Speaking with Medianama, online shopping portal Naaptol.com claims that it does not own any warehouse or any inventory and thus Naaptol is not in any violation with any department.

It also said that Naaptol is only a marketplace and the violation that has happened is through vendors and not through Naaptol. Naaptol also claims that the vendors own their inventory and have their own warehouses. The entire responsibility of the products rests with vendors and not Naaptol.

Earlier this morning,  Times of India had reported that Naaptol’s warehouse in Bowenpally, Andhra Pradesh was raided and the officials seized over Rs 1.26 crore worth products including laptops, cameras, home appliances and toiletries. The legal metrology officials have booked a total of 54 cases against Naaptol and Pentagon Logistix.

The raid was carried out by legal metrology officials on Pentagon Logistix warehouse on a specific complaint. The details of this complaint were not disclosed. The officials who carried out the raid states that the company claimed to sell product worth Rs 2000 for just Rs 200 while the actual price of the product was not more than Rs 200 as the products were all imported from China, as indicated by the report. What’s surprising is that Pentagon Logistix had apparently replaced the original price tags with their own and didn’t mention the details of the product manufacturer and importer.

What’s worth noting is that Naaptol follows a market-place like model and sells products across various categories including mobiles, cameras, electronics, kitchen appliances, jewelry, apparel, books and others. The company had also launched a private sales site  Naaptol Club offering deals on  fashion apparels like denims, formals and accessories like sunglasses, watches and perfumes from different brands including Guess, Levi’s, Numero Uno, Puma, Revlon, among others.

The company had raised $25 million (Rs 122.5 crore approx.) in an all cash funding round led by New Enterprise Associates (NEA), with participation from earlier investors Canaan Partners and Silicon Valley Bank in October 2011. Prior to that, it had  raised Rs 33 crores from Canaan Partners in 2010.

In April 2013, Timtara.com CEO Harish Ahluwalia and Director Arindam Bose were arrested on allegations of fraud amounting to Rs 12 lakh. The police had said said they had received complaints from around 200 buyer, and three complaints have been registered with the Economic Offences Wing and Janakpuri Police Station. Apparently, payments were made through credit cards, but the goods were never delivered, and TimTara shifted its office (within Noida) and subsequently shut down its call center to avoid complaints.

In India, it has taken a lot for E-Commerce companies to gain the trust of the consumers. Frauds like these might turn off consumers from E-Commerce segment, which is already in a bit of a soup to become profitable. However, it appears that Naaptol’s case indicates the pitfall of a marketplace model.

Update: Error in headline has been corrected.