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Is Snapdeal going the AskMe way? Vendors start deserting ship

With payments stuck, vendor association writes to commerce minister, fears repeat of AskMe episode where they suffered losses after closure of the company

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Vendors selling on Snapdeal's e-marketplace is a worried lot.

Having lost money and stock on AskMeBazaar.com last year, the fraternity fears it may face a similar situation again.

Snapdeal recently fired 600 people and is reportedly facing funding issues.

The vendors on Snapdeal have been advised by the All India Online Vendors Association (AIOVA) to immediately stop sales to avoid further losses.

With this, Snapdeal, which claims of a seller base of 3 lakh, may see vendor numbers shrink, sources said.

Harish, a Hyderabad-based seller of mobile phones, told DNA Money that he has got fed up with Snapdeal's indifference to their payment related follow-ups, queries and concerns, and has discontinued selling on Snapdeal sometime back.

"I am still fighting it out with Snapdeal for payment of about Rs 15 lakh, goods (stock in their possession) worth Rs 7 lakh and refunds of around Rs 7.5 lakh. That's a total of almost Rs 30 lakh due from Snapdeal. While I am still fortunate, there are a few large consumer electronics sellers in Hyderabad who are likely to lose over a crore each if the payments do not come by," said Harish adding that a lot of other consumer electronics sellers in his network have also stopped selling on Snapdeal for some time now.

AIOVA, in a letter to Nirmala Sitharaman, minister for commerce and industry, had estimated that on any given month, Snapdeal holds between Rs 300 and Rs 400 crore in the form of outstanding dues and goods in transit or refunds.

"Our constituents (sellers / vendors) are now having a sense of credit risk while dealing with this company due to the past experience in losing money and no immediate relief in case of Askmebazaar and other marketplaces," the association said.

While credit risk is one key area of concern, according to e-commerce sellers, transparency in operations is another major issue.

"For instance, Snapdeal is cancelling our order after the product is already shipped. Then they charge us with the 'out of stock' penalty by saying we did not ship the product. What is surprising is as per the Snapdeal terms, if in any case, we fail to ship the product then Snapdeal will charge 250% of the marketing fee as a penalty. But there are instances of them charging 700% to 800% of marketing fee as penalty," said a vendor, adding that the seller support team directly rejects all their claims without providing any proper resolutions or reasons.

That's not all, said Sanjay Thakur, president, E-Commerce Sellers Association Of India (a group of over 1,500 sellers from across India), Snapdeal has been dilly-dallying payments everytime they get due. "While payments are delayed, Snapdeal is also debiting our account without giving any reason. That's not all, our association members are also having a tough time dealing with fake returns on the e-marketplace," said Thakur.

When contacted, Snapdeal spokesperson denied all the concerns. "There are no overdue payments to either the sellers or vendors - any speculation to the contrary is without any basis. All payments have been made in time and will continue to be paid on time as per contractually defined payment cycles," the spokesperson said in an email response to DNA Money queries.

On transparency related issues, the spokesperson said, "There is full transparency with regard to the scope of work, charges and timelines - all terms with sellers and vendors are recorded in writing, through purchase orders / contracts, which are mutually agreed and all business dealings are conducted within this framework."

As for issues related to return of goods, the spokesperson said, "Where the returns are not due to any fault of the seller, the cost incurred in shipping and returns is shared between the seller and Snapdeal, as per standard industry practice."

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