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Seller group moves Centre to stop Snapdeal-Flipkart merger over unsettled dues

16 May, 2017

All India Online Vendors Association (AIOVA), a group of 2,000 online sellers, has sought the intervention of the central government to prevent the imminent merger of e-commerce marketplace Snapdeal with rival Flipkart until the former settles payment dues of sellers on its platform, a letter written by the association to the corporate affairs ministry showed.

In the letter, the association has expressed fears that if the merger goes through, its members would meet the same fate as sellers on the now-defunct e-commerce marketplace AskMeBazar.

AIOVA alleged that many sellers have complained of payment delays, but the Snapdeal management has done nothing to address those concerns.

“We would like to inform you via this email that more than 500 sellers have complained to us regarding unsettled financial matters with the current management of Snapdeal. We had compiled and submitted a small list to the management of Snapdeal informally in March, however they never acted on the same,” the letter said.

Last week, VCCircle exclusively reported that the payment disputes with sellers may be 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. A couple of senior executives who have left the firm believe the data loss took place more a year ago, during 2014-15.

Payment dues and delays have been never-ending concerns for sellers on Sanpdeal. In February, a group of sellers from AIOVA approached commerce minister Nirmala Sitharaman to complain against piling dues at the troubled e-commerce firm. According to the complaint, Snapdeal held Rs 300-400 crore in the form of outstanding dues and goods in transit/refunds.

A fortnight ago, VCCircle first reported that Bangalore-based apparel seller Rajdhani Cotton had filed a police complaint against Snapdeal for allegedly withholding payments after a 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.

The Snapdeal-Flipkart merger, which has been in the works for months, is expected to be finalised this week. Once the deal is done, Snapdeal founders Kunal Bahl and Rohit Bansal would leave the organisation, sources familiar with the matter had told VCCircle.
Snapdeal’s digital payments subsidiary FreeCharge and order management provider Unicommerce would be part of the merged entity. However, its logistics arm Vulcan Express is likely to be divested. The nitty-gritty of the deal is being worked out, including $20 million compensation for each Snapdeal founder from SoftBank, the e-tailer’s biggest investor.

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Seller group moves Centre to stop Snapdeal-Flipkart merger over unsettled dues

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