Snapdeal drops contentious clause in sellers’ contract
Tax planning:
NEW DELHI: Snapdeal in last October dropped a clause from the contract with sellers that authorised it to influence pricing on its platform, barely a month after brick-and-mortar retailers went to the Delhi High Court, alleging violation of foreign investment rules by ecommerce companies.
An updated Snapdeal Seller Agreement, the company communicated to sellers in October, didn't have a key clause that the previous document had. The provision had authorised it to "discover and display" prices payable by the buyer based on "competitive pricing prevalent in the market."
According to the October communication, the new agreement would be effective from October 15, 2015, and any seller continuing on the marketplace after that date would be considered as having accepted the conditions. It termed Snapdeal as an intermediary between the seller and the buyer.
The earlier version of the "Snapdeal marketing and distribution agreement" with sellers also stated the company reserved "the right to run promotions offering several benefits/discounts to the buyer on the website".
The agreement was changed just after the Delhi High Court in September 2015 observed that there had been "a prima facie violation" of foreign investment regulations by ecommerce companies, on a petition filed by the All India Footwear Manufacturers & Retailers Association.
In a response to emailed queries on the matter, a Snapdeal spokesperson said: "We work closely with our sellers to help them derive maximum benefit from the marketplace. We update our seller agreement as per changing business requirements and market developments." The spokesperson did not respond to a specific query about the reason for the update in the agreement and the removal of the clause in the revised agreement.
Over the past few years, brickand-mortar retailers have been demanding a level playing field with ecommerce rivals, which have been wooing away Indian consumers with heavy discounts.
In March, the Department of Industrial Policy and Promotion came out with guidelines for foreign investment in ecommerce.
The rules bar marketplaces from influencing prices in direct or indirect ways. Snapdeal's revised agreement considers selling price as a bipartite contract between the buyer and seller.
An updated Snapdeal Seller Agreement, the company communicated to sellers in October, didn't have a key clause that the previous document had. The provision had authorised it to "discover and display" prices payable by the buyer based on "competitive pricing prevalent in the market."
According to the October communication, the new agreement would be effective from October 15, 2015, and any seller continuing on the marketplace after that date would be considered as having accepted the conditions. It termed Snapdeal as an intermediary between the seller and the buyer.
The earlier version of the "Snapdeal marketing and distribution agreement" with sellers also stated the company reserved "the right to run promotions offering several benefits/discounts to the buyer on the website".
The agreement was changed just after the Delhi High Court in September 2015 observed that there had been "a prima facie violation" of foreign investment regulations by ecommerce companies, on a petition filed by the All India Footwear Manufacturers & Retailers Association.
In a response to emailed queries on the matter, a Snapdeal spokesperson said: "We work closely with our sellers to help them derive maximum benefit from the marketplace. We update our seller agreement as per changing business requirements and market developments." The spokesperson did not respond to a specific query about the reason for the update in the agreement and the removal of the clause in the revised agreement.
Over the past few years, brickand-mortar retailers have been demanding a level playing field with ecommerce rivals, which have been wooing away Indian consumers with heavy discounts.
In March, the Department of Industrial Policy and Promotion came out with guidelines for foreign investment in ecommerce.
The rules bar marketplaces from influencing prices in direct or indirect ways. Snapdeal's revised agreement considers selling price as a bipartite contract between the buyer and seller.