Snapdeal-Flipkart Deal May Falter As Sellers Demand For Unpaid Dues

Sellers that work with the online marketplace Snapdeal have raised concern to All India Online Vendors Association (AIOVA) about non-payment of dues by the ecommerce marketplace. They have requested the authorities to seek a stay on the merger of Snapdeal with Flipkart, until there dues are settled.

As per an ET report, the sellers are now pushing AIOVA to seek help from the corporate affairs ministry and the commerce ministry. Last week Snapdeal agreed to sign a non-binding Letter of Intent (LoI) for the merger. The group has also said that it will consider filing a civil complaint to bring a stay on the sale.

Commenting on the non-payment of dues a Snapdeal spokesperson said,  “Payments to sellers are made as per pre-defined payment cycles and these continue to be made per normal practice. It should be clear that payments are made only as per contractual commitments & in accordance with seller policies. Robust grievance redressal mechanisms exist to address any escalations from individual sellers.”

In March 2017, the AIOVA said that small online sellers were still waiting for their dues to be cleared by Snapdeal. The online marketplace has allegedly not cleared the payments for eight months.

At the time, it was stated that the All India Online Vendors Association (AIOVA) conducted a survey to ascertain the pending dues and the value of the merchants stock lying at its warehouses. About 2,100 members participated in the survey and, as per their responses, the estimated outstanding dues were about $182.4K (INR 1.2 Cr).

It was further reported that the AIOVA had sent a mail to MCA secretary Tapan Ray and commerce minister Nirmala Sitharaman on Monday May 15, 2017 about the recent concerns. An AIOVA spokesperson said: “Most of the sellers have stopped selling on Snapdeal. But at least 500 members still have uncleared dues from before and they are worried if the payments will be made if Snapdeal is sold.”

Apart from this, the association has also requested to “hold the winding down/sale/merger of the above mentioned company subject to approval by 75% of sellers doing active business on the platform.”

The letter also cites an example of the previous case of online platform Askmebazaar that shut down, without paying the seller dues. During the AskMe matter, enraged vendors approached the Economic Offences Wing to register a case against the company.

The spokesperson further added, “We need assurances that payments will be made by Snapdeal or the merged entity. We will file a civil complaint asking to stop the sale of Snapdeal till it clears sellers’ dues.”

After mass layoffs in February 2017, a group of online sellers reportedly asked the Commerce Minister Nirmala Sitharaman to intervene in the matter and safeguard their money that Snapdeal holds in the form of outstanding dues. In March 2017, Nirmala Sitharaman stated that she will look into the matter and inquire into the vendors’ complaints of default payments by Snapdeal.

Earlier today it was reported that SoftBank, after convincing Nexus Venture Partners and Kalaari Capital for the deal, is now looking to obtain the final nod from the family offices of Azim Premji and Ratan Tata.