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Buyer beware? e-marketplace AskMe edges towards shutdown

businesspaper Updated: Jul 01, 2016, 06:22 IST

NEW DELHI: Madhura Naik ordered a queen-size bed from e-tailer Mebelkart for ₹40,000 two months ago. But, she still sleeps on the floor. And it’s not by choice.

Naik hasn’t received the bed, which was supposed to be delivered within a week. Several stern phone calls to the customer care haven’t helped. “Every time I called them, they would raise a new ticket,” Naik said.

She recently got a message from Mebelkart, a subsidiary of online marketplace Ask Me, that her order has been cancelled. “They didn’t mention by when I will get my money back,” she said.

Hina Chandna, a research scholar, ordered a watch last year, but never received it.

Naik and Chandna are just two among thousands of customers who never received the products they ordered on both AskMe as well as Mebelkart.

Little did these consumers know that the company was counting its last dollars.

Malaysia’s Astro Holdings, which holds 95% in AskMe, has decided to withdraw from future investments owing to poor performance. Ask Me’ s management has decided to go for a buyout of Astro’s share, but the minority holders have not been able to raise the money.

AskMe might be the first marketplace, selling everything from grocery to furniture, to shut shop. An Astro spokesperson told a financial daily that despite best efforts of the board and management, Ask Me didn’ t meet targets.

Meanwhile, an AskMe official confirmed that it owes $50 million (₹300 crore) to merchants. It took money from customers, but never passed it back to the merchants .“My payment of ₹8 lakh is due… I have sent them emails and messages ,” said Rohan Chitalya, a furniture seller .“On Tuesday night, I was threatened by Rahul Agarwal, owner of Mebelkart of dire consequences if I went to the media, or the police.”

A computer accessories seller did not wish to come on-record fearing AskMe will not even make partial payment of the dues in tune of ₹70-80 lakh.

A source said some employees have received only half month’s salary in June. Another furniture merchant said AskMe is likely funding operations with the sellers’ money. It has fired about 650. “Why would they hold back our money, otherwise? They tell us that an audit is underway and the money will be given after three months,” another seller said.

A company spokesperson said, “No one is available to talk to the media as of now… They are travelling to meet investors .”

AskMe has not been able to raise a single penny in the last one year. In June 2015, Manav Sethi, AskMe’s CMO, has said the company will raise $100 million, or go for a listing on the international bourses. In February, the company said it will soon raise $150200 million at $1 billion valuation. But the money never came.

Throw in the buyout— even at half of the desired valuation, at $500 million — the management will need $450 million to buy Astro’s share, $50 million to pay seller dues and about $50 million to run operations. For a company, which has never even raised $100 million, this amount seems like too big a dream to come true.

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