Exclusive: Irate Snapdeal Sellers Rise Against The Etailer Over Withheld Payments & Irrational Penalties

“At Snapdeal, we are committed to create life changing experiences for more than 1 million sellers by 2017,” said Vishal Chadha, senior vice president, market development, Snapdeal, when the ecommerce giant announced the launch of its ‘Professional Services Panel’, last year in November, to strengthen the ecosystem for its sellers. However, the sellers on Snapdeal’s platform seem to be far from being satisfied with the etailer’s services.

A constantly growing group of Snapdeal sellers have rose up against Snapdeal, accusing it for withholding their payments – as prior recoveries – and charging them huge and irrational amounts as penalties for minor infractions. Sellers from all across the country are raising their grievances and some of them have been making the rounds of the Snapdeal’s Gurgaon office, hoping the company would hear them out and settle their issues.

Sanjay Thakur, the owner of a firm called Cyber Space in Jaipur, created a small WhatsApp group in February this year to provide a platform for the sellers in Jaipur to share the issues they are facing with Snapdeal. However, within a few days, the group was joined by over 80 sellers – and constantly growing – across the country, sharing their woes. There’s another WhatsApp group created this evening which has over 100 sellers.

Sanjay – who himself is one of the affected sellers – told Inc42 that the sellers are coming up with two key issues. One group of sellers have their money deducted from their seller accounts by Snapdeal, stating it was recovery for a prior overpayment from Snapdeal’s side. However, the sellers claim there are no records backing the same and the money was deducted without any intimation. The other group have been randomly penalized heavily – starting from a few lakhs to tens of lakhs – for mistakes such as delays and damaged goods, without any intimation.

Sanjay, as well as the other sellers, seem to be wondering on what basis the company comes up with such penalties. They claim that there are no guidelines or policies on the basis of which these ridiculous amounts are being dictated. “If Snapdeal can charge them so heavily for minor mistakes, then even the sellers should be able to penalize Snapdeal for the mistakes from the company’s end,” says Sanjay, jokingly.

A few of them were penalized for the fact that their products were fake, without any proof that their products were fake. In one instant, a seller sold products worth INR 8 Cr via Snapdeal, after which his account was frozen and a huge penalty was slapped on him for selling fake products. He raises a valid question that if his products were fake then why was he allowed to sell on Snapdeal in the first place and why did Snapdeal wait for him to sell goods worth INR 8 Cr before finally stopping his account, withholding his money and slapping a huge penalty. Some even have their inventory withheld for months.

A website called Sellersuraksha.com has also been created by one of the jaded seller, as a moderated platform for these sellers to raise their issues. Another wary seller has been visiting Snapdeal’s office every day, for the past seven days and has finally created a Facebook group today called The Ecommerce Hustle, for the sellers to vent their frustration.

They have even reached out to Nikesh Arora and Masayoshi Son of Softbank on Twitter, as well as Ratan Tata. Both SoftBank and Ratan Tata are Snapdeal’s investors.

The sellers have also mailed a number of executives of Snapdeal and even Kunal Bahl, sharing their woes and seeking clarity on the same. A long list of sellers has also joined this trail mail today, however, no one from Snapdeal has responded back to these mails.

Here are the snapshots of the mails:

We reached out to Snapdeal to understand it’s point of view and Anup Vikal, CFO, Snapdeal said, “Sellers are a crucial part of Snapdeal’s ecosystem and we believe that our sellers play a critical role in creating a great experience for our customers. We are continuously working towards creating an enabling environment for these entrepreneurs. At Snapdeal, we are extensively using technology to improve the experience for our sellers- our seller UI upgrades, including Sherpalo are continuing efforts in this direction.”

“SD Advisors work very closely with their assigned sellers to assist them in conducting their business efficiently on our platform. We are implementing data driven financial tools, which will help us execute faster and accurate payments and reconciliation cycles,” he added.

The company has also announced that it has introduced new processes in its recently upgraded seller app to make its seller management systems more efficient. It claims that the refreshed seller interface, backed by integrated analytics, ensures concurrent screening for multiple financial transactions. According to the company, this process leads to an efficient settlement cycle enabling swift reconciliation of accounts and faster payouts to sellers. With the implementation of this process, seller payments processing will be faster and any disputes relating to financial and or product parameters will get flagged sooner and per well-defined parameters.

The etailer also revealed that the new processes have enabled Snapdeal to detect and suspend the accounts of 23 sellers, who were found to be indulging in irregular business practices.

Snapdeal, which has a current seller base of about 2.5 lakh, has been coming up with a host of seller enablement initiatives, including improved user interface, Snapdeal Ads, SD Plus Service, SD Advisor and Capital Assist. to strengthen the ecosystem for its sellers. However, incidents like this might be an indication that the execution of these initiatives might be flawed. Instead of catering only to its customers, Snapdeal should equally focus on its seller service and make sure that its basic system in place is rock solid and bring about more transparency in the processes involved.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.