A Taobao store owner from Qingdao, Shandong Province, browses her shop's website on Thursday. Taobao's B2C e-commerce website Tmall has received protests from tens of thousands of its retailers after it announced an up to tenfold hike in technical service fees. Photo: Xinhua
In a showdown over a controversial fee rise, small online retailers have reportedly taken to the street outside e-commerce giant Taobao's Hangzhou headquarters, after launching attacks against larger businesses operating on an off-shoot site.
Participating in a campaign dubbed "Occupy Taobao," named after the wave of sit-in protests in Western cities, at least dozens of business owners rallied Wednesday outside the company's HQ, various media reports said, showing pictures of people waving banners that condemned the company's new fee policy.
However, Taobao denied the protests had even occurred, saying the pictures were from events that took place years ago.
The incident was triggered by a new rule issued by Taobao's B2C platform, tmall.com, on Monday, which hiked annual fees for Tmall store owners from 6,000 yuan ($945) to between 30,000 yuan and 60,000 yuan, depending on the size of the business.
The new regulation also requires each Tmall store to deposit at least 50,000 yuan as funds to pay for customer compensation in cases of fraud or other consumer complaints.
Protestors said the new rule would force small- and medium-sized businesses out of Tmall and that Taobao did not inform them of the new regulation in time.
A large number of small retailers responded with a coordinated online attack against larger stores.
In a typical assault, a large number of Tmall shoppers placed a 24-hour-rush order on the same goods of a target store. When the store managed to deliver, the buyers would demand a refund, taking advantage of Tmall's 7-day return policy.
League Against Taobao, an online group of about 7,000 angry Tmall retailers participated in such attacks Tuesday, claimed that it had attacked 20 large Tmall stores.
On Wednesday, Tmall president Zhang Yong called the attacks "unjust," saying the company would not "tolerate or bend" to the attacks, the Beijing News reported.
Zhang said the fee hike was to "strengthen corporate management on Tmall, and stores with annual sales over 1.2 million yuan will have their fees refunded. This is the least a real company can do in a year."
He added that the company had alerted the police about these "malicious attacks" and would come to the aid of the large stores targeted.
Ma Yun, chairman and chief executive of Alibaba Group, which owns Taobao, said Wednesday on his microblog, "We will continue to do what we know is right. Even if it means turning friends into enemies."
Taobao launched its first C2C service in 2003. It claimed over 190 million registered users last year with daily sales reaching 700 million yuan.
Running a store on Taobao was free of charge in its early years. This earned the site the reputation of being a "paradise of startup entrepreneurs."
However, launched in 2008, Tmall meant serious business from day one.
"People have taobao.com confused with Tmall," the Beijing News quoted Zhang as saying. "Taobao.com will always be a paradise for people who want to start up from zero. But Tmall is for business on a corporate level."
Those against the new rule said it stabs small businesses in the back.
"Tens of thousands of (small) retailers brought you (Ma) success. They made you who you are. How can you betray them like this?" League Against Taobao said in a statement.
Meanwhile, some consumers are worried they may take the brunt of the changes.
"Eventually, our customers will pay the increasing fees," Wang Dandan, a regular Taobao buyer told the Global Times. "It is definitely not good news for us."
Chen Shousong, an e-commerce analyst at Beijing-based research firm Analysys International, told the Global Times that Taobao is doing this to promote fair competition by weeding out fraudsters.
"I don't think Tmall raised the fees for revenue purposes," Chen told the Global Times. "The mall is getting bigger and it only has a limited amount of service and resources for its stores. Meanwhile, Taobao is trying to reduce fake goods and build a high-quality mall."
Chen predicted that some mid- and small-sized retailers would stick with Tmall, while others may leave for less expensive platforms, bringing more business opportunities for other e-commerce operators.
Zhang Wei, a vice dean of the E-commerce Department of Central University of Finance and Economics, told the Xinhua News Agency that the latest incident showed China lacked legal and administrative expertise on e-commerce.
"In most cases, companies such as Taobao set up their own rules without guidance from authorities. Relevant government departments need to improve to cope with the development of China's e-market," Zhang said.
Hao Di contributed to this story