Snapdeal, the homegrown e-commerce startup which was once competing against Flipkart and Amazon for a larger market share in India, is now hanging by a thread. The company is having some serious capital issues and has handed out pink slips to a huge chunk of its workforce just recently. As if that was not enough, the online sellers on its platform seem to have lost trust in the company as well.
As per the report from ETTech, online sellers of Snapdeal have urged commerce minister Nirmala Sitharaman to intervene to ensure troubled e-commerce company Snapdeal pay their dues. The All India Online Vendors’ Association (AIOVA), which represents 2,000 sellers on different e-commerce platforms, wrote a letter to Sitharaman stating that Snapdeal is not paying the sellers, citing technical issues.
The Association has also urged to set up a regulatory body for e-commerce, like TRAI for telecom and SEBI for markets. It said:
You can see how data is being manipulated, (and) wrong and late penalties (are) imposed just to debit the sellers.
According to the report, this is the second time online vendors have sought Sitharaman’s interference in their dispute with Snapdeal. However, the e-commerce firm isn’t the only company that AIOVA has concerns with. The letter also highlights non-payment of dues by BestDeal TV, a home shopping channel owned by Shilpa Shetty and Raj Kundra. In December 2016, the company had temporarily suspended operations after seeing a drastic drop in the business. After that, Raj Kundra resigned as its Chief Executive Officer.
Snapdeal has been hit hard, mainly due to mounting losses, and the rapid growth of rival Amazon. It is also facing problem in retaining its top leadership managers due to lack of growth as well as fresh capital. Recently, the company laid-off nearly 600 employees and the founders decided to take 100 percent salary cuts. This move is aimed at cutting down its burn rate and gunning for profitability in the next two years.
The Gurgaon-based company is also said to be in talks with PayPal to sell its payments platform Freecharge for around $500 million. Notably, Snapdeal acquired Freecharge for around $400-450 million in 2015. It seems that Snapdeal is selling Freecharge to get the much needed financial help as it has not been able to raise further funding to keep the company running.
