Snapdeal ups the ante with advance payments to sellers

NEW DELHI: Snapdeal, the e-commerce giant backed by SoftBank and Alibaba, will soon launch a scheme where sellers will be able to receive payments for cash-on-delivery orders, even before the product gets delivered to the consumer’s doorstep.

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The company will roll out the “early payment options” next week, an official said. Once implemented, the seller will get the money three days before the delivery date. For merchants, this will mean payments between four and seven days, compared to the current 15-20.

There are around 300,000 sellers on Snapdeal. The e-tailer is in talks with two banks to provide for the advances, since the company cannot itself disburse money before delivery according to Reserve Bank of India (RBI) regulations.

Snapdeal’s move comes at a time when the country’s largest e-commerce major, Flipkart, is facing protests from sellers for making delivery and returns more expensive. Other marketplaces, including AskMe and Mebelkart, are also delaying sellers’ payments.

“The advance payment is a great relief for merchants,” said Sanjay Thakur, president of eSeller Suraksha, a body of over 1,500 merchants who sell on various platforms. Incidentally, eSeller Suraksha has been leading the protest against Flipkart.

Snapdeal will also provide advances or extend credit terms for the amount of the order though Capital Assist, the company’s payment arm which offers short-termloansto sellers.

Sellers can avail the new scheme at an additional fee of 0.5%.

“Sellers can choose the payment cycle for which they want to avail the service. In case of a return, the amount will be adjusted in the next cycle,” a Snapdeal spokesperson said.

A seller who sells mobile accessories worth ₹1-2 lakh every month on Snapdeal, Flipkart and Amazon put together, said an advance on cash-on-delivery is unheard of in the industry. “My experience with Snapdeal has not been great with payments, but things are changing.”

Snapdeal should bring down the advance time to the day the product is shipped, instead of three days before due date, Thakur said. “It will be help sellers to manage working capital, especially the small ones… A lot of sellers will move towards Snapdeal if that happens.”

Sellers are the new battleground for e-commerce companies. Amazon reduced commissions by 20% to 58% for many product categories. Paytm is helping sellers source cheaper products from China.