and also for providing us with the insights on the working of the organization. Without their help and constant support, the project would not have seen the light of the day. We wholeheartedly thank them, all the people who were involved in this project.

SkyCandle: Managing their inventory

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Abhishek Barua        Ayush Kumar               Boddu Santhosh

                             Deepak Lanka             Dhananjay Singh        Vikram Dhawan

Faculty of Management Studies, University of Delhi | Delhi

Prologue

Gaurav sat in his office with a cup of tea, thinking about how to overcome the problem of managing the accounting system. Skycandle, an online retail store founded by Gaurav Garg and team, and currently dealing in candles, fitness, home decors, kitchen and dining, lamps and lighting, housekeeping, utility and more such accessories, had a humble beginning, starting with scented and unscented candles. But in a short span of time, Skycandle rapidly expanded to the sprawling business that it handles now. But with the growing business came the growing number of customers, which meant growing number of goods and inventories. This growth in the number of inventories gave Gaurav a sweet headache – How to maintain the accounts of the inventory.

Earlier, when the business was small, the inventory was maintained in Tally records, but as the number of orders grew, it became increasingly difficult to maintain the inventory in Tally. The organization had to move on to better methods of managing and maintaining this inventory. This meant that the organization had to migrate to larger and more sophisticated technologies like SAP. But the problem was that the business was not too large enough that they could pool in their finances and buy a sophisticated accounting management system like SAP. Hence they had to look at other cheaper options.

About the company

Skycandle sees home décor as a reflection of creative space. The company saw a business opportunity in this space to involve creativity and decorate the houses better. With this idea, the company was started by a team of innovative and creative people, led by Gaurav Garg and Aditee Joshi in 2013 with the sole aim of making gifting simple, fun and affordable while also making home decorations a thing of more creativity. They started by selling designer candles and sky lanterns.

The timeframe: In 2014, the company had only 3 people on its rolls, catering to the orders in Delhi only, and taking one order per day. It had 50 SKU’s in its portfolio, but endless determination and a never-say-die attitude of the team. Their constant efforts and endeavours meant that Skycandle soon had its headquarter at Nehru Place, Delhi by April 2015. Even the team became as strong as 20 enthusiastic people, who catered to 700 SKU’s. Skycandle also ventured into the Retail outlet space during this period to

significantly expand its business base and improve its brand as an emerging leader in this kind of markets.

Skycandle has grown large enough to currently have over 100 energetic and creative mind working for it. It handles upto 4500 orders a day, receiving 1 order every 20 seconds. The operations of Skycandle have been big enough to warrant 4 warehouses for the company across India, delivering the products to more than 19000 locations in the country.

The e-commerce industry

When monetary transactions happen for goods and/or services sold in brick and mortar, it is called as commerce. When the same is sold without the customer really not visiting the brick and mortar shop is called as e-Commerce. With the rapid and fast paced growth of internet services, everything is now available on the internet at the click of a button. This has led the people to stay in their comfort zone and yet meet their requirements by utilizing the technology and internet. This has in turn led to the phenomenal rise of the online business industry, more commonly called the e-commerce. In general terms, e-commerce is the usage of electronic medium to transact online or buy and sell goods online. It is generally of three types:

• Business to Business

In this type of transactions, the buying and selling takes place between two organizations. The individual customers are not involved in this type of transactions.

Ex: Organizations transacting in bulk, like Steel.

• Business to Consumer

In this type of transactions, the buying and selling takes place between an organization which is a seller, or a platform where the goods can be sold, and an individual customer.

Ex: Amazon, Flipkart, Snapdeal, etc.

• Customer to Customer

In this type of transactions, the buying and selling takes place between two individual customers. This happens on a common online platform.

Ex: OLX, Quikr

In common practice, e-commerce can be seen to be conducted using various mediums like emails, online platforms with shopping catalogues and carts, file transfer protocols and web services which aid e-commerce services.

 E-commerce has many advantages. A few of them are as listed:

• The customers can buy the products of their choice in just a few clicks without having to really visit the store.
• The products bought online are door-delivered to the customer.
• It is available round-the-clock, can be accessed very fast at a place convenient to the customers and is easy.
• The customers have a choice of a wide variety of products to choose from.
• Even the businesses need lesser money to have their setup.

• The customers can easily replace the products if they wish to, which again offers the advantage of home pickups.
• There are periodic discounts for the customers and the targeted marketing makes it an enticing platform for the customers.  

Every coin has two sides. As there are advantages due to the e-commerce industry, there are disadvantages too. Some of the disadvantages are listed below:

• The penetration of the e-commerce sector in rural parts of the country is not very high.
• There is a sense of insecurity among the people with regards to payments on the online platform. Many people do not consider payments to be secure.
• The products cannot be physically tried or tested before making a purchase.
• There is a possibility of product misplace.
• There could be connectivity issues in remote places which make it difficult for the customers to access the e-commerce platform.

Competitors and comparative analysis

While externally, e-commerce looks like a lucrative business and a fast developing platform, internally, there is a lot of competition among the many players who dictate terms in the e-commerce industry. In this cut-throat competition, the organization which manages to minimize its spendings maximize its profits would emerge as the clear winner over the others.