India’s one of the old timers in online retailing Indiaplaza, seems to be going through rough patch. As per various sources, the company may be struggling with cash flow situation with debt and is looking for a ctrl-alt-del to restart its operations with fresh funds.
Like many other Online Retail companies, Indiaplaza also works with sellers on credit, with total payable amounting upwards of Million USD. As per some of the sellers we talked (on condition of anonymity), the company is now offering them a choice to settle dues @ 50% of total value. This, as mentioned by sellers, is an attempt to clean up company liabilities so that it can raise fresh capital. In lieu of these settlement the sellers are asked to provide a No Due Certificate to the company.
It is also stated, that similar process was adopted by Indiaplaza few years back, when an investor finally underwrote all seller liabilities of the company.
On contacting Vaitheeswaran, CEO, Indiaplaza, to know the exact scenario of Indiaplaza, he neither accepted nor denied the information and said, “We are always in discussion with vendors on various matters, that is confidential, we can’t disclose in Press.”
As per the Alexa rankings, the traffic on Indiaplaza has fallen dramatically in last 6 months.
The company is certainly looking to raise funds from last few months, and in words of Vaitheeswaran it is difficult to raise funds in this market, he also said that Indiaplaza will be raising funds in a short span of time. But according to one of the ex-employee of Indiaplaza, the company had already raised a round from a big brand and the above activity is to clear up the dues and start fresh.
This is not something new for Indiaplaza, before also in 2011, prior raising funds the company has merged two of entities (Indiaplaza.in and Indiaplaza.com) into single brand i.e. Indiaplaza.com in February and later on in April it had raised $5 million in funding through a fresh issue of equity, from NEA – IndoUS Venture Partners.
Vaitheeswaran founded the company, at that time it was known as Fabmart.com. In 2002, the name of the company was changed to Fabmall, which had two business formats i.e. an online platform and an offline chain of grocery stores. In 2006, the Aditya Birla Group acquired the Fabmall chain of grocery stores, known as the More chain of stores. After this the name was changed to Indiaplaza.com. In January 2007, Fabmall.com acquired US-based Indiaplaza.com and created India-centric online shopping company with two distinct websites, Indiaplaza.com to serve customers in the US, and Indiaplaza.in to serve customers in India. In February 2011, the company merged both websites into a common single website, Indiaplaza.com to serve customers worldwide.
Sellers on receiving end
With growth on ecommerce in India, all major online retail companies were supported by sellers, selling their products at the back. Right from Indiatimes, Rediff, days and till today when marketplace is a common trend, it is the sellers who back product demand of ecommerce. However somewhere in rush of ‘consumer satisfaction led valuation, these sellers are getting ignored.
Though all companies claim to have seller protection program, but sellers are generally left out in conversation. Recently when Timtara.com issue surfaced, there were many sellers with their money stuck with Timtara; however, market talked mostly about consumers. Iamwire believe that sellers play a very important role in ecommerce ecosystem and there must be programs to neutrally help sellers against these issues either by consumers or online retail cos.