Askmebazaar & Mebelkart strapped for cash; Blame investor for inability to pay Sellers!

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It’s been almost a year now that a great deal of online sellers on Askmebazaar and Mebelkart, its subsidiary, have not been paid for the goods sold on these platforms. Since october of last year sellers on these two platforms have been pleading for their money.

Delayed payment is not new?

Two sellers revealed to us delayed payments were not uncommon on Mebelkart, however by withholding payments online sellers feel their patience has been tested enough.

When asked about the marketplace’s response to both sellers grievances, they each were promised they would be paid soon enough. However, both are still eagerly waiting.

Following is a thread of tweets from one of the two online sellers about the issue:

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I have discontinued selling on their (Askme Group) e-marketplace but there are quite a few vendors who are stuck and chasing their payments,” said Vinod Narwani, a leather-based accessories seller. He too experienced delayed payments like so many others.

How much do the online platforms owe?

With a sizeable portion of online sellers not willing to disclose what’s owed to them or their names, it is difficult to determine how much the marketplace actually needs pay. Neither of the online marketplaces has released the amount they owe to their sellers. But based on these claims from sellers it isn’t surprising why online sellers are distraught.

An online seller from AIOVA said, When we call, the company executives say they don’t have money to pay. They say the company is expecting some funding and once that happens vendors can expect some payments.”

HouseFull International, a furniture brand, no longer sells with Mebelkart because the company hasn’t received an outstanding sum of Rs.29 lakhs. The amount owed has accumulated over the last year and hasn’t been paid till today.

he furniture company’s managing director, Akshay Chaturvedi said, “Mebelkart has not assigned us any reason for not paying. They have not responded to any of our email communications/notices asking for the payments.”

ESS President, Sanjay Thakur revealed, one of its members from Mumbai, has been derived of Rs.6.40 lakhs. Askmebazaar owes a multi-category seller, from the same association, Rs.20 lakhs and another seller dealing in mobile phones Rs.1.80 lakhs.

Marketplace Response

Askmebazaar and Mebelkart said they are planning a management buyout with new investors. Through a spokesperson, the ecommerce players said, “We (the current management, along with investors) have already made a formal bid and our management buyout is (going to be) settled with the cut-off date of July 31 with a backer.”

The spokesperson said, the sum owed is varies across the Askme group’s different platforms, Askmebazaar, Askmegrocery, NDD, etc. They have spoken with investor, Astro Holdings to expedite these payments. Astro has a 98% stake in the Askme Group. The investor has pumped 1,700 crores into the group in 5 years.

As for the delay in payment the group blames the investor by claiming they already informed them about a management buyout and have requested the old investor, i.e. Astro to settle the dues they owe according to old commitments.

When can sellers expect to get their money back?

The old investor Astro has been making regular investments to the group until June 2016 claimed the platform’s spokesperson. “They have already exited FoodFood and are in the process of exiting others. They are already charge-sheeted by the CBI in the Aircel-Maxis case. They also had to exit Indonesia for the same charges,” they said.

That’s not good enough!

According to Thakur from ESS, “This non-payment of dues to the sellers has been going on for almost a year now. If Askmebazaar and Mebelkart continue to delay payments it will affect more than just their reputation. The whole ecommerce industry will suffer in a way. Online sellers will have doubts about collaborating with startup marketplaces. As for the existing big players in Indian ecommerce, online sellers will constantly wonder when these marketplaces will do the same to them.”

As we already know new commission policies have been rocking the ecommerce boat. Lack of finances may be causing them to collect more commissions but taking away all their money now isn’t that unfair?

“This is the seller’s hard earned money,” Thakur explains, “but most of them refuse to state their claims to the media because they fear the marketplace will delay their payments even further. The sad part is most of them are suffering from the same problem.”

“Despite this it is the marketplace’s duty to return what they owe. What have they done with the payments they’ve collected?” Thatkur stated, “The marketplaces must pay back in full. If not they have to send back the material sold. Askmebazaar and Mebelkart as online marketplaces are only liable to claim commissions not the entire amount of sales.”

Explanation for the delay and lack of finances

Due to the buyout taking place, a delay in the payment may occur and as a result of the process the company is undergoing limited availability of cash may is also expected. With a firm buying out, the marketplaces should be receiving cash once the necessary transactions are complete. It may take weeks or even months before payments start coming in.

With the issues related to dried up investment funds, how is it possible for Askme to acquire additional funding right now. Lack of new funding could also be a reason for the delays.

Hard core advertising and marketing of up to Rs.350 crore in 2015 with Bollywood stars endorsing the marketplace may have resulted in the drastic dip in finances too. An ad campaign was also launched in February for the launch of askmegrocery.com.

Whatever this reason may be, the online sellers the marketplaces are indebted to are wondering what happened to their money. The lack of response to their queries is making them wonder if the Askme Group is actually in trouble! And if they are what will become of the money owed to the sellers?

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1 Comment

  1. Manoj Reply

    Dear Sellers

    Narendra Modi government is listening here http://pgportal.gov.in/pmocitizen/Grievancepmo.aspx

    post all grievance and problems to modi government.

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