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Vendors rebel against Taobao Mall changes

(China Daily)

08:57, October 13, 2011

China's largest business-to-consumer online marketplace, Taobao Mall Co, on Tuesday announced significant increases in the commission rates and premium fees it charges to all online shops, which outraged small dealers. (China Daily)

SHANGHAI - Taobao Mall Co, China's largest business-to-consumer (B2C) online marketplace by transaction value, has experienced two successive waves of online rioting since it significantly increased fees on online vendors on Tuesday.

The organized unrest is a measure of the widespread discontent with Taobao Mall's growing reliance on bigger merchants, and it highlights the crisis of the industry monopoly, analysts said.

The company, a unit of Chinese e-commerce giant Alibaba Group Holdings Ltd, announced on Tuesday it would overhaul its business management system. One major change was to significantly raise the commission rate and premium fees it charged all online shops.

Depending on the category of goods, sellers on Taobao Mall now have to pay either 30,000 yuan ($4,710) or 60,000 yuan as the "technology service fee". The previous agreement had set the annual fee for all sellers at 6,000 yuan.

Also new is a system for refunding vendors the following year based on their performance and reliability ratings. Vendors with an average of at least 4.6 out of 5 points in a customer satisfaction index can get either a 50 percent or 100 percent fee refund depending on their revenue scales.

Daniel Zhang, president of Taobao Mall, said in an open letter that the company is firm in its commitment to "zero tolerance" with fake products. Therefore the rising costs will serve to guide and regulate online merchants to improve their service quality for the sake of consumers.

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