Online Vendors Complain Rs 300 Cr Stuck With Snapdeal; Ministry Jumps In To Rescue Them
In a major embarrassment, Ministry of Commerce has jumped in to investigate complaints against them Snapdeal, made by online vendors and sellers. As per the complaints made, an association of online sellers’ have claimed that Rs 300-400 crores are at risk with Snapdeal, and they are afraid that their money will not be recovered.
When Commerce Minister Nirmala Sitharaman heard these complaints, she assured that Ministry of Commerce will investigate the issue, and bring justice.
She said, “.. A lot of people have approached me on the issue. We need to examine whether it is a case of some commercial transaction gone wrong, or it is some violation…there are too many angles to the issue..”
Incidentally, she made these statements during the ongoing conference on Competition Law, which is being organised by fair trade regulator Competition Commission of India.
Minister has assured that she is working with other Ministries as well, and will soon resolve the issue.
Rs 300 crore At Risk With Snapdeal?
Last week, Snapdeal announced that they will fire 800-1000 employees, due to cost cutting measures. The e-commerce company have no cash left, and they need to trim down, in case they want any future funding.
As soon as the official announcement was made, All India Online Vendor Association (AIOVA) issued a warning statement, that their members have long pending dues with Snapdeal, and they are afraid that their dues would be never returned.
In a statement, AIOVA said, “Ancillary industries like logistics, e-sellers, among others have already laid off a lot of workforce in the past months. We are scared that Snapdeal may not make the payments, which were collected by them in the past month, on behalf of sellers. Our estimate is approximately Rs 200-300 crore is at risk..”
In their reply, Snapdeal assured that every payment would be made. They said, “There is absolutely no connect between the steps taken to rationalise the team and routine business operations, including regular payment of seller dues”, adding, “Any apprehension in this regard is without basis. Business at Snapdeal continues to grow steadily towards profitability and all sellers dues continue to remain fully secure, as at all times.”
Snapdeal, infact, asked all sellers to contact the company directly, rather than issuing press statements.
However, it seems that the sellers’ association has directly contacted Ministry of Commerce, and some action would be taken against them.
Snapdeal Is A Sinking Ship?
There are reasons why online sellers are scared now, especially after their money is blocked: Snapdeal is almost like a sinking ship, and nothing is ruled out.
Including its closure.
Sample this: Snapdeal has repeatedly claimed that they have over 3,00,000 sellers on their platform, but the reality is something else.
As per a report, almost 90% of these ‘registered sellers’ are nothing but just blank accounts, with PAN Card and TIN Number of offline merchants. These ghost accounts have never carried on any transactions in the last 12 months.
As per insider sources, only 10% or 30,000 sellers are actually active, Snapdeal has decided to focus only on these 10% of sellers.
Besides, as per another report, Snapdeal has only $100 million left in their bank accounts, and the situation is pretty scary at the moment.
No doubt that the online sellers, who must have invested quite a sum into Snapdeal, are now taking help from Commerce Ministry for recovering their dues.
We will keep you updated as the story unfolds..