SnackMagic Says Software Overhaul is to Blame for Vendor Payment Issues

Recently, a brand in the Startup CPG community reported substantial unpaid invoices with SnackMagic – a food and beverage delivery service focused on global group gifting. Additional brands commented about similar struggles getting paid, as well as difficulty getting a response from the company’s accounts payable team. Some had even severed ties with the company after lack of communication and inconsistent payments – with one even threatening to report them to business authorities. 

With over 300 brands – both big and small – listed on their website, we wanted to get the scoop on who’s got invoices left unpaid, and what SnackMagic plans to do to rectify the situation, so we went straight to the source. We spoke with Shaunak Amin, CEO of SnackMagic.Unfortunately, this is not the first time Startup CPG has reported on subscription box-style companies having issues paying CPG brands. See our coverage on Vices.com boxes here.

The Issue

On the CPG brand side of things, while some brands reported no issue with on-time payments, numerous brands reported issues getting paid or getting a response from the SnackMagic team. Responses from founders facing payment issues included (but are not limited to):

“We’ve been trying to get their help to figure out if it’s a reconciliation issue or a payment issue for 2 months now, and we haven’t made any progress with them”.

“It has not been a good experience in the past 3 years.”

“We’ve reached out to them on aging invoices for forever, and now I’m regretting sending in more inventory recently. They owe us a few thousand.”

“They finally just paid us after so much time, but you literally need to beg them to pay. It’s terrible. We are going to stop working with them I think.”

“They paid us about a month ago – 7 months late – followed up many many times, mostly didn’t answer until they finally paid.”

“We don’t work with them anymore because they don’t pay. They are awful and should be called out.”

“I have been trying to reach out to SnackMagic to get all the remittances information from January 2023 to date to reconcile our AR aging – still no response.” 

On the SnackMagic side of things, “We did a whole tech overhaul, and in that process, we didn’t do it right”, explained SnackMagic CEO, Shaunak Amin. “To put it simply: we could have done a better job, and I take full ownership of that. This caused a lot of misses in the reconciliation and the restocking.”

“We didn’t know anything was wrong until brands started pointing it out, and then we had to do the reconciliation, send payments out, but that whole process became a very manual process, and that caused some of these issues in terms of payments”, said Amin.

When asked if he was personally aware of the situation, Amin replied, “I did not personally know about it before June, but again, at that time I didn’t even know it was systematic. Neither did the AP team, so they were handling it on a case by case basis”, said Amin. “I take full ownership of it. I as a company take full ownership of it. The intention was never to get to this.”

SnackMagic has said their approach is not to proactively notify brands of the issues, but rather to respond when brands reach out about the payment issues. 

When Startup CPG began its inquiry in mid November, Amin reported the company had approximately 10% outstanding invoices. “As it stands today, we’ve gotten quite up to speed and now it’s less than 4% of vendor payments delayed because of the issues we experienced.”

What’s Being Done

“Our first goal is to just get everybody paid. We very much care about this community. And of course, action speaks louder than words. I understand that.” He paints a promising picture to brands by adding, “This should be a non-issue in two weeks.” Note: this conversation happened on November 25th, 2024.

The brand whose claim initiated Startup CPG’s coverage reported back to us last week that they had been paid in full, saying “SnackMagic has sent an apology and has cleared our pending payments. This is huge for us.” They had initially assumed they’d have to write off the entire five-thousand dollar sum as a loss. 

Another brand reported they have yet to get a response.

Update: On December 9th, the Startup CPG team was alerted by SnackMagic via email that all vendor invoices are now up to date. “As a quick update, we are happy to share that all payment issues have been resolved.”, said Kleanthi Batistatos, Chief of Staff at SnackMagic.

SnackMagic’s Outlook

We asked SnackMagic what their funding and cash runway looks like. “As of this point, we’re profitable, so the runway’s technically infinite”, said Amin, and went on to share that the company does “north of $20 million in revenue” each year.

What Brands Can Do

As SnackMagic is responding to requests for payment reconciliation, it would be appropriate for brands with outstanding SnackMagic invoices to reach out to them again. 

Startup CPG will continue to follow this story. Any brands that would like to contact us regarding this story or others, reach out to us at news@startupcpg.com.