Did Snapdeal fail to keep books and make a mess of seller payments?
Photo Credit: Reuters

It now seems the numerous disputes involving troubled e-commerce firm Snapdeal and its online sellers were not isolated incidents but, simply put, the result of the e-tailer's inability to keep books and put in place sound systems for maintenance of financial records.

Several people, including former senior executives at the company, told VCCircle on the condition of anonymity that scores of seller disputes can be traced to data discrepancies in Snapdeal's seller management function, including data loss and technical bugs.

An internal mail regarding payment issues with a seller, accessed by VCCircle, corroborates this. It reads: “POD (proof of delivery) data of more than three months are not available. It is a grey area.”

How big is the bug?

Last week, VCCircle exclusively reported that Bangalore-based apparel seller Rajdhani Cotton had filed a police complaint against Snapdeal for alleged non-payment after months-long dispute over transaction data.

“During our meetings to resolve the dispute, Snapdeal representatives kept telling us that they did not have the data, and asked us to present ours. Many other sellers have faced similar problems but they are just waiting to see how this pans out,” said Rajat Gupta of Rajdhani Cotton.

These problems might have persisted for well over a year and affected almost all sellers on the platform, a person privy to the matter saidA couple of senior executives who have left the firm believe the data loss could be up to a year, during 2014-15.

Such slip-ups on part of a tech unicorn, which is out to solve the age-old retail problem using technology, are both bemusing and disconcerting for stakeholders.

In fact, these problems might have persisted for well over a year and affected almost all sellers on the Snapdeal platform, a person with direct knowledge of the issue said. “The seller panel shows negative amounts, in lakhs and crores, but Snapdeal has not been able to come up with accurate data in a clear format. Only once this is done can there be any reconciliation between sellers and Snapdeal,” he said.

“Besides, there are issues like payment-order mismatch, several instances of the same order ID, and several cases of inventory leakage,” the person added.

When VCCircle reached out to All India Online Vendors Association (AIOVA), a group of 2,000 sellers, seeking its views on the petition filed by Rajdhani Cotton, a spokesperson said, “Such an accusation is not a one-off incident. We have accumulated similar data from our members where due to data and technical problems, more than Rs 1.5 crore of over 100 members is due at Snapdeal.”

“All cases have been duly flagged by the sellers. But due to Snapdeal’s inefficient systems, they are forced to take legal remedy,” he added.

The constant employee churn across critical functions like tech, seller management and supply chain hasn't helped matters even as the current leadership grapples with this complex issue, two of the people cited above said. To its credit, Snapdeal has tried to address the issue but with limited success. It is also said to be engaging with a number of technology vendors to address these problems.

In its petition to Delhi police commissioner, Rajdhani Cotton alleged that Snapdeal, vide its email dated 21.09.2015, was seeking to mislead the former “by relying upon purported account books which are not in its possession, therefore clearly, the accused company has forged the instant documents that it seeks to reply upon.”

Snapdeal's response

The e-tailer dismissed the charges. “Claims raised by Rajdhani Cotton are frivolous and will be dealt with as per contractual provisions and legal process. Despite multiple opportunities, the complainant has been unable/unwilling to produce documents in support of the amount claimed by it,” a Snapdeal spokesperson said in an emailed reply.

Snapdeal has tried to address the issue but with limited success. It is said to be engaging with technology vendors in this regardThe company, however, didn't answer questions on instances of data loss or engagement with technology vendors for reconciliation of disputes with sellers. On AIOVA’s charges of pending dues, the Snapdeal spokesperson said: “All seller disputes are managed in accordance with seller policies and contractual agreements. In case of any concerns flagged by the seller, ample opportunity is given to the seller concerned to provide any additional information or documents in support of their claim.”

With Snapdeal in the throes of a merger deal with rival Flipkart that's likely to value it at less than a sixth of its $6.5-billion peak valuation, it is yet to be ascertained to what extent these issues, which spilt over to supply chain as well, contributed to the decline.

One of the former senior executives, however, sought to defend the e-tailer in its disputes with sellers. “These issues are quite common in e-commerce and all companies face them. Issues at Snapdeal have now become sensational because of the sale talks,” he said.

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