Taobao Mall has been hit by cyber-attacks from small merchants after the e-commerce website increased fees it charges online store operators by at least five-fold.
China’s Xinhua news agency reported that thousands of small merchandisers “waged war” Tuesday night against larger companies selling on Taobao Mall by submitting large orders then asking for refunds, or by filing phony complaints against their larger brethren to tarnish their customer ratings.
Several dozen brands, among them Japanese clothing company Uniqlo and Chinese clothing stores Handuyishe and Qigege, were hit by the attacks. On Wednesday, around 40,000 people calling themselves the “temporary anti-Tmall union” gathered in an online chat room to discuss other ways to disrupt operations on Taobao Mall (www.tmall.com), according to Xinhua.
The protests erupted after Tmall on Monday implemented several new policies aimed at improving the quality and service of independent merchants operating on the platform. Among the changes was an increase in annual technical service fees from 6,000 yuan ($945.2) to two new packages costing 30,000 yuan ($4,726) and 60,000 yuan ($9,452). Tmall also started requiring merchants to put down liability deposits of up to 15,000 yuan ($23,629) that could be forfeited if sellers failed to live up to standards written into their contracts.
Small merchants complained that the new fees are punishingly high given their revenue streams, while largerretailers with high sales volumes are better able to absorb the increases.
China’s largest B2C (business-to-consumer) platform by transaction value, Tmall has been steadily trying to boost the size and professionalism of retailers using its platform, which was launched in 2008. As online shopping has boomed in China, consumers have been plagued by growing online fraud and fakes being sold over the Internet, along with poor service. According to the China Internet Network Information Center, one out of every 12 online shoppers reported they were defrauded in the first six months of the year.
Unlike its sister platform Taobao Marketplace, which hosts hundreds of thousands of small merchants selling inexpensive goods, Tmall is positioned as a website for branded goods and higher-end merchandise. It requires its members to abide by basic service standards, including guaranteeing the authenticity of their products and providing seven-days-no-questions-asked exchanges or refunds. International brands operating flagship stores on the site include Adidas, Levis, Gap, Jack&Jones among others.
Tmall officials said the fee increase was designed to drive away inferiorretailers offering shoddy products, noting the fees will be fully or partially returned to sellers if their scale and service quality meet targets set by Tmall. “We hope to encourage businesses to conduct self-inspections to improve their service,” said Tmall President Daniel Zhang at a press conference held Wednesday in Hangzhou, where Tmall’s parent company, Alibaba Group, is headquartered.
“Why do people breach the contract willfully?” Zhang asked, according to a story on ZDNet Asia. “It is because the cost of violation is too low. In fact, it is a form of unfairness to merchants who operate honestly. Therefore, we will use financial measures to resolve this problem by increasing the cost of violation” by deducting penalty payments from liability deposits. “The increase in the deduction will be much higher than in the past so as to propel the business to raise their service standards,” Zhang said.
Small businesses unhappy with the higher costs can always switch to Taobao Marketplace which charges no fees, Zhang noted.
Alibaba Group Chairman Jack Ma also weighed in on the controversy in comments posted on his widely followed Weibo blog. Obviously shaken that the protestors had resorted to cyber-attacks, Ma wrote: “In China today, it is hard to be a businessman, harder to be an honest businessmen, and even harder to establish a trust and credit system.” But he vowed Tmall would not back down from the fee increase. “We must follow through,” he wrote.
