New set of sellers sue Snapdeal over non-payment of dues

New set of sellers sue Snapdeal over non-payment of dues
Photo Credit: Reuters
26 May, 2018

Two online sellers have filed court complaints in the National Capital Region (NCR) against e-commerce firm Snapdeal over alleged non-payment of dues, a media report said.

Bengaluru-based Veepee Electronics and Nagpur-headquartered Spacewood Furnishers have separately filed cases in a Gurgaon court and the Delhi High Court, respectively, against Snapdeal’s parent Jasper Infotech Pvt. Ltd, The Economic Times reported.

According to the court documents accessed by the publication, Veepee Electronics has alleged that Snapdeal owes it approximately Rs 5 crore and has demanded that products worth approximately Rs 15 crore be recovered from the e-commerce firm. Founders Kunal Bahl and Rohit Bansal are also made party in Veepee’s petition, the report added.

Veepee Electronics is a distributor of consumer electronic brands such as IFB, Philips, Bajaj, Whirlpool, Panasonic and others.

Another seller, furniture retailer Spacewood Furnishers has alleged that Snapdeal has to pay dues amounting to Rs 18 crore. In its complaint, Spacewood accused the e-tailer of neither paying for the products sold on the marketplace nor returning the goods procured from it, the ET report stated.

“At Snapdeal, payments towards our seller partners are processed, paid and guided by clearly stated policies. As per the records of the company, the claims pertaining to the two instances cited are not payable. Further, one of the claims made is pending arbitration and the other represents an attempt by the claimant to misuse police machinery to address commercial disputes. Snapdeal will oppose the claims and defend itself in the appropriate forums,” a spokesperson from the e-commerce firm told TechCircle in an emailed response.

This is not the first time that Snapdeal has faced ire from its sellers. In May last year, VCCircle reported that several of its online sellers filed petitions in court for non-payment of dues by the company.

In April 2017, 11 Snapdeal executives, including co-founder Kunal Bahl, were summoned by a Bengaluru metropolitan court over a complaint filed by Dream Events, which runs Bangalore Fashion Week. The company alleged that the e-commerce firm violated a financial contract and also owed it dues.

In February 2017, a group of sellers from Snapdeal-affiliated 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.

VCCircle had also reported last year that scores of seller disputes can be traced to data discrepancies in Snapdeal’s seller management function, including data loss and technical bugs.

However, Snapdeal has focussed on turning a profit and is understood to have reduced its sales even further in the current financial year after walking away from a planned merger with bigger rival Flipkart in July last year. After months of negotiations, Snapdeal scrapped the proposed merger and had decided to tweak its business model, cut costs and slash headcount in a bid to revive its fortunes. In the same month, Snapdeal sold digital payments unit FreeCharge to Axis Bank. 

Earlier this month, the company sold its cloud-based inventory management subsidiary Unicommerce to Infibeam Incorporation Ltd.

The e-tailer also failed to raise fresh funding after its biggest shareholder, Japan’s SoftBank Group, declined to invest in the firm and went on to fund Flipkart.

At its peak, Snapdeal was valued at more than $6 billion and was considered to be a close competitor to Flipkart. Since 2015, it has, however, lost its second position to Amazon and has consistently been losing market share.

Snapdeal reported a 26% drop in consolidated revenue for the financial year ended 31 March 2017 as it continued to struggle in the wake of mounting competition. Its consolidated revenue fell to Rs 904 crore in 2016-17, the firm’s filing with the Registrar of Companies showed. That’s down from consolidated revenue from operations of Rs 1,214.3 crore in 2015-16. Its total consolidated revenue, including other income, was Rs 1,506.8 crore in 2015-16.