Tmall Crisis

Thousands of small merchandisers waged war Tuesday night against larger companies on tmall.com, after the platform announced that it would raise its service fees fivefold on Monday.

Zhang Wan 1 has the story.

 

On Tuesday night, thousands of small merchants "attacked" Tmall, China's biggest business-to-consumer platform, with a flood of traffic and fake orders that crippled many of its individual sites.

The protest came in response to a recent decision by Tmall, a subsidiary of the Alibaba Group, to charge higher annual fees to merchants.

Tmall said on Monday that merchants have to pay an advance deposit of at least 50,000 yuan to protect against contract violations 2. The new rules also raise the fee for technical services from 6,000 Yuan to 30,000 or 60,000 yuan for various Tmall merchants.

Under the new policy, larger businesses will barely be affected 3, as the fees take up only a small part of their sales. Medium and small traders however, may feel a financial pinch.

Zhang Yong, president of Tmall, says the company hopes to encourage businesses to conduct self-inspections to improve their service.

"We've upgraded our service system. Most people are focusing on the fact that we've raised the annual fees, but the most important thing is that we've established business standards. As long as the merchants meet annual transaction volume targets and provide a better service, they will get their money back. Definitely, we want to cooperate with the qualified 4 businesses, because what we pursue are service and quality, which are also the customers' requirements."

Zhang explains that small-sized businesses have the option of entering the Taobao Marketplace, or taobao.com, a consumer-to-consumer platform that does not charge service fees at all.

But one of Tmall's small sellers, Chen Xiaobei, who has tried to call the service hotline to express his complaints, says that small businesses would not accept Zhang's solution.

"What we've got is half an hour of music and the words saying that they've written down our suggestions and will hand them in. We can't make our voices heard through the normal channels, so we did the only thing that we can do."

Tmall approved the entry of businesses regardless of size when it first opened in order to secure rapid expansion. But customers have repeatedly complained about cases of fraud and the sale of counterfeit 5 products, demanding that the company take action. But experts suggest that measures should be taken gradually; otherwise merchants as well as the e-commerce industry as a whole will suffer. Expert Fan Feng gives his opinion.

"Tmall's decision went beyond my expectations. In an interest community, how to make regulations and who has the right to make them really matters. Should one stake holder 6 decide everything?"

The company's new regulations are believed to be part of wider efforts to bring order to its online shopping platform. But how can small and medium sized businesses be protected? And what about the interests of larger merchants who have been affected by this war?

At the moment, China's online shopping market is in the middle of a transformation 7 from the chaos 8 of good and fake products being sold side by side, to a mature market achieved through brand building. The current trend being pursued is to establish an e-commerce platform built on integrity, but devising regulations which are suitable to merchants of all sizes and scale is the true test of those setting the rules.

For CRI, I'm Zhang Wan.